From the Daily Tom Durning, this article from Better Dwelling describes how rampant real estate speculation has created “artificial shortages” of housing as global capitals have thousands of vacant homes sitting empty. While this “artificial shortage” does transform local home owners into cash kings, it turns cities inside out with no liveliness.
Paris in response to this vacant house epidemic implemented a tax in 2015 and is tripling it this year to 60 per cent. While trying to deal with vacant property owners over time, there are now “107,000 vacant homes, representing 7.5% of all residential dwellings in the city according to France’s INSEE. Deputy Mayor Ian Brossat told Le Monde that 40,000 of those vacant homes aren’t even connected to the electrical grid.”
Here is the interesting part-just like in Vancouver, local developers argue that more new construction is the answer. But Brossat notes “In a city as dense as Paris, where it is very difficult to build, controlling the occupancy of housing is strategic.” It appears the city believes they have 107,000 reasons more construction is not the solution”. Paris sees occupancy as being more important than adding to housing stock. The vacant housing tax did not work to reduce speculation and encourage renting, which is why the tax has increased 60 per cent. So how many empty homes are there in global cities?
“Paris’ 107,000 empty homes might seem like a lot, but it’s becoming strangely normal around the world. New York City had a whopping 318,831 vacant units in 2015. It’s a hot topic in Sydney, where 118,499 vacant units were counted in 2013. Heck, London considers it a critical issue, and they “only” have 22,000 empty homes. There’s a massive numbers of vacant homes across the globe, but only Paris has decided to take aggressive action to tackle it.”
While the amount of speculation has been scaling with demand, it suggests that the issue is s more complex than just a basic supply and demand problem. Will Paris’ high tax be enough to curb speculation and encourage rental stock?
Paris has a “whopping” 7.5% residential vacancy rating? They are in fact well within averages. Vancouver’s rating was about 7% as measured by actual BC Hydro meter readings a few years back. The next study here shot that number way up based on the census. This turned out to be a highly flawed method that failed to adequately factor in large developments under construction (of course they will read zero), Snowbirds, people in hospital or on vacation, or shift workers who were not home when the census takers knocked.
These stories are always followed up with anecdotal information presented as The Truth … the dark house at the end of a Dunbar block indicates “massive” vacancies in the neighbourhood. According to the census-based report, even the most expensive “vacant” neighbourhoods had an occupancy rating above 85%. This is not some abandoned mining town where the one employer shut down operations, but an urban conglomerate that generates almost $9B a month in a plethora of GDP activity.
Housing prices and rents are high and have not moved much even with anti-foreign money / speculation taxes coming on board. Yet the issue isn’t about supply and demand? Oh really? The Missing Middle is still missing, rental vacancies are still at record lows, 30% of all housing occupies 80% of all private residential land, interest rates are still at historically low levels, and the Metro remains a very attractive place to live.
According to NYC architect Vishaan Chakrabarti who wrote ‘A Country of Cities’, the high density developments on the periphery of Paris at the termini of Metro lines helped to preserve beautiful central Paris where development is indeed very heavily regulated. In effect, districts like La Defense acted as a “pressure relief valve” for the Parisian economy. Not to exactly advocate for that level or kind of development, but anyone with basic summer school Econ 101 can tell you that in all likelihood the Paris vacancy rate would be a lot higher than 7.5% if that pressure relief was not there.
The Metro needs to build thousands of non-profit public rental units targeted to middle and low incomes, and every city needs to open up RS zones to intelligently-rendered infill. These are the Metro’s pressure relief valves, and coupled with climbing interest rates will likely do more to stabilize housing prices and rents than showpiece taxes.
I should add that several additional layers of public transit needs to be integrated into the mix throughout the Metro.
Paris metro accessible is an area like MetroVancouver excl. N/W-Van or outlying regions like Tsawwassen or WhiteRock. The “Vancouver” pressure relief valve is in NewWest, Surrey or Burnaby where plenty of affordable sub $500,000 condos can be had. But of course that is not “Vancouver” and not close to the beach !
And yes, we could do more to rezone arterial roads like 1st Ave, Hastings, 76 Ave, King Eddie or 41st Ave and allow all of them to be 5-12 stories and not 1 or 2 like today. Plus the odd laneway house in say 1/4 to maybe 1/3 of the SF zoned houses would go a long way to add the missing middle. And/or reduce development permit cycles and CACs, DCCs and BP fees such as $100M for the Burrard @ Nelson FBC tower to the tune of around 250,000 to 300,000 per condo for the city alone plus land value plus actual construction costs. Plus more rapid transit to UBC, deep into Richmond and onto N-shore not just buses.
Many levers have to be moved to bring affordable supply up ! More taxes and regs to not cut it.
If you took the entire population of metro Vancouver and squeezed it into the city of Vancouver you’d have about population density of Paris. Everyone could live in Vancouver and be a lot closer to the beach, And a lot closer to nature in all directions too.
If we had evolved as a city like that we could have subways everywhere as well.
Leapfrogging white picket fences and mall parking lots across our region didn’t give us what everyone loves about Paris. It sure has given us a lot of grumbling.
Many suburbs in Paris are ghettos that only the poorest locals and immigrants live in .. not a model for Vancouver necessarily !
very few parks too .. NOT a beautiful city in my opinion. Vancouver FAR MORE desirable as it is not as dense.
Density has benefits .. and drawbacks !
You hit the nail on the head.
The entire “vacant homes epidemic” is a media-created panic that functions as a useful scapegoat for politicians who are unwilling to do the unpopular thing of advocating for the only thing that will materially impact the affordability crisis: legalize the construction of more housing by de-zoning the swathes of single-family homes fiercely protected by NIMBYs.
There is already a very significant financial incentive to rent out empty housing: the opportunity cost of 12 months/year of sky-high rent. A rarely-applied but costly-to-enforce tax isn’t going to fundamentally change the economics of leaving a home vacant.
Anyone who has ever tried to rent an apartment in Paris knows the ridiculous amounts of bureaucracy required to get approved for a lease. The relatively high vacancy rate in Paris is a direct consequence of the strict tenant protection laws, which puts a lot of risk on landlords who could be stuck with deadbeat tenants for many years before eviction could happen.