Vancouver condo marketer Bob Rennie brought lots of numbers to his annual presentation to the Urban Development Institute.
In a one-hour speech, Rennie said that 193,000 homes in Metro Vancouver are owned “clear-title” by someone over 55 years old.
The value of these residential properties is $197 billion. That’s up from $66 billion owned clear-title by the region’s baby boomers in 2006.
Rennie noted that $60 billion of the $197 billion of clear-title property is owned by people over the age of 75.
He suggested that these equity-rich boomers are trading down and buying second homes or recreational properties. In addition, he said that they’re helping their children and grandchildren enter the market.
“The Royal Bank of Canada is tracking first-time buyers,” Rennie stated to a full house in a Fairmont Hotel Vancouver ballroom. “Eighty percent-plus of their Vancouver first-time buyers are receiving family funds, 70 percent-plus in Burnaby, and 60 percent-plus in Surrey.
“The $197 billion is fuelling Victoria, but it’s also in Kelowna, on Bowen Island, and at Whistler,” he continued.
Rennie predicted that a coming wealth transfer from baby boomers to their children is going to have a profound impact on the housing market in the coming years.
“I see a wealth-transfer tax coming by 2020—and a huge rush to transfer wealth by the living rather than by the dead,” he forecast.
He pointed out that the regional homeownership rate of 65 percent is on par with the national average of 66 percent in metropolitan regions. And it’s far higher than the 56.4 percent homeownership rate in the region in 1986 when Vancouver hosted a World’s Fair.
Rennie also said that it’s a myth that millennials are leaving Vancouver, noting that the number of 20-to-34-year-olds rose 9.5 percent in the city between 2005 and 2015.
Rennie criticizes neighbourhood groups
As in past presentations to the UDI, Rennie took some potshots at neighbourhood activists trying to put the brakes on development.
“Neighbourhood groups seem to have lost their way and are prepared to sacrifice future generations by choking off supply and hurting affordability,” he declared.
He contrasted these organizations with the San Francisco Bay Area Renters' Federation, which is agitating for more housing supply so that young people can continue to live in the area.
Later in his speech, Rennie said that in Metro Toronto, research indicated that the majority of participants in the planning process are “white male homeowners over the age of 55”. And he claimed that newcomers, including youths and renters, were “particularly under-represented” in these discussions.
“Maybe it’s time to bring in some new stakeholders into the conversation,” Rennie said. “It is seriously time to change the narrative. Neighbourhood groups require more diversity here in Metro Vancouver, too.”
He also stated that if the "narrative on affordability" isn’t changed in the Lower Mainland, there will be more candidates making antidevelopment and antidensity promises in the next municipal election campaigns.
“We will see more and more ‘no tower signs’, just like in Grandview-Woodland.”
Other factors curtail supply
He also highlighted other pressures mitigating against adding to the housing supply. According to Rennie, banks will not fund construction unless 60 percent of condos have been presold. This means that anytime anyone sees a construction crane, it means the project is 70 to 100 percent sold out.
“If a site is acquired today by a developer and requires a rezoning, the condos will not have a key put in the door until 2020 or 2021,” he stated.
Of the 1,694 new condos being completed in Burnaby and New Westminster this year, 86 percent have already been sold. In Coquitlam, Rennie said that 94 percent of the 1,107 completions have been sold. And over the next four years, there will only be 3,312 new condos in downtown Vancouver, with 90 percent already sold.
“The good news is over 4,500 West Side condos will be delivered in 2016, 2017, and 2018,” Rennie added. “The bad news is that inventory is already over 90 percent sold.”
In East Vancouver, the situation is even worse: 95 percent of the 3,500 condos coming on-stream in the next three years have been sold.
“This explains the pressure on land,” he said. “We are going to see a land sale of over $500 per square foot buildable west of Main.”
Rennie claimed that this will lead to condo prices of $1,300 per square foot in this neighbourhood.
Region deserves more attention
One of Rennie's messages in his speech was that there's far too much media focus on Vancouver at the expense of other cities in the region.
He pointed out that the City of Vancouver is home to 650,000, which is about a quarter of the region's population. Vancouver has about 33 percent of the region's jobs.
"If every person that worked in the city wanted to live in the city, the population would have to increase by 197,000," he said. "That would be a 30 percent increase in population."
This, in turn, would translate to an additional 76,000 dwelling units.
In a lighthearted tone, he said that this could be accomplished by building 380 30-storey towers. Or it could be achieved by tearing down 12,666 single-family homes and building 76,000 townhomes at six townhomes per lot.
"Maybe that is what we should be doing anyway," he stated.
False Creek Flats eyed for housing
The real-estate marketer went on to encourage the development of residential real estate on False Creek Flats. It’s a 182-hectare, mostly industrial-zoned stretch of land bounded by Prior Street, Clark Drive, Great Northern Way, and Main Street. It’s currently home to 600 businesses and 8,000 jobs, according to the City of Vancouver.
“There is currently no residential contemplated for the Flats,” Rennie conceded.
However, he said that with limited supply for new housing and with condos around Main Street and East 7th Avenue selling for $900 per square foot, it’s time for planners to re-envision the Flats as a community and as a neighbourhood.
“The Flats doesn’t have the neighbourhood group pressure of putting density into a single-family neighbourhood,” he said. “What if we could double the job goals with contemporary jobs and also build grocery stores, high-tech offices, theatres, and office towers—and as much diversified residential as possible with zero parking? Maybe 10,000 rental apartments with no parking and 500 car2gos?”
Rennie revealed that he contacted the new city manager, Sadhu Johnston, to discuss this idea in advance of delivering his speech.
“Sadhu actually said, ‘Not only there Bob. We have to look at creative uses everywhere,’ ” Rennie said.
Rennie likes a spec tax, but not taxing foreign buyers
Rennie reiterated his call from last year for a speculation tax. But he continues opposing taxing foreign investment in real estate.
“A foreign ownership tax of 10 percent on a $5-million home will not stop a sale or create any affordability,” he stated. “And after six months when a foreign-ownership tax fails, it will only cause racially charged conversations to go beyond where they are now.”
He also suggested that a foreign-ownership tax could have an impact on investment in other areas, including the oil sector and the forest industry.
In addition, Rennie said that foreign students are responsible for more than 26 percent of UBC’s revenue, 24 percent of SFU’s revenue, and more than 41 percent of the revenue at Emily Carr University of Art + Design.
“Can you imagine where tuition would be—where taxes would be—without foreign residents here?” he asked.
He also maintained that his company does not market offshore. And he stated that only 2.2 percent of condo sales at the Rennie-marketed Independent at Kingsway and Broadway went to foreign buyers. He added that less than four percent of his company’s condo sales in Burnaby’s Brentwood Town Centre were to foreigners.
“Nobody here needs to market in China because we have no supply—not even in the $2,000 per square foot properties,” Rennie said. “Grosvenor Ambleside is the only development achieving an average over $2,000 per square foot and they are local [buyers], even the $17-million penthouse.”