The real estate war on the west coast: Vancouver's wealthy haves vs. middle-class have-nots - Canadanewsmedia
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The real estate war on the west coast: Vancouver's wealthy haves vs. middle-class have-nots

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Across the street from a run-of-the-mill Starbucks in the Kitsilano neighbourhood of Vancouver is a two-storey Ferrari and Maserati dealership. Locals will tell you with amazement that it is the highest-volume location in North America. Whether or not that’s true, the five homeowners gathered today around a table at the Starbucks want to make clear that Ferraris are not for people like them. Though their homes on the west side of the city may be worth millions of dollars, they do not consider themselves rich. “It’s really hurtful when someone says, ‘You live in a $2-million property, so that means you’re a wealthy person,’ ” says Mary Lavin, an English teacher. “Um, no. Not at all.” Lavin points to her car in the lot, a 1998 Toyota Tercel. “I’ve had one holiday in my life.”

Premica Baines, a retired federal government worker, notes she walked here from her home in Point Grey, which is assessed at around $4.5 million. She even brought her own coffee. “The majority of the people who are not living in the neighbourhood think we have lots of money in our accounts,” Baines says. “It’s not true.”

They do, however, have lots of equity in their homes, which the provincial NDP government has moved to tax at a higher rate. The government announced a change to what’s called the school tax, a levy derived from property values that helps fund the education system. Starting next year, some residents will pay an additional 0.2 per cent on the amount by which their property values exceed $3 million, and 0.4 per cent on the portion above $4 million. (For a $3.5-million home, that’s an increase of $1,000 per year.)

READ ALSO: Vancouver real estate: Why multi-million dollar homeowners are crying poor

The change has deeply angered the west side of Vancouver, where large detached homes perch on leafy, green lots. Residents have launched petitions, staged protests and erected yard signs claiming the tax is “hurting seniors and working-class families the most!!!!” Home values have skyrocketed in the area, but incomes have not. Those who purchased property many years ago don’t necessarily have extra cash on hand.

Around the table, there are multiple objections to the tax. Mainly, the group feels targeted because of their home values. “We don’t think it’s fair that it’s only applied to certain individuals and not others,” Lavin says. “That appears discriminatory.” Lavin bought a duplex in Kitsilano two decades ago for $500,000, and it’s now assessed at just over $2 million. The tax does not apply to her. “My concern is that it can be arbitrarily lowered to a $2-million property, which would impact me.” Recently, a UBC professor called for increasing property taxes on homes worth more than $1 million. “Personally, I’m fearful,” says Lavin.

The effect of the government’s fixation on housing wealth, they say, is to sow harmful social discord. “When you single out a part of the community, and fuel that discrimination by talking about the haves and the have-nots, it’s not only bad policy, it’s bad for our community,” says Jeff Petter, who works for a medical technology company. “We find that is morally repugnant.” (He doesn’t want to say how much his property is worth, but allows it’s “absolutely absurd.”) Baines nods in agreement. “I had dinner with some friends last night, and the person who is renting was attacking the people that were there,” she says. The renter was telling the homeowners to just sell their homes and enjoy the windfall if they were so worried about taxes. “What kind of response is that?” she says.

While the issue of housing has long strained the city’s social fabric, it’s now creating discernible tears. Owning a home here costs 85.2 per cent of a typical household’s income, the worst level ever recorded in Canada, according to RBC. Even a condo eats up half a household’s earnings. Everyone seems to feel like a victim: homeowners fretting about taxes, locals priced out and forced to move to suburbs, and those struggling to find anywhere to live in a place where the vacancy rate is less than one per cent. There is fierce disagreement over the cause of the crisis—insatiable demand or a lack of supply—and, as a result, no consensus on solutions.

As part of an effort to tackle affordability, the NDP government has opted for taxation to reduce demand. In addition to the extra school levy, the province increased and expanded the foreign buyer tax and put in place a so-called “speculation tax,” which applies to vacant homes in select regions. Finally, the province boosted the property transfer tax on high-end homes, and expanded disclosure requirements to end hidden ownership. “We finally have a government that’s serious about housing affordability and is willing to see prices fall,” says Joshua Gordon, an assistant professor in the school of public policy at Simon Fraser University. “That’s not to be underestimated as a force.”

