A Limerick (and a reply to a response to a critique of a study)

John Rose posted a response to my critique of his study this morning. Almost immediately after I was alerted to the posting (via Kerry Gold), we met up to chat at Sweet Obsession cafe. In appreciation of this turn of events, I offer this limerick:

John Rose is a very nice guy

Despite our dispute o’er supply

We just met for tea

And we mostly agree

Where not, please see my reply

He really is a nice guy. And in order to insure our back-and-forth doesn’t become too tiresome, I’ll offer just a quick reply.

  1. Though I replicated John’s Census results from 2001-2016 for Vancouver, I apparently did not replicate his results for other metro areas. I admit, I didn’t catch this, since I was focused on Vancouver (and since I ran the replication of his 1.19 ratio of new dwellings to new households very quickly, before he’d provided his full report). I don’t know why his results and my own differ for metro areas beyond Vancouver, but it’s worth looking into! The data should be from the same source (Statistics Canada), but sometimes they report things differently in different documents, and it’s also entirely possible that errors were introduced in transcribing data (in which case, they were probably mine! My response was hastily assembled). Though it does not change the results for Vancouver, it’d be good to nail down overall dwelling count and occupancy changes.
  2. As John notes, the Census does not offer guidance with respect to how their procedural changes affect underlying dwelling count data between 2001 and 2006. But in noting their newly inclusive criteria for expanding the count of secondary suites, they clearly point out how single-family dwellings changed to duplexes in their structure data. This implies that each of those dwellings formerly counted as one unit (but containing a secondary suite) would henceforth be counted as two or more. As we know, Vancouver has a LOT of secondary suites, and this shift in classification both could and should have boosted the count of dwelling units significantly, even without any new dwellings being built or added. Worth noting as well that new secondary suites are the LEAST likely to show up in permitting data (though the Metro Van databook for 2017 at least tries to capture them). It would be great to get more from the Census on the characteristics of “dwellings unoccupied by usual residents.” On a related note: I’d love it if someone could point me toward or carry out an intensive study of how the Census counts dwellings in Canada!
  3. John acknowledges the awesomeness of the construction permitting data, but does not (yet) engage with how much better it fits new household formation than census counts of dwellings, indicating a shortage rather than a surplus of supply. I’ll look forward to seeing his comparison between construction and census data if he’s able to pull one together! (Both of us have time constraints involving stacks of grading and lots of other work on our plates).

Otherwise, as I said, John Rose is both a nice guy and clearly well-intentioned. He mentioned during our conversation that his study was motivated over concerns about new construction in the Agricultural Land Reserve (ALR) in Richmond. On this point, we clearly agree. The ALR is worth saving, and we don’t need to expand our housing supply any further out into Vancouver’s agricultural and wild lands, which is part of why I focus on densifying single-family residential neighbourhoods as the best path toward making Vancouver a more affordable, more inclusive, more lively, and more sustainable city.

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Overbuilding vs. Undercounting

As mentioned in my previous post, the sensational claim that Vancouver has built 1.19 dwelling units for every new household added since 2001 has been making the rounds, leading many people to suggest Vancouver has over-built for the past fifteen years. We don’t need any more supply, they suggest! First, make better use of what we’ve got!

Here I want to offer an alternative theory: We haven’t been overbuilding at all. But we have been undercounting.

First let me reproduce the numbers behind the claim. Here’s what happens when we compare counts of dwellings in 2001 and 2016 to counts of households across the same years.

RatioNewDwellingsNewHHs-2001-2016

Sure enough, Vancouver clocks in at a ratio of 1.19 Newly Counted Dwellings to Newly Counted Households between 2001 and 2016. BUT two things bear observing. 1) Vancouver isn’t especially unusual in this regard, and 2) I used the words “Newly Counted” rather than “Newly Built” for a reason.

It’s hard to count dwellings. I used to work cleaning up census data for public release as a post-doc with the Minnesota Population Center (beloved home of IPUMS census microdata files freely available to everyone). As a result, I have some idea how messy census data can be. Counting people is difficult at the scales at which censuses operate. Counting and classifying dwellings is only the first part of that endeavor. But every census year, the folks at Statistics Canada work toward getting better and better at their jobs. Everyone there deserves a raise!

