'Empty Condo' Phenomenon a Myth

Posted by JZ
Filed in City
June 25, 2009

Is there anybody home?
If you've seen the film Everything's Gone Green you know what the 'empty condo' phenomenon is. Wealthy, overseas buyers snap up Vancouver condos, only to let them sit vacant for years. An entire city of tall buildings sitting virtually empty.

Well, a new study from BTAworks, a research and development division of Bing Thom Architects, suggests that it's just a big urban myth.

You can find the full study in schwanky pdf format here.

Some interesting notes:

BTAworks...examined data from the City of Vancouver, BC Assessment, BC Hydro, and the Canadian Mortgage and Housing Corporation for 2,400 condos in Downtown Vancouver - almost 10 percent of all the condos in the area.

Only 5.5 to 8 percent of study condos were unoccupied.

Condo ownership is a relatively new form of housing for Vancouver. Over 88 percent of condo units in Downtown Vancouver have been built since 1990.

Less than 40 percent of downtown condos have more than one bedroom.

The majority of condos are not occupied by the property owner.

The majority of non-owner occupied condos are owned by BC residents, with a scattering of foreign owners, predominately from the western US states such as California, Washington, and Arizona.

Owner-occupied units are typically worth $30,000 to $40,000 more than non-owner occupied units, and the more bedrooms the unit has, the more likely it is to be owner occupied.

A family with one child in the City of Vancouver earning the median income of $75,000 a year would have great difficulty in finding and paying for a condo bigger than one bedroom, even if condo prices were to fall 25 percent below 2008 assessment levels.

While much of the study provides what I like to term 'duh' statistics, it is interesting not so much that the empty condo myth has been falsified to some extent, but rather, why it began in the first place. Did China's takeover of Hong-Kong and the subsequent exodus prompt mass racism/classism in the form of such urban myths? I really have no idea, but check out the study and post all your problems with it below.

(Photo by Uncle Buddha in the BR Flickr Pool)

Reader Reviews and Comments

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Isn't that an office building you pictured?

Posted by: itis at June 25, 2009 10:34 AM | Quote Comment

Indeed it is.

Posted by: j.z. at June 25, 2009 10:48 AM | Quote Comment

Very interesting. I've heard time and time again that housing prices have skyrocketed due to absentee Hong Kong landlords. If that's not the case, who can we scapegoat now instead?

Posted by: Josh D at June 25, 2009 12:18 PM | Quote Comment

Josh: Things that can't really be scapegoated (high labour and material costs for construction), and NIMBYs.

Gonna zone for buildings much lower and less dense than demand would justify (most of Vancouver is still zoned for single family housing)? Enforce weird building code rules like the one that forbids any housing unit under 400 square feet? Have neighbourhood associations that bitch and moan about any new development (see Chinatown, the west side, and even the West End if it involves any loss of rental housing)? Offload social services onto developers (via "social housing")? Value view cones over functionality? Enforce aesthetic standards via the Urban Design Panel (obviously more expensive buildings will be able to get through this more easily)?

It should be impossible to pretend that none of this comes at a cost, but that doesn't stop a lot of people from trying.

Posted by: Ripley at June 25, 2009 4:04 PM | Quote Comment

I've looked at the analysis (given what data are publicly available) and it has some important drawbacks that call into question the author's findinds. See here: http://vancouvercondo.info/2009/05/the-empty-condo-myth.html#comment-47786

In addition, why does Vancouver have the highest housing costs in the world right now? Three words: real estate bubble. It's popping just like it has in every single other city in the world.

Posted by: oneangryslav at June 25, 2009 6:45 PM | Quote Comment

Josh,

You can always scapegoat the speculators. The people who bought "investment" condos who are now renting them out because they are worth less than what they paid for them. The study says more than half of downtown condos are not occupied by the owner so they are now renting them hoping for a recovery. Since they are paying more for the mortgage, strata and property tax than they are getting for rent the owner won't last long and will have to sell at a loss. Just wait 2 years and real estate prices will be much closer to normal limits.

Posted by: davers at June 25, 2009 7:37 PM | Quote Comment

didn't BC Hydro claim 18,000 condos were empty in April 2008 because they showed they used just enough power per month to run a fridge and nothing else?

Posted by: 4thelulz at June 26, 2009 1:41 PM | Quote Comment

666 Burrard in fact

itis:

Isn't that an office building you pictured?

Posted by: chris w at June 28, 2009 2:46 AM | Quote Comment

So a condo designer is trying to convince us that the empty condo phenomenon is a myth? Sounds pretty fishy to me. After all, IF it is a myth, wouldn't the implication be that more condos are needed, and that council should approve more zoning applications to build more condos. And wouldn't mean more business for BTA?
This study sounds pretty biased and self-serving to me.

Posted by: someguy at July 13, 2009 5:21 PM | Quote Comment

Someguy:

Haven't you noticed EVERY real estate 'expert' that tells us "there is no bubble - hurry up & buy now or be priced out forever!" ... "Ok, there's a drop in housing prices - buy now!" ... "prices are now recovering - buy now!" ... ever bit of it is self-serving, from the real estate board directors to CMHC to the marketing companies (the news gets Rennie's perspective?!?) ... it's one of the only industries that exist that completely directs it's own market.

Posted by: Bullsh*t at July 22, 2009 1:52 PM | Quote Comment