Polls show the NDP’s affordability measures have broad support, but not everywhere. For the first time in years, those who have ostensibly benefited from Vancouver’s real estate boom—homeowners, investors, flippers and the entire industry—feel threatened. “The NDP is creating class warfare, and using real estate to drive the wedge,” fumes real estate agent Keith Roy. Someone, he notes, recently defaced lawn signs on the west side protesting the school tax, scrawling “EAT THE RICH” on them. “Homeownership is being punished,” he says. “Success is being vilified.”

On a recent weekday morning, David Williams is giving a walking tour of his block in Dunbar, on the west side of Vancouver. At 64, Williams is retired from a career in finance, and he walks briskly through the quiet streets describing who bought which house when. His tour is really about how wealth—or hot money, he believes, referring to foreign capital—is transforming his neighbourhood. “The guy across the lane from us, he tore down an old house, built a whopping new house, and he had a Rolls-Royce and a Ferrari in the garage,” he says.

David Williams describes the changing neighbourhood of Dunbar In Vancouver, BC on May 29, 2018. (Photograph by Jimmy Jeong)

The trend for years has been to purchase a home, knock it down and build an even bigger one. The clash of styles—squat, old bungalows next to towering three-storey mansions—bothers him. “Here’s a brand spanking new house, built on spec. I think they listed it for eight,” he says, meaning $8 million. “It’s a f–king ugly house.” It’s rare to walk a block without passing a dumpster filled with refuse from a home construction project. And then there are the four empty homes on his street. He stops in front of one. “They can’t even pay for a gardening service,” he says, pointing to the long, weedy grass.

Williams and his wife purchased a home in Dunbar almost 30 years ago, when it was more of a working-class area. Today, their property is worth $4.4 million, but the neighbourhood feels as though it’s emptying out. “There are fewer families, let’s call it that way,” he says. Halloween once brought upwards of 150 kids to his door. Now he gets maybe 50. A neighbour of his used to collect $25 from every household to purchase fireworks and put on a show once a year. Three years ago, the neighbour returned Williams’s money. Only a few households chipped in, and there hasn’t been a fireworks show since.

If Williams ever sold his home, he has no doubt the buyer would knock it down. But who could even afford it? “Well, not a Canadian,” he says. “The next buyer of any of these houses here is not somebody who earns their income in this province.” Williams says he would gladly accept a 50 per cent reduction in property values if it meant that younger residents, including his own children, could buy into the neighbourhood. But he knows that will never happen. He’s read the news stories about wealthy offshore buyers, and students and homemakers who somehow own multi-million-dollar properties. “For guys like me who pay their taxes year after year, it just pisses you off,” he says. “The government doesn’t appreciate why people are pissed off.”

READ ALSO: David Eby handles every live grenade in B.C. politics. Is he a premier-in-waiting? 

His fear, shared by many in Vancouver, is that the city will become a playground for a rootless class of nouveaux riches. The perception is that this trend is well under way. A few years ago, a television producer launched Ultra Rich Asian Girls, a reality series following the extravagant lives of four young women in Vancouver. (It lasted only two seasons.) Exotic vehicles are not an uncommon sight on city streets, and last year the province’s public insurer jacked up premiums on high-end vehicles since repair costs are becoming a concern. The Insurance Corp. of B.C. recently spent more than $790,000 on damage claims for a Ferrari that crashed into a utility pole. And when a nine-year-old rapper and Instagram personality named Lil Tay went viral recently, she seemed to embody the worst excesses of the Vancouver housing market. In her videos, she crudely belittles viewers for not being as rich as her, poses with Lamborghinis and in high-end condos, all while flashing stacks of cash. Her mom, as it turned out, worked as a Vancouver real estate agent.

The province’s tax measures are designed to address the very issues that so aggrieve long-time residents. By making it more expensive to own homes in Vancouver, especially for offshore buyers or those simply wanting to park money, demand will ebb and affordability will improve. Or so the government hopes. Homeowners like Williams are skeptical. Many believe deep-pocketed foreign buyers won’t be dissuaded by additional taxes. They also argue the tax measures don’t exclusively target offshore wealth, but sweep up those with local incomes, too.

