1731 replies to this topic

[VicHockeyFan]

These are microcondos.  There aren't a lot of them, but the others (non-janion) that have sold recently have gone for about $200,000.   Big difference.

 

This is the cheapest non-leasehold condo for sale in the CoV right now.  1982.  $239 and no dishwasher or insuite laundry.

 

https://www.realtor....Columbia-V8R5R8

 

This is the cheapest downtown, $245k.  

 

https://www.realtor....Columbia-V8V3K5

 

After that the next cheapest condo in downtown or James Bay is $325k

 

https://www.realtor....Columbia-V8V1P7

Edited by VicHockeyFan, 27 September 2017 - 03:48 PM.

[VicHockeyFan]

First we hear that AirBnB doesn't have a large impact on housing.   Now we hear that apparently the impact is so large that it is the deciding factor whether developments are built or not. 

 

In a smart part of the very downtown core, for sure.

 

Meanwhile, hundreds of Air BnBs operate outside the very downtown core, but council seems to not be interested much in regulating them back to monthly rentals.

 

And right next door in the largest municipality on the Island, Air BnB regulation is not even on the council radar.  

 

In fact Air BnB regulation only seems to be on the radar right where Tourism Victoria gets all its money from.  Near the 12 big hotels in the very core of the City.

 

Anyway, next week, Mike K. and I will be having lunch with the GM of one of the very top hotels in the downtown core (certainly not one that usually competes anywhere near on price with Air BnB - looking at Expedia for a room there the day we have lunch with the GM, it's $314/night), we'll try to get a bit of insight.

Edited by VicHockeyFan, 27 September 2017 - 03:59 PM.

[Mike K.]

First we hear that AirBnB doesn't have a large impact on housing.   Now we hear that apparently the impact is so large that it is the deciding factor whether developments are built or not.   In other words, STVRs have driven up prices so much that it has become the reason to build new developments.    

If true, then you are making the city's point for them.   STVRs are a huge distortion of the condo market and are driving up prices to levels that wouldn't be sustainable without them.   In other words, great reason to kill STVRs and remove that market distortion.

 

As for developments not being built, I see that as fear mongering by the industry.   Of course the developers are against anything that could hurt condo pricing.   And yet tons of projects were built before AirBnB, and tons of projects will be built after.   

 

The point is there is no transient-zoned condominium building in the City of Victoria that is 100% AirBnB-rented (if there are a few, they're tiny and irrelevant to the overall market). Virtually every market condominium with transient zoning constructed in the City of Victoria contains a mix of vacation rentals, full-time rentals and owner-occupied units. These projects benefitted from the 5-10-15-20 or 25% of sales to investors with the intent to rent their units as short term rentals. Without their entry onto the market, would all of those projects have proceeded? Some yes, others no, others still would have been delayed or down-scaled. So even if 25-units at the Era are AirBnB's, 132 are full-time homes. 

 

You're looking at the vacation rental issue as it has materialized only within the last couple of years. Vacation rentals have been a thing since the 1990's. This is not a new phenomenon, it's just become more common and goes by a new catchphrase. It's also more visible now as the tools to research rentals are easier to use and more prevalent (the old adage, right? Out of sight, out of mind).

 

Now as far as quantity, we've built 2,000 full-time rentals in this region over the last couple of years. Have they changed the market and reversed the vacancy rate issue? No. But officialdom actually believes that putting 500 or 300, even 200 full-time AirBnB's onto the rental market will.

 

As a licensed realtor I'd expect you to show a greater regard for the industry you represent and to not perpetuate tired cliches like "developers are against anything that could hurt condo pricing."

 

So in your mind, if the individuals who are directly responsible for conceiving, financing, marketing, selling and building the overwhelming majority of our housing raise an issue and infer that a sudden and ill-conceived change could quickly erode the viability of housing projects, in your mind it is solely out of a concern that they might be forced to lower condo prices?

 

Maybe that line of reasoning resonates with your blog's followers who have been holding on to hopes for a massive market correction for over a decade, but its not helpful to the situation at-hand.

