May 26, 2011
A Special Place on the Planet
When other parts of the world have problems people look for safe places to live – and Vancouver is such a place.
BY LESLIE PETERSON
While markets collapse and the real-estate industry is anything but healthy south of the border, Greater Vancouver has weathered the storm remarkably well, says the man who undoubtedly has a better handle on the Lower Mainland’s housing industry than just about anyone.
Bob Rennie, owner of Rennie Marketing Systems – a company at the forefront of marketing real estate and new developments nationally and internationally — attributes our relatively buoyant market to a variety of factors, due in large part to Vancouver’s unique qualities, economists having deemed us the best place in the world in which to live.
“We have to understand that Greater Vancouver did all this without any real manufacturing, without being a head-office city and without being a financial centre,” he explains. “We are a very special place on the planet and when other parts of the world have difficulties people start to look for safe places. We’re one of them. We’re socially safe, we’re financially safe. When you just look at the package, we have to plan that people are coming. The money comes then the people come.”
The people came for the Olympics, certainly, however the economic downturn preceding the Games proved beneficial in that it kept building in check, thus avoiding an oversupply, he says. “So many developers put down their hammers and put projects on hold or shelved them between 2008 and 2009 that that vulnerable Olympic overhang of inventory never occurred.”
Also saving us have been such conservative measures as banks offering construction financing only when 50 to 60 per cent of the development has sold with 15 to 20 per cent deposits in place, as well as restrictive density and zoning downtown, he explains.
Rennie has answers for a recent study that deemed Vancouver the 323rd least-affordable city of 325, a dichotomy given our status as the best place in which to live.
Simply put: “All those surveys are really done looking at local incomes related to the cost of housing. I don’t look at it as much doom and gloom when they say least affordable. We clearly have two markets: one fuelled by local incomes and another fuelled by outside eyes that cannot be measured by local incomes. We’ve probably benefited by $6 billion worth of advertising from the Olympics and then we’re all surprised when people want to move here.”
Buyers from Mainland China account for 85 per cent of the “exponential” increase in housing values on Vancouver’s west side and areas such as Shaughnessy, Rennie says. “So there’s no relevance to the cost of housing to local incomes. They’re excluded because they’re an anomaly.”
An equally important driver of affordability are buyers who are simply transferring equity from sales of existing property. “Sixty-nine per cent of all housing is bought by people who already owned a home, and so this is an equity play, it’s equity moving around. It’s not incomes.” The result, says Rennie, is that there is an insatiable demand for houses in the city under $350,000 or $400,000, leading many new buyers to head out to the suburbs.
“So transportation is going to become the number one factor in decision-making and if a family is buying a house they’re going to buy a house close to where one of the income-earners works and the other person will be commuting.”
Having experienced the downturn several years ago, the baby boomers’ approach to the market has changed immensely, Rennie says. Those who didn’t lose money had friends who did, all of whom are hanging on to what they have left, no longer willing to take risks.
“So I think my industry has to understand how to cater to this new, conservative baby boomer, 46 to 65 years old and to really