Is Vancouver broken or just potentially broke? First off, Property Manager, Klaus Rode, joins us a month into the COVID-19 crisis to discuss the rental market. How many people are actually deferring their rent? Are rent prices in free fall? And how does an eviction moratorium impact our real estate market? And then, Adrian Crook and Rob McDowell join us to grade the City Council after its first 18 months. Spoiler alert: this report card might not make the fridge; in fact, one Councillor might even take to Zoom and flush it down the toilet. Today’s episode is a triple threat! Stay home and listen up.
Vancouver Real Estate News, Market Updates, Insider Tips, Stats, & Analysis
Can you tell us a little bit about yourself?
Klaus and his team provide property management services. Klaus is the Associate Broker at Century 21 In Town Realty in Vancouver and also has an office at Century 21 Percy Fulton in Toronto. He runs rental portfolios in both Vancouver and Toronto.
What are you seeing with Vancouver rent prices due to COVID-19 (Coronavirus)?
We are starting to see a small decrease in rents of maybe $50-$100 / mth depending on the properties. Rents had started to stabilize the month before, so rents are definitely not increasing right now. I suspect over the next 2 months, we will see a steady in decrease in rents, maybe $200/mth max change for 1 bedrooms (renting at $1,800 / mth to $1,900 / mth). Two bedrooms are bit more difficult to say because there is a larger span of rent prices, but these rents will need to come down as well.
Did you see a lot of rental deferrals in April due to COVID-19 (Coronavirus)?
For April, we only saw a small portion of our renters defer their rents. In these cases, it was usually only part of their rents as they were trying to setup relief from the Government. Our tenants are normally professionals, accountants and people that can work from home, which is why the deferral portion was small. The people that are having the most trouble are in the hospitality industry, because they are not working right now. We suspect May will be more difficult because people may have still been working for part of March that will not be working in April.
What are the challenges for landlords and tenants due to COVID-19 (Coronavirus)?
People cannot be evicted right now. If someone is not paying rent, the Landlord cannot serve notice right now. Communication between Landlords and Tenants is key and they need to work together to find a solution that works for everyone. If tenants were scheduled to move out before April 1st, this is still enforceable. If they were scheduled to move out after April 1st, they may have nowhere to go, so it is not enforceable to make them leave.
Have you seen any politicization of the moment for rental housing? People that are advocating that tenants not pay their rent, even if they have the means to?
Our understanding of the ‘Don’t Pay Rent’ movement is that it is geared towards a younger demographic (who may not have savings or are just starting their careers). It is also prevalent in full rental buildings and not as prevalent in single condo units that are being rented from a small landlord. We haven’t seen much of this in our business right now because we deal with property management for condo owners.
What is happening with Airbnb due to COVID-19 (Coronavirus)?
There should not be a big impact on the rental market due to Airbnb. We saw a big hit last year when new rules were introduced for Airbnb and lots of landlords decided to halt renting furnished units and moved to unfurnished. Any furnished units that are left would normally be absorbed by people waiting to get into a new home after purchase or people needing a place to stay due to an insurance claim or something similar.
Where do you see rent prices in the next 1 to 2 years in Vancouver?
If all things remain equal and we flatten the curve, there will be short term rental softening, and rents should stabilize in the fall. We should see rent prices increase a bit in 2021, just due to costs increasing for owners for things like insurance. It is hard to predict right now due to COVID-19 (Coronavirus) and the uncertainty surrounding it.
Find out more about Klaus Rode.
Rob McDowell & Adrian Crook
Can you tell us a little bit about yourselves?
R: I worked in the Canadian embassy in Hanoi, Vietnam, as well as in Ho Chi Minh City as the director of the Canadian trade office. I then went to Beijing where I worked for the Canada-China Business Council. I was then the consul in Guangzhou, China, before returning to Vancouver.
A: I write the blog 5 Kids 1 Condo. I co-founded Abundant Housing Vancouver and Abundant Transit BC, as well as the spokesperson for BC Rental Project. I also have an ongoing court case currently at the BC Court of Appeals about my children being allowed to ride the bus alone. They had ridden the bus many times with me in the past, but at the time of the initial complaint they were 10, 9, 8, and 6 years of age. They had cell phones with them and knew exactly what they were doing with the bus driver’s support.
We have you on today as you both are active in the municipal political scene; you’ve both run for city council. Why did you run?
R: I have a few close friends who work for the city. I helped one of them run and get elected in 2011. I saw the upside and downside, and thought I would run as well, back in 2014. We were some of the first people to live in Yaletown back in 2000. I knew I wanted to help solve the housing and transportation issues.
A: I started to get into politics with my blog and the Abundant programs. I ended up in a lot of influential circles. I saw it as another way to affect change, though I’m still unsure if it’s more effective to enact change within or out of the government.
From your perspective, are we at a crossroads for the city’s future? What are we getting right and what are we getting wrong?
R: The problem with the current City Plan is that it’s great as a concept, but there are concerns with it. We’ve now stopped the individual neighbourhood plans, and nobody knows what the City Plan is. For example, they tried to unify all the community centres under one plan a number of years ago, and every neighbourhood was up in arms. If we look at that plan, it likely doesn’t bode well for the City Plan either.
A: We’ve been at a stalemate for years. I ran on opening up neighbourhoods for everyone and getting rid of detached zoning. We see a lot of other cities and some states trying to do this. I’ve tried to appeal to the province, though I don’t think they’ll do this. We need to fix our land-use issues. And it shouldn’t be an issue left up to the individual areas; the province should step in and sort things out. It needs to happen at that level, or else we get the NIMBY communities blocking it.
