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episode # 296

The Reinvention of the Vancouver Real Estate Market with Frances Bula

Vancouver is changing. Covid, political & policy shifts, housing policy and more. But what does this all mean for those interested in real estate and the City of Vancouver? Legendary Globe & Mail Vancouver journalist Frances Bula sits down with Adam and Matt to survey the changing landscape of the city and her findings may surprise you. Come pick the brain of someone who has been on the frontlines of all things for Vancouver – including real estate – for decades. The results will not disappoint!

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Episode Summary


 

Please tell us about yourself.

I have been covering city hall politics and urban issues for about 27 years, mostly in Vancouver. I write primarily for the Globe & Mail, but also for BC Business. My big focus is cities and how they function. I love them but they’re crazy and interesting. 

I live in East Van in a house that requires constant rodent housekeep. I have one son and three step-kids and they all have housing issues. We built a laneway house for my husband’s eldest and her family. I wrote a series about that and it was the most popular story I’ve ever written. Another son just bought a condo and the other two are renters. Plus, we have a basement suite that we decided to rent out below-market. I had to choose between two dozen very deserving people, which was horrible. 

I am living all the pain points of real estate in the city. We’re constantly looking at how we can finance things, what we can do for our kids, what to do about the house, if we should downsize, etc. 

Can you tell us more about the laneway house you built? That sounds like it was a painful process.

It wasn’t an extreme pain – more like a dull ache for five years. There was never anything dramatic but there were always little things. It was quite an experience! Some city people told me that it was unfair for me to write about my process because I’m in a special zone and that’s why it took five years. But I keep hearing from other people that that isn’t the case. There’s always something that goes wrong. 

It was interesting to go through it firsthand. People kept telling me it’s been worse in the last few years with more regulations and departments that weigh in. Every department is trying to do their best but they each have their own mandate. This affects life for many people in Vancouver. 

Every department is trying to do their own thing with no one at the head figuring out the priority. There needs to be an executive decision about the priority. If it’s net zero, that’s great. But it can’t be everything at the same time. There’s a new head of planning who is trying to fix it all so we’ll see what happens.

You recently wrote an article on the state of real estate in BC entitled, “2021 Real Estate Report: With a push from COVID, the B.C. property market is reinventing itself.” What do you mean by reinventing? 

There were a lot of trends evident before the pandemic and then the pandemic really escalated them. A lot of people don’t think industrial real estate is very interesting but it is. All the stuff they order online is sitting on industrial land. The pandemic really accelerated the demand for industrial land. We’re now seeing multi-story industrial buildings, which developers for years said they couldn’t do. 

When it comes to the office, there’s a debate about whether or not people will come back. And if they do, will it be the same working situation? No one knows yet. Every company is making a slightly different decision. A lot of people are talking about reinventing offices into collaborative spaces instead of cubicles. You may only book the space for a couple of days a week.

Sadly, residential housing is not being reinvented much. That’s a problem around the world. The housing situation we’ve had from post war to the 1990’s seems to have worked but now it’s broken. We’re not seeing reinvention. People are just struggling through the current system, but that’s not solving anything. 

Have you talked to anyone who has ideas for reinventing the residential side?

The ideas people have tend to be very big picture. There’s a debate in cities throughout North America between one group that says just build, build, build – we’re seeing this in California and Oregon with rezoning from single-family to a six-plex. And another group is saying we need to keep out the institutional investors, the banking system is a problem, etc. They’re more concerned about the investors. In Vancouver we hear a lot about foreign investors. The second group believes those investment forces drive up the price of real estate. Whereas the first group is saying the reason those investors are coming in is because of lack of supply. But the second group answers, “Well, if you just get rid of the investors, you won’t need so much supply!” So it’s an unproductive debate and we don’t know whose solution will work. 

There are little ideas here and there. For example, Los Angeles has created some laneway home designs to help speed up that process. But in terms of great ideas? I’m not seeing it. It’s a big, complicated system and everyone has their own narrative about how it works. 

A lot of people have been heading into the Fraser Valley looking for more space. Do you think that will have a negative impact on Vancouver?

What people are saying is no. That’s an acceleration of what happens in big cities, especially university cities, all the time. People come in their twenties, they stay for a while, and then they move out. During the pandemic, you saw a big move out of all the people who were probably going to move out anyway, but decided now was the time. And you didn’t have the influx of new students and new immigrants. There was a real slowdown of incoming people. So I don’t think that pattern is going to change cities.

What I’m curous about is if there’s a dispersal of working throughout the region. Will people be able to move out of the city because there is an office close by to their home in the suburbs or they only have to come to the downtown office twice a week? 

The suburbs are cooler than they used to be! That’s a trend that has been happening for a while – the suburbs have been developing little high streets and neighbourhoods of their own. You can see how these little hubs will allow us to have a larger metro area. And that’s a good thing. 

On the reinvention of office space and coming back to work:

The biggest question is for what purposes do we need to have people together while they’re working and when do we not need it? There’s a compulsion by employers to want to see their employees working – they want to have visual management. Can they break out of that? That will be fascinating to watch. I think it will play out differently in different industries. Everyone is making such personal decisions. It’s often the executives who will make decisions based on what they personally like. 

With the push to the suburbs, there are people who move out to smaller areas who demand city amenities. So will suburbs keep getting better and better?