Gordon at SFU argues the speculation tax in particular will bite, however. “It’s difficult to dodge, and it’s not a one-time tax.” Owners of homes left vacant for at least six months of the year in Metro Vancouver and a few other jurisdictions are subject to the tax. Foreign owners and so-called satellite families (households that have high foreign incomes but little local earnings) pay two per cent on the value of their properties, while others pay one per cent. Some may opt to sell or rent out their properties. The province has not said how it will define a satellite family, nor how many households are actually in this situation. But studies have found tens of thousands of wealthy immigrants have arrived in B.C. through programs that offer permanent residency in return for investment. A 2014 federal report of a defunct program found business immigrants declare “considerably lower” personal incomes than those who arrive through some other programs.

Houses line the street of Dunbar neighbourhood in Vancouver, BC on May 29, 2018. (Photograph by Jimmy Jeong)

B.C. Liberal Leader Andrew Wilkinson says satellite families are unfairly maligned. “If they are Canadian citizens, on what basis are you going to say this is an invalid way of life?” he says. “Suppositions are made based on the ethnic appearances of people, that somehow they are this class who are predatory speculators,” he says. (Asked about what responsibility his party, in power for 16 years, bears for the affordability crisis, he demurs. “To look into the past and look for scapegoats serves no purpose,” he says.)

Supporters of the NDP’s new measures contend they are part of a necessary shift in the province’s approach to taxation. “We had a tax system that told the world to come buy real estate here, but don’t work for a living,” says Tom Davidoff, a professor at UBC. Property taxes are relatively low compared to other cities, creating an incentive to buy real estate, but not earn or accurately declare local wages, avoiding the brunt of income taxes. Davidoff says the NDP’s tax measures finally start to address this problem, though it’s necessary to tilt the scales even more aggressively by cutting income and sales taxes, and raising property taxes further. Politically, that would be difficult since it places a bigger burden on seniors who have accumulated a lot of housing wealth.

Already, the reaction to the school tax shows what awaits politicians who wish to tackle that issue—even when steps are taken to forestall blowback. Those over 55 years old can defer payment of the school tax until a property is sold, for example. Given the rapid price appreciation in Vancouver, the amount of tax due is likely to be a very small portion of the sale price. But to opponents, deferring is like taking on government-mandated debt. “I don’t want to be borrowing,” says Sepideh Ziabakhsh, who owns a $4-million property. “I mean, I have,” she clarifies. Ziabakhsh and her husband have a mortgage on their west-side home, which they bought 12 years ago. They also recently drew down from a line of credit to fund a much-needed kitchen renovation. “I’m an optometrist and he’s a lawyer. You would think we have it made, but we don’t,” she says. Ziabakhsh and her husband are not yet in a position to defer, in any event. “If they keep increasing taxes, they’re going to push us—who are middle-class—out of our homes.”

Houses line the street of Dunbar neighbourhood in Vancouver, BC on May 29, 2018. (Photograph by Jimmy Jeong)

Davidoff himself is a target for his support of the new measures. One angry homeowner wrote a letter to his neighbours denouncing Davidoff as a “socialist” and encouraged them to write to his employer to muzzle him. Davidoff wasn’t expecting that kind of reaction, but he’s also not completely surprised. “Back in college,” he says, “someone once told me real estate brings out the worst in people.”

Darren and Hannah have seen the same real-estate-fuelled rage, but for different reasons. The young Vancouver couple run a blog called City Duo, which recounts their experiences supporting new housing developments. The pair often attend open houses and council meetings related to residential real estate proposals to support development. Although they’re homeowners, they have friends who have struggled to find rentals, still live with their parents or moved away due to the region’s housing crunch. More supply of all kinds, they believe, can help. “We believe it’s important for people to know what’s going on so they can have their say,” Hannah says. But the anti-development vitriol is so intense they use pseudonyms online.

People have told them off, screamed at them and come inches from Darren’s face. “There were a couple of times I was concerned I could get hit.” At one open house for a proposed rental building on the west side recently, some attendees demanded city staff throw them out since the couple didn’t live in the neighbourhood. At the same meeting, one man likened the development to a “forced abortion.” The proposal called for 12 units.

Why some residents of a region in the midst of an affordability crisis would oppose development is puzzling to Darren and Hannah. The couple categorize the resistance into three broad camps: those simply afraid of what change will bring; those who feel development plans have been forced on them; and finally, people who simply don’t want change. “They’re in it for their own selfish desires,” Darren says. “They’re happy that their property values have gone up. They bought into exclusivity and feel they’re entitled to it.” While that attitude isn’t exclusive to the west side of Vancouver, neighbourhoods replete with detached homes tend to be the most vocal in opposing increased density. (Ironically, many west-side neighbourhoods have seen their populations decline in recent years.)

