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Lisa Helps | Victoria | Mayor

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#41 VicHockeyFan

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Posted 17 September 2014 - 07:04 AM

We need to work to bring units down to $150-$175k and enough of them to ensure they won't all go to investors.

 

There is nothing wrong with investors buying up cheap housing.   They will mostly be rented out, and normal laws of supply and demand will apply (lower rents everywhere).


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#42 Mike K.

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Posted 17 September 2014 - 07:18 AM

For sure, but have enough units in that price range and you'll have a lot more people buying than renting. And if politicians want home ownership then that's how we get it, not through some subsidized housing nonsense that takes money from the pockets of one demographic and gives it to another.

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#43 tedward

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Posted 17 September 2014 - 07:28 AM

A developer needs both height and density to make a project affordable for a wide spectrum of buyers and make the units livable. Density only gets you so far. In Victoria a project like Escher starts clocking in at $220k for the smallest, low floor unit (in other words, the same starting price as downtown Toronto condos!). We need to work to bring units down to $150-$175k and enough of them to ensure they won't all go to investors.

 

I wish this were true and if you can show me some examples of that working somewhere in any way comparable to Victoria I would love to hear about them.

 

However, here in the real Victoria, developers are not going to price housing units below what they think they can get are they? Why would a developer build a unit and sell it for $150-$175k when they could just as easily get $200k for the same property? From what I have observed of the Victoria market for the last 30 years they would rather let a property sit empty or be used a a parking lot for decades rather than build something they cannot get maximum profit from. A philosophy they call "capitalism" I believe.

How does telling them they can build as many units as they want, in buildings as high as they want make them offer units for prices people earning $30-$60k per year can afford?


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#44 Mike K.

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Posted 17 September 2014 - 07:33 AM

Tedward, really? You think it's all just a scheme to siphon money from poor little old Victorians?

Do you have any idea how much the per square foot cost to build a condo actually is? Developers break even on most units until they get to the upper floors. That's where their profit is, not on $300k fourth floor condos. If they could sell them for $100k they would. That would mean less capital investment to build, less risk, more buyers and quicker sell-outs.

Jeepers, why are Victorians always such victims? Always getting screwed, always fighting off corporate greedy devils. Meanwhile when a solution to an issue is proposed it's poo-poo'd as some evil scheme and the whining begins again.
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#45 jonny

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Posted 17 September 2014 - 07:47 AM

It seems pretty obvious to me that if a building like Era was 30 floors instead of 15 floors we would have roughly double the number of "affordable" units in the $200kish range available. 

 

Alas, for some reason in Victoria 30 floors is akin to Burj Khalifa and probably won't happen in my lifetime.



#46 jonny

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Posted 17 September 2014 - 07:49 AM

The sad thing is there seems to be pent up demand for new rental housing downtown, as evidenced by how well Hudson Mews has done, but our government insists on cutting the supply of decent rental housing stock.



#47 lanforod

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Posted 17 September 2014 - 07:52 AM

There is a glut of condos in the Toronto market - it isn't bringing prices down, but they haven't gone through the roof like all the other real estate there has either. I suspect that is what would happen here if we got a number of new units flooding the market. Perhaps the starting prices would go down a bit, but I doubt it would go down to 150k/500 sq ft (barring a general real estate correction, which some folks have been warning about for a decade!).



#48 Mixed365

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Posted 17 September 2014 - 08:07 AM

The sad thing is there seems to be pent up demand for new rental housing downtown, as evidenced by how well Hudson Mews has done, but our government insists on cutting the supply of decent rental housing stock.

Has the Hudson Mews actually done that well?


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#49 VicHockeyFan

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Posted 17 September 2014 - 08:09 AM

Has the Hudson Mews actually done that well?

 

Ya, it's all rented up.

 

Helps is on CFAX now, until 9:30am.


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#50 jonny

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Posted 17 September 2014 - 08:14 AM

There is a glut of condos in the Toronto market - it isn't bringing prices down, but they haven't gone through the roof like all the other real estate there has either. I suspect that is what would happen here if we got a number of new units flooding the market. Perhaps the starting prices would go down a bit, but I doubt it would go down to 150k/500 sq ft (barring a general real estate correction, which some folks have been warning about for a decade!).

 

I suspect you would be correct; however, more units in the $200k range would be welcome.



#51 jonny

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Posted 17 September 2014 - 08:15 AM

Has the Hudson Mews actually done that well?

 

From what we have heard it is full or nearly full.

 

I took a walk by the new Q Apartments. Most of the balconies seemed to have chairs or plants on them, so it seems like that one is doing well also.


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#52 Mixed365

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Posted 17 September 2014 - 08:15 AM

Ya, it's all rented up.

 

Helps is on CFAX now, until 9:30am.

That is FANTASTIC. I had been hearing the opposite. Glad I can be proved wrong. 


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#53 Mike K.

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Posted 17 September 2014 - 08:31 AM

If Chard can start pricing units in the $220k range at Escher then it's clear that if he'd had approvals for a 14-storey tower starting prices would have been at $200k. Bump that up to 20 and we'd see prices in the vicinity of $180k. Push it up to 30 and prices would slide even further.

Of course, unless we adopt high density, tall buildings as a norm they won't produce affordable units as they'll be built to a higher standard at a higher cost as luxury or up-market properties since they're so unique. Bosa did that with Promontory.

We need to get over this ridiculous fear of heights and pack the units in if housing affordability is a serious political goal. This subsidized housing nonsense (government creating the problem, then "fixing" it with our money) and the relentless push for small buildings will ensure existing housing prices will remain where they are and barriers to entry will too.