[sdwright.vic]

Nope, sorry agree with Leo. If it's NOT affecting anything, then it's not affecting anything. Including the sale of condos. You can't have it both ways. No one is doing this, but the number of people that are will affect future sales. Pfft.

[Mike K.]

You're conflating two separate issues.

 

The feasibility of building a project will be affected if a portion of buyers have dried up for a new building.

 

But the return of 500, 300 or 200 units of existing AirBnB's into the full-time rental stock will have no significant effect on a) rental prices b) the rental vacancy rate.

 

Think of the two issues as micro vs. macro. A small change to a microclimate could be devastating (i.e. removing 25 buyers from a 100-unit condo development). A bigger (by comparison) change to a macro climate could have some effect or a negligible effect (i.e. adding 200-units of former AirBnB's to 75,000-units of rental housing).

[VicHockeyFan]

I think we all agree that investors are buying a large number of brand new downtown core condos, no?  So they are driving, finally, the construction boom. 

 

And they are buying for a variety of reasons.  But every time a condo is built, that means more units overall.  Even if a condo is 80% investors/Air BnB, at least some will be for month-to-month renters and owner/occupiers.  So what's wrong the the status quo for new buildings?

Edited by VicHockeyFan, 27 September 2017 - 05:14 PM.

[VicHockeyFan]

Think of the two issues as micro vs. macro. A small change to a microclimate could be devastating (i.e. removing 25 buyers from a 100-unit condo development). A bigger (by comparison) change to a macro climate could have some effect or a negligible effect (i.e. adding 200-units of former AirBnB's to 75,000-units of rental housing).

 

THERE, well said.

[sdwright.vic]

We are assuming a portion of "buyers" will dry up. I don't believe they will. I think that it will just be absorbed by a "normal" type of buyer.

Those who bet there horses on one have the biggest thing to lose then those who spread their risk of lose amongst many ventures.

[Mike K.]

I think we all agree that investors are buying a large number of brand new downtown core condos, no? So they are driving, finally, the construction boom.

Yup, as they have been for time immemorial in Victoria.

The only reason Victoria saw ANY rental homes added to the market was SOLELY due to investors buying condos. Without them, many thousands of people would have not had access to housing because all levels of government had turned their back on the purpose-built rental industry. By extension, homeowners with illegal secondary suites also took it upon themselves to provide rental housing.

Investors continue adding more rental capacity to our rental stock. Of course the big difference today is developers are able to do it too due to the low rate environment where major lenders see key low vacancy rental markets as safe havens for long-term investment.

[sdwright.vic]

Haven't we discussed over and over again on here about the fact we can't discuss "what could of /should of happened because we don't live then. We have no idea WHAT would of happened "then" under numerous scenarios. You can't just pick the ones that fit your dialogue and make today, the day of your dreams because it fits your PERSONAL ideals.

[LeoVictoria]

In a smart part of the very downtown core, for sure.

 

Meanwhile, hundreds of Air BnBs operate outside the very downtown core, but council seems to not be interested much in regulating them back to monthly rentals.

 

And right next door in the largest municipality on the Island, Air BnB regulation is not even on the council radar.  

 

In fact Air BnB regulation only seems to be on the radar right where Tourism Victoria gets all its money from.  Near the 12 big hotels in the very core of the City.

 

Anyway, next week, Mike K. and I will be having lunch with the GM of one of the very top hotels in the downtown core (certainly not one that usually competes anywhere near on price with Air BnB - looking at Expedia for a room there the day we have lunch with the GM, it's $314/night), we'll try to get a bit of insight.

The corruption theory requires evidence.   How exactly is the hotel industry buying the votes of the Victoria city councilors?

[LeoVictoria]

The point is there is no transient-zoned condominium building in the City of Victoria that is 100% AirBnB-rented (if there are a few, they're tiny and irrelevant to the overall market). Virtually every market condominium with transient zoning constructed in the City of Victoria contains a mix of vacation rentals, full-time rentals and owner-occupied units. These projects benefitted from the 5-10-15-20 or 25% of sales to investors with the intent to rent their units as short term rentals. Without their entry onto the market, would all of those projects have proceeded? Some yes, others no, others still would have been delayed or down-scaled. So even if 25-units at the Era are AirBnB's, 132 are full-time homes. 

