Tom Durning passes along a New York Times article from October 21 that now seems dated by fast-changing events:
A Canadian Condo Boom
Although price increases have slowed this year, Vancouver’s housing market is not experiencing a bubble, Mr. Pastrick (chief economist for the Credit Union Central) said. Less aggressive mortgage underwriting practices have helped shield Canada from the credit squeeze that swept through the subprime mortgage market in the United States after the fallout in housing.
The usual voices, from Bob Rennie to David Eby, are quoted – and me too:
Gordon Price, the director of the City Program at Simon Fraser University, said the city erred by abandoning its commitment to maintain a 33 percent low-income housing mix in the Southeast False Creek site. The development is being built initially to house athletes during the Olympics. Later, it is to be converted into condominiums and town houses selling for $600,000 to $6 million.
The city reverted to a 20 percent low-income housing mix because of concerns about cost, said Jennifer Young, a city spokeswoman, explaining that there had been a drop in government financing for low-income housing.
The middle-income component that had been targeted by the previous COPE/Vision Council looked to be about good intentions. But the City could have kept the one-third non-market percentage if it was prepared to take less for the land.
I now wonder whether it would have made a difference to the current financial tribulations that Millennium, the winning bidder, is experiencing.
Ironically, the City finds itself on the hook for back-up guarantees because it took an interventionist approach in order to retain some responsibility until completion. The City decided to hold the land until the project was finished on time rather than sell it outright with no further entanglements.
In turn, it provided a construction loan – an approach unanimously approved by all sides of Council. And now it has to provide additional security, backed by the assets of Millennium, to ensure completion. In the event of default, the land and improvements at the False Creek site revert to the City.
There’s nothing there, that I can see, that suggests the City is overexposed. Indeed, I think it was the responsible approach, in order to ensure that the Village would be built on time.
But politically, that may not matter. Because of the world-wide turmoil in financial markets and the massive government bail-outs in response, people are pissed that the smartest guys in the room, the ones getting very, very rich, were running away with something they didn’t understand. And now it seems government, the taxpayers, must bail them out, while coping with the recession they induced. There’s real anger out there, and November 15 offers a chance for the voters to express it, even if in this case it’s not justified.
As Frances Bula points out in an important column, it may have bad consequences for the continued, competent management of the city.
