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episode # 133

‘Dirty Money’ is Destroying Vancouver’s Social Fabric? With Jens von Bergmann & Nathan Lauster

Money laundering, drug rings, organized crime, and duffle bags full of money dominate the narrative around Vancouver Real Estate, but are these claims justified or do they just make compelling headlines? Jens von Bergmann and Nathan Lauster join Adam and Matt to weigh in on the facts and follies surrounding this Dateline discourse. Join us for a gripping story only Lester Holt could dream up and BYOPopcorn!

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Episode Summary


 

Tell us about yourselves:

Jens: I moved to Vancouver 7 years ago. I focus on data analysis and visualization and I like to dabble in housing issues.

Nathan: I’ve been in Vancouver for 13 years. I began my work as a demographer (studying population) and became interested in how housing influences that. I’m now solely focused on housing and wrote a book on housing in Vancouver.

 

Categorize the discourse around housing right now

Nathan: The discourse around housing has heated up in Vancouver in the last 15 years.  Prior to this, housing was only difficult for lower income folks. Now it’s becoming more of a challenge for middle class families. The ideal is a single family detached home but that’s not possible for the middle class anymore. People have frustrated ambitions and the emotional level has ramped up. The discourse has become more toxic in Vancouver.

Jens: One of the big problems is that the data analysis we have is still quite immature and our discourse could benefit from more/better data. There are a few people working on data as a side task but not their main focus.

 

Thoughts on: In Terry Glavin’s article, he claims that Vancouver is a case study in the ugly side of globalization.

Nathan: There are parallels between what we see in Vancouver and what we see in the United States. The anti-globalization rhetoric was a big problem in Terry’s article.

 

What are the dangers in misdiagnosing the causes of the housing crisis?

Nathan: Anti-foreign or anti-globalization rhetoric is one of the big dangers. We can see where that has gone with Trump, Brexit and the neo-nazi movement. We need to be working to stop that. If we misdiagnose the problem, we won’t be able to make things better. In housing, homelessness is the number one concern, then rental crises. Middle income families unable to buy single family detached homes is not the big problem. And everything else falls by the wayside if the focus is only on the middle class crisis.

 

Both of you are advocates for increasing supply here in Vancouver. Do you think the NDP housing policies that focus on demand are good policies? Or are they a symptom of misdiagnosing?

Jens: Increasing rental supply was also a part of the NDP platform. Their policies are going in the right direction. They are using property more effectively. I’m curious to see the details on the speculation tax; I’m unsure how it will meet the objectives. But the shift of taxation towards property is useful.

Nathan: The NDP platform isn’t just about demand – though that part did roll out more quickly. But they do have non-profit housing and other supply policies/tools, like rental only zoning. Of course, there are other things they could be doing. They are working with both the supply and demand sides of the equation.

Jens: On the supply side, the immediate funding they provided for temporary modular housing was great and had a big effect.

 

Thoughts on speculators in the marketplace

Nathan: Speculation can be good – it’s connected to how developers fund projects and it’s important to learn how it’s all connected. But speculators can leave homes empty which is a negative and doesn’t help with supply. Engaging with policy means getting a better grasp on the details and seeing how everything works together. It’s not useful to just say speculation is bad. We need policy that helps speculation do what we want it to do, for example with the empty homes tax.

 

Claim from Terry Glavin’s article, “At least 20,000 Vancouver homes are empty and nobody is sure who owns them.” Why is this problematic?

Jens: We need to look at why homes are empty – are they good empty or problematic empty? A rental unit looking for a renter is good empty; we want rental vacancy to be higher. If a property is for sale, that can be a good empty. There are also moving vacancies; we have empty homes so we can move efficiently. So there may be 20,000 or 25,000 total empty homes but how many are problematic? We can use other measures to answer this, such as the report with BC Hydro to see electricity use to determine the good vs problematic empty homes. We learn that the number of problematic empty homes is closer to 10,000-13,000 units and even less now with the empty home tax in effect.

Nathan: So 20,000 – 25,000 is actually 2-3x higher than it should be if we’re focusing on accurate empty houses.

Jens: “…don’t know who owns them” is a throwaway line. We have land title records that tell us who owns what homes and the NDP is working to make that even more transparent. But there is not an evil force that keeps owners unknown. There are privacy laws.

 

Claim from Terry Glavin’s article, “Another 25,000 residences are occupied by homeowners whose declared taxable household income is mysteriously lower than what they pay in property taxes, utilities and mortgage payments.” True or false?

Jens: It’s off by a factor of three. It’s important to look at who these households are. These are census numbers, so not empty homes. It is more accurately only 8,900 homeowner households. The majority of that 25,000 (which is a 2011 number) is renters. For example, a student who has no income and is renting a place so their home costs exceed their income. Other examples include parents buying a home for their kids or seniors living in homes with no/low income.