Unfortunately, sometimes when people at the Census get better at counting, it screws up our ability to perform decent historical comparisons using the data. (A similar problem, of course, plagues homeless counts). In 2001 and again in 2006, the people working on the Canadian Census tried out some new techniques for counting dwellings. They footnoted these techniques, and raised flags about data comparability (for more follow-up on the links above), but I don’t think anyone has adequately accounted for their effects on our estimates of occupancy rates. So let’s do a little comparison. Here’s the proportion of dwellings occupied by usual residents from 1991-2016.

PercentDwellingsOccupied1991-2016

Notice how EVERY single one of our top fifteen metropolises shifts down together in occupancy between 1996 and 2006? By 2011, nowhere in the country had an occupancy rate anywhere near the (frankly unrealistic) highs of 1996. That’s a big old red flag that the methods Statistics Canada incorporated into the census for counting dwellings across these years underwent some pretty important changes, challenging comparability across different Censuses.

So, if friends shouldn’t let friends run historical comparisons of Dwelling Occupancy (by usual residents) using the 2001 and 2006 census years, then what data SHOULD we use to assess new supply? Fortunately, we have CMHC construction data! This is provided to Statistics Canada via surveys of municipal permits. Not all metro areas have this data made public, but metro Toronto, Montreal, Vancouver, and Winnipeg do! Let’s test construction against some census data, shall we?

First, let’s look at completions data (referring to new dwelling units added to the market) for five year periods. How well does this compare with the number of people who report living in a new dwelling unit in the Census at the end of the period? I matched up the timelines for census data (which always uses the past five years leading up to the Census, which happens in May) and completions data (reported on a monthly basis). Are we building a lot of homes that no one reports living in?

Completions2NewHousing1991-2016

Wow! Quite the opposite, it would seem. In early census years, more people report living in new homes than we have permitting data for.* Nevertheless, overall there’s a very close match between permitting data for new homes completed and census data on who reports living in a new home! This makes me feel better about both data sources. I read this to suggest that the permitting data is probably our best source for how much new housing we’re adding in a given metro area. For sure, it may miss internal subdivision of units and other sneaky additions that can be made to our housing stock, but it probably captures most new supply. Moreover – and this is important – very few new homes would appear to be empty – or even occupied by anything but their usual permanent residents. What do you know? When you build new homes for people, they report moving into them!

Ok, ok, so people like new homes. But what about the old homes destroyed to make the new homes? Good question. We haven’t really matched up new households between census years to new building stock yet. With both completions and demolitions data we should be able to track how many net dwellings we’re adding. I’m having a hard time getting all of the demolitions data I’d like, but drawing from the Metro Vancouver housing data books from 2010 and 2017, I can pull together enough demolitions data to get us back to 1999, and then impute the rest of the way back to 1996. Let’s compare new households counted across census years to net dwellings constructed during the same time periods** in Metro Vancouver. Just for kicks, we’ll throw in the additional number of dwellings counted during the same period.

NetConstructiontoNewHHs1996-2016

Wow! New households occupied by usual (or normal) residents very closely tracks net construction (completions – demolitions). In recent years, the relationship is almost one to one. In earlier years, we actually added more new households than we did net permitted housing units. Why? Well, we probably found and/or counted some new households living in basement suites and other internal subdivisions not captured by the permitting data. After all, the census would appear to be getting better and better at finding these things! Yay!

Key points for the day:

  1. Census workers should be paid more.
  2. Friends don’t let friends use intercensal comparisons of dwelling counts to establish trends during years when dwelling count procedures change.
  3. People move into new housing when we build it!
  4. There is very little “slack” in the relationship between household formation and supply of housing in Vancouver – so adding new supply is definitely something we should be looking to do.

 

* could be a weighting issue, an inaccurate reporting issue, or an incomplete permitting data issue.