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#54 lanforod

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Posted 17 September 2014 - 08:35 AM

If Chard can start pricing units in the $220k range at Escher then it's clear that if he'd had approvals for a 14-storey tower starting prices would have been at $200k. Bump that up to 20 and we'd see prices in the vicinity of $180k. Push it up to 30 and prices would slide even further.

Of course, unless we adopt high density, tall buildings as a norm they won't produce affordable units as they'll be built to a higher standard at a higher cost as luxury or up-market properties since they're so unique. Bosa did that with Promontory.

We need to get over this ridiculous fear of heights and pack the units in if housing affordability is a serious political goal. This subsidized housing nonsense (government creating the problem, then "fixing" it with our money) and the relentless push for small buildings will ensure existing housing prices will remain where they are and barriers to entry will too.

 

I don't get that. Why would Chard bring the price down so much if they don't need to?



#55 Mike K.

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Posted 17 September 2014 - 08:41 AM

Because that's how the condo game works. You're trying to usurp every buyer from your competitor and the #1 driving force is price.

Look at Janion, prices starting at $110k and the whole project literally sold out in a day. Nobody cared about the square footage cost, just the price tag. If Chard came out with $175k starting unit prices for 450 sq ft bachelors he'd have a panicked rush at the showroom.

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#56 tedward

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Posted 17 September 2014 - 01:10 PM

Tedward, really? You think it's all just a scheme to siphon money from poor little old Victorians?

 

So you really don't understand capitalism do you? It has nothing to do with being "victims" and everything to do with maximizing profit.

 

Developers are going to charge whatever price the market will bear. If they cannot get the rate of return they want they will simply not build. Nowhere in that equation is there any incentive to build housing units for families of moderate incomes. Low-income housing or whatever term you want to use will never, has never been built using purely "market-based" solutions as far as I am aware.

 

Developers are not rushing to build houses that average families can afford but rather over-sized McMansions that they can sell for maximum profit. Even Langford, the Libertarian Capitalists favorite local municipality, had to use incentives to create their moderate-income housing. 


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#57 29er Radio

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Posted 17 September 2014 - 02:26 PM

tedward makes some good points but It could be possible for a city to work with developers to achieve both parties goals. If the authorities better understood the constraints and challenges  faced by a developer, and worked with them on zoning that would allow a developer to make the same amount of money whatever the demographic then you might be able to serve many communities.

 

Imagine if the city didn't offer density bonuses at a cost to the developer, but instead allowed higher buildings IF the developer provided larger unit foot prints.


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#58 Mike K.

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Posted 17 September 2014 - 02:39 PM

So you really don't understand capitalism do you? It has nothing to do with being "victims" and everything to do with maximizing profit.

Developers are going to charge whatever price the market will bear. If they cannot get the rate of return they want they will simply not build. Nowhere in that equation is there any incentive to build housing units for families of moderate incomes. Low-income housing or whatever term you want to use will never, has never been built using purely "market-based" solutions as far as I am aware.

Developers are not rushing to build houses that average families can afford but rather over-sized McMansions that they can sell for maximum profit. Even Langford, the Libertarian Capitalists favorite local municipality, had to use incentives to create their moderate-income housing.

Developers build what the market wants, not what they think it wants and they charge what the market will pay, not what they want it to pay.

I'd put a little bit of faith in your theory if there were two development companies colluding and we as consumers were getting wiped on the floor, but there are dozens and dozens of home builders in the CRD who sell for as little as they can to turn enough profit to stay in business.

And then there are thousands of home owners who happen to put their houses on the market at the prices we see.

Now here's a question. Why aren't the folks who believe the silly myths that developers are raking in millions on our blood sweat and tears selling the homes they bought in the 80's with no capital gains? They seem to have no qualms with capital gains in the hundreds of thousands.

Anyways this is a silly debate.

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#59 RFS

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Posted 17 September 2014 - 03:08 PM

Tedward you are also ignoring the principles of supply and demand. The more housing built, of ANY price, the lower the average price in the overall market. The best strategy to make housing more affordable would just be to build build build housing of any type
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#60 tedward

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Posted 18 September 2014 - 12:23 PM

Tedward you are also ignoring the principles of supply and demand. The more housing built, of ANY price, the lower the average price in the overall market. The best strategy to make housing more affordable would just be to build build build housing of any type

 

I don't think so but I would be happy to be proven wrong. Mike K. cannot seem to do it so perhaps you can.

 

Supply and demand is not a one-way transaction and real estate is a special case since you cannot simply produce more land. What I am postulating is that the relatively-fixed supply of available land and the developers desire to maximise profit means that affordable properties simply do not get built.  There is no collusion or myths needed to see that when the prospective return on investment is too low developers simply do nothing.

 

We could allow 30 story buildings in downtown and it would not likely affect the stock of affordable housing in the slightest. It still costs money to build additional height and at some point the price they could sell the cheapest units simply becomes not profitable enough compared to the investment required. Sure you might still make 5-10% on additional units but if you can make 30-40% on a different project why would you bother unless there is some other incentive?

As to your assertion that, "The more housing built, of ANY price, the lower the average price in the overall market." I have to call bullshit. Are there more housing units in Victoria today than there were two years ago?  Has the average price gone down? You need to qualify that statement before it can even approach being accurate.

 

In the real world, if we want affordable hosing we have to accept some sort of government involvement whether that be in the form of direct investment, tax breaks, zoning variations etc.  The only real argument is about what are the most effective forms of involvement. I personally favour working with private developers and potential homeowners and keeping bureaucrats and politicians out of the process as much as possible.


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