READ MORE: Why everyone should buy real estate in…Brantford?

Support for development has come at a political cost for Hector Bremner. He won a Vancouver council seat last year for the Non-Partisan Association, a local political party, running on a pro-development platform. But in May, the NPA board rejected his candidacy for the mayoral election later this year. There were concerns about conflicts of interest, since Bremner works for a media relations firm that represents developers. But Bremner claims he was turned away for his views on housing. “It had everything to do with it,” he says. “There was a takeover of the board of, essentially, anti-housing people.”

Bremner is forming a new party to tackle Vancouver’s housing crisis, and development remains a key pillar. “We are not going to tax and ban our way to prosperity,” he says. The city has made progress in allowing laneway homes and basement suites, but Bremner argues that’s not enough. “Families deserve more than raising their children in the basement suite of some 70-year-old house,” he says. With no city-wide development plan, growth happens on a piecemeal basis. If residents had more certainty about how their neighbourhoods will develop, and that the necessary services and amenities will be there to accommodate new residents, there would be far less tension, he argues.

Indeed, opposition to development can’t be reduced to NIMBYism. Developers have a bad reputation in some quarters. Westbank, for example, is helping spearhead an outfit called Creative Housing, which has the goal of constructing 50,000 rental units in Vancouver and Toronto. Meanwhile, an ad for a Westbank condo called the Butterfly appeared in a Singapore newspaper in February playing up the investment opportunities. The ad trumpeted a 13.5 per cent capital appreciation, while highlighting Vancouver’s low 0.9 per cent vacancy rate. (Westbank says the majority of the units were bought by locals, and those sold abroad were purchased by new immigrants to Canada, not investors.)

Number of Vancouver homes worth over $1 million skyrocketed from 2014 to 2018

2014: Indicated in red, 23 per cent of single-family residential properties in Metro Vancouver assessed at more than $1 million

2018: Indicated in red, 73 per cent of Vancouver single-family homes are worth more than $1 million

The criticism is that developers build not to house people but to maximize profits from investors, speculators and the wealthy. Metro Vancouver’s housing stats lend some credence to that view. In the past 20 years, the region averaged 1,411 market rentals and 421 social housing units. That compares to 16,489 houses, condos and the like for purchase.

These pressures are coming to a head in Vancouver’s Chinatown district. Melody Ma spearheads a group called #SaveChinatownYVR that aims to fend off “predatory real estate developers and speculators,” according to its website. Unchecked development risks erasing Chinatown, and a significant part of Vancouver’s history and culture, the group argues. Walking through the neighbourhood, Ma points out all the ways development has already altered the character of the area. Many of the newer residential buildings, in an attempt to blend in, feature red accents (“Red, China—get it?” she deadpans), while a large green lantern sits awkwardly atop another building. “That actually looks like a mosquito lantern to the rest of us,” she says. Such ersatz features ring hollow, she argues, while the buildings risk displacing long-time Chinatown residents, many of whom are low-income seniors.

“This building is just a big block of gold,” Ma says of a rental complex on the eastern edge of Chinatown. The building’s gold trim seems to glitter in the sun. During construction last year, a firewall collapsed and damaged the small building next to it, which housed the Lee’s Benevolent Association of Canada, a clan association and social club. The group had to temporarily move out. Meanwhile, a 430-sq.-foot unit in the building, which is marketed with the slogan “Where Eastern culture meets Western living,” goes for $1,700 per month.

In 2014, only 23 per cent of houses were worth $1 million, now it’s 73 per cent

Last year, Ma and other community groups vigorously fought a nine-storey condo. Vancouver’s permit board rejected the proposal, the first in 11 years. The site is an empty lot surrounded by a chain-link fence today. Just down the street is a sleek showroom for another condo called Sparrow. She points to the scale model of the condo inside the showroom, which resembles a luxe boutique hotel. “Who is this really for?” she says.

