Vancouver development is in bad shape now thanks to these taxes and a glut of new supply that was built with financing not available to the average developer
Pre sales are dead. Some projects are in receivership. New Projects are not going ahead
A residential vacancy rate that low means people are deeply stuck - that means the market has almost no slack, and people can't move there. That's a very very bad situation - employers want to hire more people, but they can't get talent because that talent can't move. AND the people who can't move then can't get the better paying jobs they're being offered.
Because development and permitting fees aren’t the problem. People already want to build new homes. We just don’t allow them to do so.
In fact, those subsidies are often part of the problem. The only way to get new development approved in many cases is to include a number of below-market units in the development… even though they are subsidized, that mandate kills the economics of the project. It happens often enough that you start to wonder if maybe that isn’t the point.
Well whatever. Hand vacancy taxes to developers as straight cash incentives to build more. Bonus per unit completed or any other metric that isn't subject to gaming. The point is, make it cheaper to build.
This article is terrible. It starts off talking about high vacancy rates for commercial properties, then segues to talking about housing shortages. Vacancy rates for housing is definitely not in the 27% range implied by the article. They're in the single digits, with the hottest housing markets also having the lowest rates.
Sorting by the census areas with the highest rates gets you areas like Jacksonville, FL, Baton Rouge, LA, and San Antonio-New Braunfels, TX. Superstar cities like SF and NY have rental vacancy rates of 5.5 and 5.4 respectively.
The kind of landlord who is willing to keep a property vacant is not usually a struggling enterprise, unless we are talking about a completely hollowed out declining metropolitan area (which most west coast cities absolutely are not).
In my city, one development in a highly desirable area basically demolished a historic building, built a new one with far more prime retail space including small storefronts and flagship retail (think grocery store or big box store), built it out completely in the interior, totally ready to lease. But in the years since they built the development, the bank branch is the only occupant.
My guess is the bank is squatting on the property. It was probably easy to get a big “revitalizing” property approved, and now they can take a tax write off on multiple retail spaces that they apparently never intend to bother leasing out.
Presumably they don’t want to bother leasing to anyone and actually have to deal with the management overhead of landlording unless someone comes in and pays inflated prices. So they’re happy to sit on it until someone bites. Meanwhile, it’s been an empty eyesore for years now.
Vancouver development is in bad shape now thanks to these taxes and a glut of new supply that was built with financing not available to the average developer
Pre sales are dead. Some projects are in receivership. New Projects are not going ahead
Shouldn't more supply result in lower prices?
Did we read the same article?
> A feature of the EHT is that it focuses on residential properties, not commercial spaces
> [Due to] the shift to remote work during the pandemic, office vacancies remain stubbornly high in many cities.
> With the combination of Vancouver’s EHT combined with the province’s SVT, the taxes are credited with reducing the residential vacancy rate to 0.49%
A residential vacancy rate that low means people are deeply stuck - that means the market has almost no slack, and people can't move there. That's a very very bad situation - employers want to hire more people, but they can't get talent because that talent can't move. AND the people who can't move then can't get the better paying jobs they're being offered.
> the taxes are credited with reducing the residential vacancy rate to 0.49%
Isn't that really, really low and a driver of rent rises?
As long as they don't let anyone build more housing: that'd ruin the character of the neighborhood.
Why not both? Subsidize development and permitting fees with vacancy taxes.
Because development and permitting fees aren’t the problem. People already want to build new homes. We just don’t allow them to do so.
In fact, those subsidies are often part of the problem. The only way to get new development approved in many cases is to include a number of below-market units in the development… even though they are subsidized, that mandate kills the economics of the project. It happens often enough that you start to wonder if maybe that isn’t the point.
Well whatever. Hand vacancy taxes to developers as straight cash incentives to build more. Bonus per unit completed or any other metric that isn't subject to gaming. The point is, make it cheaper to build.
I think you're misunderstanding the problem. Everyone wants to build more. Cities won't let them. It's often arbitrary and capricious.
I think it was sarcasm.
Given that their reply is on decreasing development fees, it seems that they understood the sarcasm.
In my experience, the same people who oppose building more housing also oppose vacancy taxes.
This article is terrible. It starts off talking about high vacancy rates for commercial properties, then segues to talking about housing shortages. Vacancy rates for housing is definitely not in the 27% range implied by the article. They're in the single digits, with the hottest housing markets also having the lowest rates.
https://www.census.gov/housing/hvs/current/index.html
https://www.census.gov/housing/hvs/data/rates.html
Sorting by the census areas with the highest rates gets you areas like Jacksonville, FL, Baton Rouge, LA, and San Antonio-New Braunfels, TX. Superstar cities like SF and NY have rental vacancy rates of 5.5 and 5.4 respectively.
Agreed that the writing is poor and difficult to follow, but the vacancy rate mentioned was regarding commercial properties:
> Portland, Oregon reached another post-pandemic high of downtown office vacancies – 27%
I can’t see it being a bad thing.
The kind of landlord who is willing to keep a property vacant is not usually a struggling enterprise, unless we are talking about a completely hollowed out declining metropolitan area (which most west coast cities absolutely are not).
In my city, one development in a highly desirable area basically demolished a historic building, built a new one with far more prime retail space including small storefronts and flagship retail (think grocery store or big box store), built it out completely in the interior, totally ready to lease. But in the years since they built the development, the bank branch is the only occupant.
My guess is the bank is squatting on the property. It was probably easy to get a big “revitalizing” property approved, and now they can take a tax write off on multiple retail spaces that they apparently never intend to bother leasing out.
Presumably they don’t want to bother leasing to anyone and actually have to deal with the management overhead of landlording unless someone comes in and pays inflated prices. So they’re happy to sit on it until someone bites. Meanwhile, it’s been an empty eyesore for years now.
I wish we didn't have to guess about these things.