I think so. People get priced out of the city but they still want those city amenities. That’s why we’re seeing interesting growth in places like North Van, Steveston and Port Moody. 

People who want to be in the city will be. There are even people who live in the city and commute out for work. Some people want to live in a cool, urban place. People who like dense living and lots of amenities around them will live in the city. And with the suburbs developing, people can move out but not feel like they only have one restaurant or one grocery store option. 

In Paris, they don’t have a downtown like we do. There’s not one central area – there are different things in different parts of the city. So there’s not one centre everyone tries to cluster around. I think Vancouver and other cities could become that, which would be good. It would even out the demand of everyone trying to be in the same place. 

What other housing patterns do you see?

I’m currently writing a piece on the Boomers and their housing. We’ve been hearing for 20+ years how all of the Boomers will cash out at once, move into retirement homes, and the housing market will collapse with all the supply. You’ll have to stay tuned for that article! 

There have been experiments in other cities, like New York, in building a purpose-built rental with six large bedrooms with a common kitchen and living area. We haven’t seen that in Vancouver. But we do see people in Vancouver renting homes that were meant for single families and filling the rooms with roommates, which suggests there is a gap. There needs to be a better system for sharing a house. There’s often one person who is the leaseholder, but they’re not the landlord. And the other people are tenants, but they’re not on the lease. A lot of people are living in precarious rental situations like that. That part of the housing market is often ignored. 

Some millennials are saying they’re willing to rent a small space for the rest of their lives in order to not work 40 hours a week and have more flexibility. They may change their mind later on but that’s where a lot of them are at now. 

Can we talk about Indigenous developers?

The Squamish own some land that is exempt from city zoning rules. They’re making decisions about increasing supply and they must feel it’s a good business move. It’s not a charity gesture; it’s to make money and/or provide housing for their people. They can move quickly and the projects they’re planning for the Senakw development are going to be incredible.

I’m not sure how many units you’d have to bring onto the market in order to make a difference for renters. It’d have to be more than 5000/year to improve vacancy rates. We do build a lot in Vancouver; we have a very healthy rate of development. But to have an impact on prices, you’d need a considerable amount of supply. 

There’s also development plans for the Jericho Lands, the Heather Lands, the Broadway-Willington site and a site on Canada Way. Some of these sites do need to follow zoning rules. It’s all going to be built out slowly so it’s hard to know what the impact will be. But the developers won’t be rushing to build everything at once and create oversupply, which would reduce the value of their assets. 

A lot of developers in Vancouver who are trying to develop rental units are frustrated. They feel they can’t get anywhere with the city. So at least some of these Indigenous-developed buildings are going ahead. But I do want to sit down and look at the numbers to see what it would take to make a difference. 

It could make a difference. Both New York and Seattle brought on massive amounts of supply in the last five years and saw rent increases slow or reverse. 

I’m an advocate for letting small builders build because they’re not concerned with not flooding the market. They go for the opportunity they see. If they were freed up to do more, they could flood the market, which would be good for some people.

I think it will be so interesting to see how Senakw goes. If it works, that will show us how much more density we can handle. Other planners and developers will want to try more density if they see it can work. 

On South False Creek: 

The city really wants to develop the South False Creek area and increase density. After seeing the success of the North False Creek area, they realized they could have gone a lot denser with the South.

The whole area was developed in the 1970’s on city-leased land. It was meant to attract people to come and live downtown because Vancouver was losing people in the 70’s. It was meant to be an affordable way for people to live in the city at relatively low density. 

The plan is to start any new buildings on empty land. That will give people in the oldest social housing buildings a place to move to. Once those people have moved out, the city can take out the oldest social housing, around 2028, and rebuild to slightly higher density. 

The eventual plan is to replace everything. There’s also some strata-leasehold and strata-freehold there that they will have to buy out, just like how developers are buying out buildings in the West End. Though the people in South False Creek will have less leverage since their leases are up in 2043. Developers will also have to take into account sea-level change since they’re right on the water. That’s something Olympic Village did which is why they’re higher up than places like Granville Island. 

On the upcoming mayoral election: 

There seem to be four people on the centre-right and it will be interesting to see if some people drop out. Kennedy is the independent and it’s unclear if he will pull together a new team or not. Then there’s parties on the left/green/progressive side. How many candidates will each one run? If they run too many, they will just cannibalize each other. It’s a mucky picture. 

But I think everyone agrees that Kennedy, our current mayor, is vulnerable. He’s had trouble getting things done with his current council. It would only take about 35% of Vancouver voter turnout to pick a new mayor. 

Everyone feels differently about what they want from politics but I think there will be a desire to have a mayor with a defined team. People think, “If we vote for all of these people, there is a plan and I know what will happen with the city council.” People miss the clarity of what Vision was doing. Whether you liked them or not, they were clear about what they were doing. Now it’s a lot of motions that overlap or not getting enough support behind a motion. Every housing initiative is such a toss up. People long for the cohesion of one mayor and one party. 

This is a primarily liberal/NDP city so you have to have someone who can capture enough of the centre. That’s what Ken Sim is trying to do from the right. But it’s a tricky thing to pull off. It’s going to be interesting. If Colleen Hardwick adds more centrist planks to her platform, she might have a chance.

I think it’s going to be narrow either way. If someone can take more of the centre away from Kennedy, that person can win. 

Find out more: 

https://twitter.com/fabulavancouver 

https://www.francesbula.com/ 

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