The question might be applied to all of Vancouver. “We’ve had 16 years of a government that refused to do anything on the housing file, except build and build market housing,” says Andy Yan, director of the City Program at SFU, referring to the B.C. Liberals, now in opposition. Meeting at an east Vancouver café, Yan pulls out his laptop and opens a presentation he gave recently to an affordable-housing conference. One slide shows the percentage of homes worth more than $1 million in Metro Vancouver. In 2014, the figure stood at 23 per cent, represented by a cluster of red mostly confined to the west side. Yan flicks through each successive year, and more areas bloom bright red. As of this year, 73 per cent of single-family homes soared above $1 million. “We could have made certain circuit breakers, and we wouldn’t be in this mess,” he says.

Yan knows how divisive conversations around Vancouver real estate can be. For years, he was amassing research showing the influential role of foreign capital, predominantly from the Asia-Pacific region, and how the market detached from economic fundamentals and even our conception of what housing is for. Yan’s findings were met with skepticism at best. He was even accused of fuelling xenophobia. He likens the reaction to climate change denial.

But the recent government policies are a start, he says. He would still like to see a tax on flipping, but the measures offer at least some hope that property in Vancouver will become less of a commodity, and homes will just be places to live again. To get there, prices must slow, wealth must be taxed, neighbourhoods must densify—not just with condos, but affordable rental and social housing stock, too. “It’s a test of civic virtue,” Yan says. “What community can be built from what we’re willing to sacrifice? That’s the test.”

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10 Years After Airbnb, Real Estate Developers See The Money In Home-sharing

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YOTELPAD Miami, pictured above, is just one of the many multi-family developments leveraging the short-term rental trend.Courtesy of YOTELPAD Miami

Airbnb and short-term rental models have flipped the hospitality industry on its head. Since the launch of the Airbnb platform back in 2008, more than 5 million “hosts” have hopped on the bandwagon, helping the company rake in a jaw-dropping $2.7 billion to date.

And while most assume these are mom-and-pop operations — a rented out garage apartment down the street, your neighbor’s granny flat out back, or an open vacation home in the off-season — stats show that more and more pros are joining the game and leveraging this multi-billion dollar industry.

In fact, the National Multifamily Housing Council estimates that about 65% of recent Airbnb bookings were in multifamily buildings — places like apartments, condos and even in-the-works hotels.

The model seems strange for landlords and property managers who have historically made cash off long-term leases and rent costs. But when you dive down deep, there’s a lot of cash to be made — saved, even — by allowing shorter term tenants.

Throw in the fact that many long-term leasees are renting out their units on Airbnb anyway (the NMHC found that 43% of property managers have had short-term rentals occur without their approval), and you’ve already got the demand — landlords just need to stake their claim.

Apartments Turned Hotels

How can they do that? Multi-family developers and property managers are taking a few different approaches. First, there’s the pop-up hotel, a la WhyHotel.

Clelia Peters, founder of MetaProp — an early investor in WhyHotel — explained the model: “WhyHotel works with developers during the lease-up period, when often a significant portion of units lay fallow. It takes those fallow units and basically turns them into furnished, amenitized hotel units.”

Peters said approaches like this, which blend hospitality with residency, have been picking up steam as of late.

“There has been a proliferation of these models — things that exist in the hybrid space between the existing residential leasing models and Airbnb,” Peters said. “So, it’s hyper-amenitized, often furnished units that require a shorter term commitment. We’re seeing more and more models like this popping up.”

According to Zak Schwarzman, another partner at real estate-focused VC MetaProp, the trend’s uptick is a no-brainer.

“It’s no surprise that companies in this category with a clear value prop are receiving a warm reception from the multifamily community,” Schwarzman said. “WhyHotel offers developers significant newfound revenue by managing their yet-to-be-rented inventory as short-term hospitality during a building’s lease-up period. Who would say no to that?”

Stay Alfred uses a similar model, offering an upscale short-term hospitality experience — only in vacant apartment units in prime locations. Once those units are identified, Stay Alfred furnishes them, rents them out and even staffs the building.

For property managers, this can mean everything from more cash and lower operational costs to reduced unit turnover and improved brand awareness, according to Kurt Ramirez, founder of Nine Four Ventures — an investor in Stay Alfred.

“Multifamily owners and developers are faced with constant operational and leasing challenges, and finding partners such as Stay Alfred that increase efficiencies in both are very welcome,” Ramirez said.

