An intriguing conversation about luxury housing and affordability in Vancouver sprouted on X last week, leading to quite a difference in opinions.
Michael Wiebe, who has a PhD in economics from UBC, made a suggestion that surprised many people.
“We need more affordable housing, and to get it, we need to build more apartments like this,” he posted on X.
The apartment complex he was referring to was the $750-million Vancouver House, a 53-storey Westbank skyscraper that, in 2020, CNN called one of the world’s most anticipated buildings.
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The foundation of his argument was the concept of vacancy chains:
We need more affordable housing, and to get it, we need to build more apartments like this👇.
But how can luxury apartments lead to affordable housing? Two words: vacancy chains.🧵
— Michael Wiebe (@michael_wiebe) September 20, 2024
Essentially, relative to real estate, the concept refers to how a brand new or newly vacated home allows people to move into new homes, which, in effect, creates more vacancies. He goes into more detail in the X thread above.
Some argued that Wiebe’s argument wasn’t taking into account factors like vacancy controls. Others suggested we don’t need more luxury housing, just housing in general.
We asked Wiebe about some of the counterarguments.
“The objection that units have their rents jacked up is missing that these are the current market-rate rates for the new tenants; it’s already accounting for landlords raising rents in between tenants. More fundamentally, for a renter looking for a new place, it’s better to have an available unit (whose rent has increased compared to the previous tenant) than an unavailable unit,” Wiebe said regarding vacancy controls.
“If we don’t build the new housing that initiates a vacancy chain, then the chain doesn’t happen, and renters don’t have units available to move into.”
Keaton Bessey, a property manager and broker, was among those who disagreed with Wiebe’s suggestion.
Okay so “We need more affordable housing, and to get it, we need to build more apartments like this👇.” is engagement farming?
Or just trying to show a clear example of a vacancy chain?
If thats the case, that makes way more sense.
— Keaton Bessey (@kbessey) September 25, 2024
Wiebe admitted that using the Vancouver House as an example was “an extreme example to defend the hardest case.”
“If even luxury buildings are beneficial for overall affordability, then non-luxury buildings will be even better,” Wiebe told Daily Hive Urbanized.
Bessey also had other concerns.
“A lot of these buildings that are designed to look cool are tragedies internally.”
Bessey isn’t wrong, particularly regarding the Vancouver House. In 2021, a severe flood damaged nine floors of condos in the Vancouver House development.
We asked Wiebe about the potential for these types of luxury properties and developments to entice foreign buyers, which is something that governments have been trying to clamp down on.
He called it a chicken-and-egg question.
“Do luxury buildings attract foreign buyers (who wouldn’t move here if the building wasn’t constructed), or do new foreign buyers induce developers to construct luxury buildings? In the latter case, the foreign buyers are moving to Vancouver in either case and so the luxury building acts as a yuppie fishtank to absorb their demand. Given that developers have to fight through zoning and permits, I don’t find it plausible that they would build merely on the hope of drawing in new customers,” Wiebe said.
“They’re going to build where customers are guaranteed.”
He also added that he feels Shaughnessy and the entire West Side do more to attract foreign buyers.
“Meng Wanzhou owned a house in Kerrisdale and a mansion in Shaughnessy, after all. The global elite want to live in mansions.”
Wiebe feels that luxury buildings are a small issue.
“The real story is about getting six-storey buildings in every neighbourhood in the city,” he said.
“We need a new industry of developers who can build mid-rise apartments everywhere.”
What’s your take on Wiebe’s argument?