 

You're looking at the vacation rental issue as it has materialized only within the last couple of years. Vacation rentals have been a thing since the 1990's. This is not a new phenomenon, it's just become more common and goes by a new catchphrase. It's also more visible now as the tools to research rentals are easier to use and more prevalent (the old adage, right? Out of sight, out of mind).

 

Now as far as quantity, we've built 2,000 full-time rentals in this region over the last couple of years. Have they changed the market and reversed the vacancy rate issue? No. But officialdom actually believes that putting 500 or 300, even 200 full-time AirBnB's onto the rental market will.

 

As a licensed realtor I'd expect you to show a greater regard for the industry you represent and to not perpetuate tired cliches like "developers are against anything that could hurt condo pricing."

 

So in your mind, if the individuals who are directly responsible for conceiving, financing, marketing, selling and building the overwhelming majority of our housing raise an issue and infer that a sudden and ill-conceived change could quickly erode the viability of housing projects, in your mind it is solely out of a concern that they might be forced to lower condo prices?

 

Maybe that line of reasoning resonates with your blog's followers who have been holding on to hopes for a massive market correction for over a decade, but its not helpful to the situation at-hand.

 

1. You are basing your argument on an assumption that AirBnB has resulted in more developments being built.   That may or may be true, but you cannot just state it as a fact.   I'm not saying it couldn't happen, but perhaps 100 additional units got approved due to favourable market conditions and 500 units got turned into AirBnBs.  Still a net negative.  Fact is, neither of us have any idea what the net effect was on construction.    

2.  Vacation rentals have always been a thing, but AirBnB is what made it a big issue.   I'm sure there are 100 times as many privately operated vacation rentals now than 20 years ago.   Who the hell ever heard of a vacation rental before VRBO/AirBnB?  It was all B&Bs

3.  They built 2000 rentals which means additional supply which reduced pressure on rents.   This is basic economics.   It would be much worse if we didn't have those extra 2000 rentals.  

4.    "As a licensed realtor I'd expect you to show a greater regard for the industry you represent and to not perpetuate tired cliches like "developers are against anything that could hurt condo pricing." -  Haha.  Thanks for the laugh Mike.    Luckily me becoming a licensed realtor did not harm my ability to think.  

5.  "So in your mind, if the individuals who are directly responsible for conceiving, financing, marketing, selling and building the overwhelming majority of our housing raise an issue and infer that a sudden and ill-conceived change could quickly erode the viability of housing projects, in your mind it is solely out of a concern that they might be forced to lower condo prices?"   -  Not solely, but are you trying to tell me there isn't an insane, huge, conflict of interest here?   What did you expect them to say?  "We as condo developer believe this action which will reduce condo demand is a great idea".   Obviously not.     Doesn't mean they can't contribute to the conversation, but it does mean you need to hold them to a higher standard of proof when they make a claim.

Edited by LeoVictoria, 27 September 2017 - 08:56 PM.

[LeoVictoria]

Think of the two issues as micro vs. macro. A small change to a microclimate could be devastating (i.e. removing 25 buyers from a 100-unit condo development). A bigger (by comparison) change to a macro climate could have some effect or a negligible effect (i.e. adding 200-units of former AirBnB's to 75,000-units of rental housing).

 

Yeah it doesn't work like that.   Let's say those AirBnB investors are gone.   That doesn't mean that the developer wont be able to sell those 25 units, it just means they will have to sell them at a lower price.    Your assertion is that lower price will make the project nonviable and it won't get built.   I doubt this, but if any developer would like to provide hard numbers that their profit margins are so razor thin that it required the uplift from AirBnB to approve projects then that's great and I will happily drop this argument.

 

And you missed the other macro effect:   Additional speculative demand added to the prices of all those condos.    How much?  Hard to tell.  Maybe 5%-10% but that's a wild guess.   We can be sure it is larger than zero though.    So not only are 25 units not going to owner-occupiers, but every other condo buyer (including you) paid that premium.

[Mike K.]