Leveraging An Already Existing Trend

There are also models like YOTELPAD Miami’s, which takes a proactive approach to the inevitable leasee-turns-landlord dilemma. The downtown condo community is the first in the city to allow short-term rentals without restrictions.

“We’ve heard many stories of residential buildings having to deal with owners who are trying to skirt local legislation by renting out their units on a short-term basis,” said David Arditi, founding principal of Aria Development Group, the developer of YOTELPAD Miami. “They are typically not allowed to do so given condominium association and zoning restrictions. We thought, why not do something that addresses this head on and gives people the option to do what they are asking for?”

It’s also a major marketing point for the brand, as it offers potential condo buyers an added revenue stream — not to mention more flexibility in their properties.

“We believe the short-term rental option was something the market was seeking but was not being addressed adequately,” Arditi said. “The profile of buyers in the Miami market is largely non-local. Whether they are absentee owners or investors, there’s a strong desire to have the ability to rent units on a short-term basis. It creates maximum flexibility for the owners. People can use their apartment every day if they want or can rent it out 365 times a year, and everything in between.”

Pillow, a start-up based in San Francisco, is another example of how multi-family developers are leveraging the short-term rental trend. The model essentially amenitizes short-term renting, making it a perk for both landlord and resident alike.

Using Pillows’ tools, property managers can completely control all short-term rental hosting in their buildings, as well as share in the revenue, ensure local regulatory compliance and insure against damages. San Francisco’s largest multi-family developer Veritas Investments announced it would start using Pillow late last year.

Still More to Come

Multi-family’s entrance into the short-term rental game may be a little late — but if Airbnb has anything to do with it, it’s likely to expand significantly in the coming years.

Last November, the company announced plans to create APIs that would allow landlords, property managers and multi-family operators to integrate with the Airbnb platform directly. This would mean direct management of bookings, payments and more.

Airbnb also has the Airbnb Friendly Buildings program, which affords revenue-sharing options for multi-family residents and their landlords/property owners. This has been in operation since 2016.

But according to Ramirez, the continued growth of multi-family short-term rental offerings depends on mortgage lenders.

“Over the years we’ve seen the multifamily space begin to embrace the opportunity that partnering with an alternative accommodations brand can bring, and lenders are beginning to do the same — albeit at a slower pace,” he said. “As institutional lenders become more comfortable with this new paradigm we expect to see an increase in short and mid-term stay alternatives financed by debt and paid down by traditional cash flows.”

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Why Real Estate Activity Will Inevitably Slow

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At the Urban Land Institute’s annual Emerging Trends conference

It is normal at this stage of the cycle to wonder about when it will end and how. Everyone from economist groups to industry experts have their educated opinions to offer. So little wonder this was a topic of conversation and debate at the Urban Land Institute’s annual Emerging Trends conference recently held in Boston.

Andrew Warren, director of Real Estate Research for PWC, said during the conference that he doesn’t see a sharp downturn ahead, but more of a plateau.

“We used to talk about the real estate cycle being in the late innings of a baseball game but this extended recovery is getting into unprecedented territory,” he said. “It’s more like the 25th inning, which is the longest baseball game on record. And it’s interesting to consider the Australian economy, which hasn’t had a recession in over 20 years.”

Mary Ludgin, Heitman’s Managing Director of Global Investment Research, had her own thoughts on the subject, saying that “It’s delusional to think we are done with real estate cycles in the US economy. Australia has enjoyed a long expansion in large part from consistent demand from the nearby Asian markets. We don’t have that.”

The debate about when aside, in a report that accompanied the conference, ULI posed an interesting theory as to why growth will slow and how that will affect real estate.

It posits that the seeds for the upcoming slowdown were planted years ago since at least the global financial crisis. Since then growth has been moderate at best. “The key reason appears to be disappointingly low productivity growth,” the report said.

Slowing Productivity Coupled With Slowing Growth

The report also notes that the most recent Congressional Budget Office projections show average GDP growth of just 1.9% in the 2018-2028 period, with job gains averaging 0.5% annually, or a net increase of 830,000 a year. That is 69,000 new jobs per month, versus the 200,000 per month average since November 2010.

To state the obvious: slower GDP growth will inevitably result in lower levels of real estate market activity.

And therein lies the challenge for real estate markets: a slower growth rate and lower levels of future demand could increase risk in any new project.