Nathan: People’s income fluctuates. I would be interested to do more research on this and how it affects those numbers.

Jens: As well as people who own their own companies. How does their income show up?

 

Claim from Terry Glavin’s article, “Non residents own $45 billion worth of Metro Vancouver’s residential properties and non residents picked up 1 in 5 condos sold in Metro Vancouver in the last 3 years.” True or false?

Jens: Mostly true, though some aggressive rounding was used. “1 in 5” confuses the City of Vancouver with Metro Vancouver. Updated numbers are not reflected here. But it’s not as off as some of the other claims. It is more accurately: 1 in 7.1 (Metro Vancouver) and 1 in 6.5 (City of Vancouver). As well, $45 billion is less than 5% of Metro Vancouver real estate.

Nathan: Providing a raw number devoid of context is one way to ramp up concern in articles like this. As well, there is no record of that 1 in 5 data.

Jens: We had a big discussion on what is meant by “picked up.” We don’t have data on non resident transactions – only non-resident ownership. And we don’t have data from the last three years. We do have some foreign buyers tax data but that gives us a much lower number.

 

Claim from Terry Glavin’s article, “Half of Vancouver’s west side residents are owned by mystery trusts or shell companies.” True or false?

Jens: This claim is so outrageously wrong! A report pulled titles of the 100 most expensive properties in Vancouver and looked at how many were owned by companies or by trusts. They found 47% were owned by companies/trusts. So that became “almost half of the most expensive properties” which then became half of the West Side because that’s a high end neighbourhood. But we don’t have title data to fact check this claim. And the numbers we do have are nowhere close. The 100 most expensive properties are different than what we see in general properties.

Nathan: Metro Vancouver has 6% of properties owned by trust/company. This is the same as most metropolitan areas,

Jens: For example, a rental building would be owned by a company. The number of properties owned by companies/trusts is actually higher outside of Metro Vancouver. We also did not see a ramp up in company/trust owned properties with the introduction of the foreign buyers tax.

Nathan: Transparency is good. This isn’t contributing to unaffordability but lack of transparency does hurt credibility in the market. With transparency, we can get rid of questions of legitimacy of the market.

 

Claim from Terry Glavin’s article, “Vancouver has become a global hub for organized crime networks based in China.” True or false?

Nathan: There’s a big issue with bringing all of these factors together. The opioid epidemic is a big issue and we need to be doing more to deal with it – but that doesn’t really involve cracking down on Chinese gangs. We need to reconfigure our system of pain management and how we legalize/criminalize drugs. It is an issue in Vancouver but we’re not the only place with this problem. My mom lives in West Virginia and they have a big drug issue but it has nothing to do with Chinese gangs.

Nathan: Money laundering is another real issue but the amount of money that could have effected real estate is small change. It’s good to crack down on these issues but we can’t tie it all together and say it’s the source of our affordability crisis.

Jens: Money laundering is responsible for $100 million over 10 years. In Metro Vancouver, that means the money laundering issue is almost non existent.

 

Claim from Terry Glavin’s article, “Median wages have been stagnating, jobs are precarious, pensions uncertain, housing, childcare and education harder to afford.” True or false?

Jens: I have been watching income for quite a while and we always hear the recycled statement, “stagnant income.” But the data tells a different story. Vancouver has overtaken Toronto; our growth is strong. The median income grows lockstep with rent. We do have lower incomes than some areas, like Calgary, but we’ve caught up with Toronto. There is strong job growth in full time employment. Our unemployment rate is low and job vacancy is high. However, it is expensive to move here and we don’t have the housing supply. Housing supply puts a hard cap on population growth. We have overshot our employment growth goals but undershot dwelling and population goals.

 

What is the larger problem with articles like these and why are these inaccuracies so prevalent?

Jens: Everyone is hurting when it comes to real estate in Vancouver. People want answers. A lot of these claims make sense or the numbers are reinterpreted until they make sense.

Nathan: We have always been good at tracking income but we don’t have good data on wealth. We see wealthier people move in and less wealthy people move out is but it’s hard to track and analyze.

Article by Jens & Nathan: https://doodles.mountainmath.ca/blog/2018/07/22/fact-checking-vancouver-s-swamp-drainers/ or https://homefreesociology.wordpress.com/2018/07/23/fact-checking-vancouvers-swamp-drainers/

Article in response to by Terry Glavin: https://www.macleans.ca/opinion/dirty-money-is-destroying-vancouvers-civic-fabric-and-causing-lasting-damage/

Find out more from Jens: https://doodles.mountainmath.ca/  

Find out more from Nathan: https://homefreesociology.wordpress.com/

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