We’ve had SFU Profs, Journalists, Architects, Developers, and public intellectuals on our show, but never all at once! And we haven’t amassed a panel. Ladies & Gentleman: Michael Geller. This conversation is wide-ranging. Full stop. We discuss how top developers tackle tough times, how Michael’s ideas about real estate investing have shifted, and how those struggling with affordability can catch a break in the toughest of markets. This is a lifetime of experience in under one hour. Get your PADI Level 2, cause we’re going DEEP!
Vancouver Real Estate News, Market Updates, Insider Tips, Stats, & Analysis
Can you tell us a little bit about yourself?
I’m a developer, architect, planner, consultant and a professor at SFU. I also often write for the Courier and the Vancouver Sun. I’ve worked for the Canada Mortgage and Housing Corporation, spending ten years there. I helped to get the False Creek area started back in 1975, then was transferred to Toronto and worked on the St Lawrence and Harbourfront projects.
What got you excited about real estate when you were young?
I grew up in Toronto and would always look up at the new apartment buildings going up. I just knew I wanted to do that.
How did you become a real estate developer?
I joined a private development company in 1981, which went under in 1983. One thing led to another and I became a consultant to another development company. I ended up buying a piece of land from them that I valued higher than they did. I made a million dollars off my first project, but I think you generally need to start small.
You’ve seen Vancouver go through its ups and downs; can you talk about this most recent downturn and your general philosophy on real estate?
I’ve been telling people throughout the years that real estate is all about location, location, location. But I’ve shifted in my beliefs lately and now think it’s more about timing. You may have a wonderful project but if your timing is off, you’ll discover that what goes up must go down. But it won’t go down forever. Eventually, prices will go up again.
What caused the Vancouver real estate market downturn?
I have no idea, but there’s no doubt that our market is influenced by China and other foregin buyers. We’ve reached a price level that is generally unaffordable for common hard-working folk. I think a lot of the downturn is due to the policies targeting those buyers, through the empty homes tax, the foreign buyers tax, and the AirBnB restrictions. I think the AirBnB restrictions might have affected it the most.
Can you talk about the past few months of the market?
There have been more sales in the past 3-4 months, but I think it may be because vendors are becoming more realistic. Eventually, you get so fed up with waiting for a buyer to match your price that you just want to get rid of it.
Do you think the Vancouver housing market is broken?
In some respects, yes. Land prices have gotten out of line. There’s a new attitude toward densification, with more density in single-family neighbourhoods. But construction costs in Vancouver are higher than anywhere else in Canada. Even if I can get approval to put 10 suites on a single family lot, I can’t just rent them for $1,000 a month. It has to be $1,500 or more, just to get the money’s worth.
What is helping, though, is the increased emphasis on public transit and ride-sharing. I was sorry to see Car2Go disappear as I think it’s very important to factor in the cost of transportation into the cost of housing.
Do you have any affordability solutions for the Vancouver real estate market?
I think that home-sharing is a very interesting concept. There are thousands of empty bedrooms across the city and there’s plenty of people who would be willing to live in them or rent them out. We should try to figure out a way of linking these people together. Is there a way to modify the landlord-tenant relationship into a shared living arrangement?
I’m often told that we’re running out of land in Metro Vancouver. We’re not running out of land; we’re just not making good use of it. There’s also the concept that you see in some other countries where every room can be a bedroom. During the day it can be a living room, but at night it becomes a bedroom. Adding to that, there’s recently been a push away from the open-concept style. It’s fine for some people, but it’s not always great for families with small children or for multigenerational living situations. Some people want to have that alone time.
What would you say to people who feel that they don’t want to live the small apartment life?
I would seriously suggest to them that they should leave Vancouver. I know that the jobs are here, but there’s jobs in other places with great ways of life. There are so many towns and cities across Canada that don’t have you spending half or more of your pay cheques on accommodation. I don’t think there’s anything wrong with leaving the city. There’s also plenty of people who live in other parts of BC, stay in Vancouver during the week, then go back home on weekends.
The BC assessments came out recently. What are the problems with BC Assessments?
I never took much interest in property assessments. They typically never had much relation to actual sale prices. But in recent years, the assessments have been getting more and more accurate. We need to distinguish between how we value single-family property and multi-family property, to help encourage people to live in the latter. Let’s separate residential into single-family and multi-family and the single-family owner can pay a bit more in taxes.
Now, about commercial assessments, we see many of the little independent shops closing. This is due to how we calculate assessments for them. We don’t base it on the value of the shop and how much they make; we base it on the fact that the lot is zoned for an apartment building with two levels of retail at grade. We need to change the assessment system to recognize what the current use is and what the future use will be. It’ll be more equitable that way. In some instances, because a property is zoned for future development, the taxes may be as high as the rent.
For residential properties though, if you live in an area that’s been rezoned for future redevelopment, all of a sudden your two million dollar bungalow is worth 10 million. But you can apply for an exclusion under section 19.8, which can save you five thousand dollars or more a year in property taxes. If more people knew about this, it could make it easier to rezone areas if the neighbours are onboard.
I also think that we should adjust the new homeowner’s grant to be relative to the region. There’s no reason that someone in Castlegar, where the 1.5 million dollar limit would be the nicest place in town, should be getting a break in taxes the same way someone in the West End is.
Favourite neighbourhood: Kitsilano
Favourite bar or restaurant: Minerva Restaurant
Book you would recommend everyone read: Use of Lateral Thinking by Edward De Bono
Piece of advice you would give your 18-year-old self: Buy a home as soon as you can, if you can’t afford on your own, buy with a friend or family member
Something you have purchased for under $1,000 that has changed your life: Digital capture device to transfer all my old video recordings to digital