The answer, according to the report, is for real estate to seek the most productive use of its existing assets as well as identifying the type of new construction needed by size, design and functionality.

Some suggestions:

  • Functional obsolescence is likely to lead to the need for new office space to meet changing tenant demands.
  • The current and future shortage of affordable housing may be met by repurposing other property types such as office, retail and hotel.
  • Consumer behavior will continue to influence and shape development activity in the retail and industrial sectors.
  • Adaptive reuse will likely remain popular as 20 years of successful urban revitalization “has amply illustrated the appeal of adaptability of older buildings in an evolving economy and society.”

Success will come to those markets that tackle their problems innovatively, the report concluded–which will require the right real estate in an increasingly specialized economy. “But success will elude those markets remaining passive or stubbornly applying 20th Century approaches–real estate expansion to ride economic growth–to 21st Century challenges.”

The ETA For a Market Slowdown

Now all we have to do is wait for the slowdown to test this theory. And back we go to the guessing game about an ETA for a slowdown, or recession.

Here’s another to add to the repertoire. “I don’t expect a recession will be as long and deep and some do,” Mark Hansen, a Senior Vice President with Prologis said at the conference. “I think we’re capable of quicker recovery than previous cycles in part from the benefits of technology and from the responsiveness and nimbleness of businesses.”

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Real Estate Agents Answer: What's The One Thing You Wish Sellers Knew?

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We’ve already had agents answer what they wish buyers knew about going into the home buying process. Now, it’s time to turn the tables. We asked some of the industry’s top agents to come clean about what they wished sellers knew before selling their homes. Here’s what they had to say:

Interview a few agents before you commit:

“You owe it to yourself to interview at least three agents in your area before hiring someone. After all, you’re about to embark on a relationship that involves possibly one of the largest financial transactions of your life. In terms of what to look for in a good agent, you want someone with whom you can have a trusting, respectful relationship, someone who knows the area, and someone who has a wealth of past experience. You also want someone who has time to devote to you.”

– Dolly Hertz, Associate Broker, Engel & Voelkers

Pricing your home right is everything:

“The one thing I wish all sellers knew is that pricing their home is everything. If a home is priced correctly, according to comparable sales, then sellers will get their price – and maybe a little more. Conversely, when sellers overprice their home, it tends to sit on the market longer and they often end up getting less than if it had been priced properly in the first place. Buyers know the value of the home and, even in a competitive market, are often not willing to overpay, not to mention that the home may not appraise.”

– Jane Peters, Broker/Owner, Home Jane Reality

Online estimates may not be accurate:

“Sellers often monitor their property value utilizing online estimate websites. Although those tools can suggest a ballpark figure for a home, owners often treat them as the indicator of potential list price. Unfortunately, these estimates typically do not reflect accurate resale values. They don’t offer consideration for a variety of important factors like current occupancy status and the condition of the property. They also fail to take into account the type of sale in situations such as short sales and foreclosures.”

– Earl White, Co-Founder, House Heroes Realty

Great photos get buyers in the door:

“Sellers need to know that an apartment’s online presence (i.e., the photos and description of the property) is perhaps the most critical factor in how quickly and at what price a property sells. It is the first thing that people see when the listing comes to market and it’s what will help them determine whether they want to schedule an in-person visit. If the photographs do not show a space that is inviting, the property won’t get any traffic.”

– Rachel Lustbader, Agent, Warburg Realty

Proper staging brings in offers:

“I wish sellers understood the importance of staging and marketing. Too often sellers believe that buyers can see past the furniture, paint, and noticeable wear. They often cannot. People are highly visual. If your agent suggests some staging, depersonalization, or repairs, it’s not to be mean. It’s to help buyers see your home at its very best.”

– Marie Bromberg, Agent,  The Corcoran Group

Selling your home is a business transaction, not an emotional one:

“The one thing that I wish sellers knew – or better yet, remembered – is that selling your home is a business transaction, not an emotional one. Just because they are in love with their home and they feel that it is special in some way, does not mean it’s without its flaws. Buyers are often more apt to see those flaws and make offers, accordingly. Sellers should do their best to remain rational in the face of realistic offers and feedback. Often, if they can do so, it leads to a better outcome than if they insist on waiting for a better offer that may not exist.”

– Eric D. Rosen, Broker, Halstead Manhattan, LLC

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