Do you think it’s a necessary process for this city to figure out exactly what it wants to be?
R: I worry that it’s going to be a lot of virtue signalling. Everyone agrees we want to be inclusive and diverse, but what does that mean in reality?
A: It feels like we’ve done a lot of these exercises in the past. That level of abstraction isn’t what’s needed at this point. They’ve been arguing over 20 or 30 stories at Commercial-Broadway, one of the busiest transit hubs in the country. It should be much higher. It just feels like we’ve hit pause.
Why do you think that we are so bad at getting things built and having applications passed?
R: I think it’s leadership, and the lack thereof. There’s no willingness to use the political capital to do it. There’s no cohesive leadership with so many parties on the council. Nobody is willing to approve higher density.
A: It’s currently seven years between your initial concept and the finished product. Why are we putting more barriers in the way when rentals don’t have the same margins as condos? There’s no will to do it.
If there’s no political will at this point, is it possible for it to exist? What will it take?
A: We’ve been in this crisis for nearly ten years. This hasn’t snuck up on us; we have these massive systematic issues. You would think that everyone would agree on the construction of more rental housing, but we cannot, apparently.
R: We also have a huge issue with schools in the area, especially north of 16th. There’s nowhere near enough capacity for all elementary school children in the downtown area.
Adrian, you’re an advocate for an increase in rental housing. Can you speak a bit about your ideas?
A; I’m not in support of rent control – there are numerous studies that show it’s bad for the rental market. Of course, I want low rent; I’m a renter too. But what I really want is more choices in rental stock. I want to be able to get some power over my landlord by being able to move just across the street if they have a better rate.
The city has been trying to fix housing issues with policies such as the empty homes tax, the foreign buyer’s tax and the Airbnb restrictions. Have these been successful in your opinion?
A: It’s hard to measure. The Airbnb restriction is likely more useful than the others. I don’t think they’re damaging, but I don’t think they have been a big help either.
R: The empty homes tax has been less effective than we hoped it would be.
A: If we can return private units to the rental market, that’d be great. But to help more people in the market, I’d like more purpose-built rental buildings. I’m also in favour of more rental-relocation policies. I don’t mind some of these policies, but the bottom line is that we need more homes. We’re way behind the curve on the problem. There’s a lot of new businesses bringing in tons of workers, like Amazon and Shopify, but nobody at the municipal level is asking where these people are going to live. It forces more and more people out of the city.
How did we end up with such a splintered city council with no cohesive vision?
R: Vision Vancouver’s implosion caused a lot of it. When they first came in, they worked in lockstep and had a strong housing policy. They were very pro-developer. But with them gone, it’s become much more complicated. It’s very hard to run as a candidate here in Vancouver. It’s led to this, with five different parties spread between ten councilors. The voters are very confused.
How is the current council doing overall?
R: Jean Swanson in so many ways typifies what’s happening. A year before she was elected, she helped homelessness activists take over the council chambers in a protest for almost a day. Now, she’s elected and needs to transition to a more pragmatic stance. She’s struggling with that. She’s voted down every single rental project because they don’t go far enough. She feels that she represents those who make under $30,000 per year. But you can’t build things like that without huge subsidies, and that’s not happening. Meanwhile, there’s Colleen Hardwick. What’s funny is that Hardwick and Swanson are at different ends of the political spectrum but vote against rental projects together every time.
A: There’s such a NIMBY feeling in this city. Nobody wants these lower income apartments near them. Aside from the two named before, the other eight council members are trying to be very centrist and pragmatic, though some have begun to lean to the right of the spectrum. I worry that if the council leans too far right and gets a “tough on crime” sort of stance, that really won’t go well with the city’s large homeless population. It will be interesting to see how things look at the next election. The Green Party, with three members on the council, doesn’t have strong leadership. They often vote against each other and don’t have a solid vision.
How do you see the next election two years from now going? Would you run again?
A: If the field looks just as diverse as it was last time, you’ll really need a party behind you. There were over 70 candidates for council last election. Nobody has the attention span to learn about everyone. The way they organized the ballot last year was a mess; it was completely random and impossible to find who you wanted to vote for. I would consider running again. We’ll see how it shapes up.
R: It’s a big financial and family hit to run again. So, I don’t feel overly compelled to run.
A: It depends on your motivation and if you’d prefer to affect change from inside or outside the council.
Are you optimistic about the city of Vancouver over the next twenty years?
R: You need to be optimistic. It’s a fantastic place and it always will be. People are always going to want to move here and live here.
A: I am. I’d even like to see Vancouver make a play for the Olympics again in 2030. There were some bumps in the road, but it brought some great things to the city like the Canada Line and Olympic Village. Maybe it could be the shock to the system that the city needs. I am discouraged at the provincial level though – some policies have been actively discouraging growth in the city centre and forcing more of a sprawl. That’s a policy from 50 years ago, not one that suits the world today.
Favourite neighbourhood: R: Yaletown; A: Yaletown
Favourite bar or restaurant: R: The New Oxford; A: Boston Pizza (for the kids)
Book you would recommend: R: Happy City by Charles Montgomery; A: Paradox of Choice by Barry Schwartz
Piece of advice you would tell your 18 year old self: R: Reap what you sow (put love out there and it will come back to you); A: Chase a bunch of stuff that represents your interests versus chasing one thing you like (follow all of your passions)
Something you have purchased for under $1,000 that has had a positive impact on your life: R: A cat; A: Movie projector to watch movies at home