I’m going to insist that if someone wants insight into the situation that they listen to the people who’s job it is to build and finance housing and not a group of politicians that have repeatedly introduced poorly thought out changes that have had less than desirable outcomes for the greater population.

Council is off base here, their priorities are misguided and their solution will do absolutely nothing to solve the housing issue but it will affect the new-build housing market until it absorbs the sudden changes, and how/if it does that over the short term remains the big unknown.

[DavidL]

Well, one might argue that pretty much everything that is now "legal, non-conforming" is due to zoning changes that came after structures were built.

 

But my non-corforming rental triplex can continue to be a rental triplex even after I sell it.  This 6-month grandfathering thing the City is considering is the tricky part.

 

Non conforming status runs with the land and survives sale.  The six month clock is a direct quote from the local government act section on legal non conforming.  What they don't mention is there is also a seasonality allowance in the act that could very well apply, and of which staff informed council last year.  Essentially the argument being that the rental season is the summer so if you don't rent for the eight months in between you don't lose the legal non conforming use.

 

The city is trying to give the impression that it is only operating units that get legal non conforming status with the wording of their releases, which looks a lot like willfully misleading the public.  

[DavidL]

The corruption theory requires evidence.   How exactly is the hotel industry buying the votes of the Victoria city councilors?

 

I find it a little a little coincidental that Tourism Victoria donates $1,000,000 to the David Foster walkway project last year and all of a sudden STRs in the downtown core are public housing issue number one.  For clarity I make no inference of corruption or quid pro quo but do find the timing interesting.

[DavidL]

You’ve got it. An AirBNB operator in a transient building can continue to operate but the new fees make it completely uneconomical, so most of them will shut down. Those units will then either return to the long term rental pool or be sold to an owner-occupier. Harsh yes, but likely effective in accomplishing the council’s goals.

 

The problem, however, is that council's goals relate to housing affordability and not simply availability.  This is the real issue.  I can go get a rental tomorrow if I want, there are plenty available.  What are not available are $800/mth spaces, which is what the council really wants all of us to rent our condos out for.  Adding my condo at $2000/mth to the long term rental pool does nothing to accomplish council's actual goals.  Conflating affordability and availability, or homelessness and STRs, is simplistic thinking.  For example, removing 60,000 room nights a year from the downtown tourist areas will have an effect on the city that council simply chooses to ignore in its "analysis" of the situation.

[Mike K.]

The problem, however, is that council's goals relate to housing affordability and not simply availability.  This is the real issue.  I can go get a rental tomorrow if I want, there are plenty available.  What are not available are $800/mth spaces, which is what the council really wants all of us to rent our condos out for.  Adding my condo at $2000/mth to the long term rental pool does nothing to accomplish council's actual goals.

 

Right, which takes us back to VHF's assertion.

 

The mayor went from not noticing/not caring about an AirBnB operating in her home for several years, to suddenly believing AirBnB is the major contributor to the housing issue.

[VicHockeyFan]

The problem, however, is that council's goals relate to housing affordability and not simply availability.  This is the real issue.  I can go get a rental tomorrow if I want, there are plenty available.  What are not available are $800/mth spaces, which is what the council really wants all of us to rent our condos out for.  Adding my condo at $2000/mth to the long term rental pool does nothing to accomplish council's actual goals.  Conflating affordability and availability, or homelessness and STRs, is simplistic thinking.  For example, removing 60,000 room nights a year from the downtown tourist areas will have an effect on the city that council simply chooses to ignore in its "analysis" of the situation.

 

I think you are more or less right.  No new condo with in-suite laundry is going to rent for less than $1500 or so per month.   Craigslist tells me there are 129 apartments for rent today at $1400 to $1600.

[Mike K.]

The foreign buyer issue sure disappeared quickly, hey? We went from the narrative that foreign buyers are eating up units and leaving them empty for one reason or another, to AirBnB operators eating up units and displacing home purchasers or renters.

 

Remember when Sid Tafler would count dark windows in condo buildings and claim in letters to local papers that they were empty units purchased by wealthy out-of-towners or foreigners? And people ate that up.

 

What'll be the boogeyman next year?