**- this time I’m being a little more conservative in matching, using net data on previous years and just ignoring the period from Jan-May of the census year in gathering completion data.

[Thanks to Richard Wittstock for sharing his spreadsheet on permitting data, which helped me track down sources for the above!]

[Addendum, Dec. 4th, footnoting sources: After some frustration trying to find dwelling and occupied by usual resident household data for 1996 and 1991, I used hard copies of Census reports for 1991 and 1996 from UBC Library to find dwelling count data, then compared to household counts from Census reports in on-line community profiles to find households occupied by usual residents. This looks notably different from results produced by Andy Yan in the Vancouver Sun earlier this year. His results – for Vancouver only – look much more realistic! The underlying issues with comparing dwelling counts across 2001 and 2006 census years remain (though the trend may vary – in Andy’s data there’s actually a marked drop in non-occupied units in 2001, which I find fascinating), but I’m following up to try and track down better stats on these years. Other sourcing and data matching should be apparent from the descriptions above, but it’s worth noting that the proportion of residents identifying themselves as living in housing built in the five years leading up to each census comes mostly from census profiles, drawn from census long-form information, weighted to reflect households. I also drew this data from on-line analyses using UBC’s subscription to the CHASS interface with public-use census micro-data for some earlier years. Then I compared these figures to Metro Area-specific construction data for the five years leading up to the Census, including the months of January-April in the Census Year itself. Censuses, of course, are usually carried out in May. I was more conservative in estimating net dwellings constructed, counting only completed units up to the year ahead of the census year rather then extending into May, which allowed me to link up yearly demolitions data from Metro Handbook(s) – linked above. This means there may be slightly more net units added over a given time period – four months worth – than are tracked here. At the same time, I’m not entirely certain how and when newly constructed units get added to Census counts of dwellings and households in the process of preparing the Census! I’d really love to get a better handle on how Census counts of dwellings work… and possibly fail to work… in a practical and time-lined sense. I’m a big fan of their illustrations for how to classify units! Aren’t they vaguely adorable?]

Notes on the “Myth” of housing supply

Much has been made of a recent study purporting to demonstrate that adding to supply has done little to nothing to bring greater affordability to Canada’s most unaffordable cities. Though I’m loathe to keep it in the limelight, I feel some responsibility to respond to the study, both because I was quoted in its initial media roll-out (despite not having had a chance to see the study), and because once the study was finally written and released it cited me – kind of – through an old press release for my book (To the author: thanks for citing me, though I might also recommend actually reading my book!).

Unfortunately, I need to start by noting that the study itself is not high quality, either theoretically or methodologically. The terms supply and demand are not conceptualized in the way the economists who more or less invented them use them (i.e., as terms in the balancing equation that constitutes the market pricing mechanism), but rather in somewhat idiosyncratic fashion. In part as a result, I initially found it a little confusing to respond to the study. I certainly agree that widening inequality makes our general reliance upon market-distribution of housing problematic for insuring equitable outcomes. In other words, the whims of rich people for a second or third home carry way more weight in the market than the shelter needs of poor people. That is a real problem that would be entirely consistent as an interpretation of the study’s findings. But that’s not the same as arguing that supply doesn’t matter, and indeed would even suggest that adding lots of non-market housing (new supply!) would be a direct way of insuring the housing needs of poor people outside of the market.

It would seem to me that the only reason to suggest supply DOESN’T matter is to effectively take off the table many policy options that might help address our current housing affordability issues. It’s kind of like we’re all in a sinking boat. Most of us are saying, “we’ve got to bail out this water and plug that leak in order to stay afloat!” But someone in the boat is picking a fight, arguing, “No! Look, we’ve tried bailing out water. Look at all the water we’ve bailed out! But now we’ve still got water in the boat. We should stop bailing out and just focus on plugging the leak.” That’s an interesting strategy, but I’d rather stick with bailing out and plugging up at the same time. (I’ll leave the economists out there to keep providing other metaphors).

So yes, I’ll continue to argue for more supply – especially by enabling more housing options on all that single-family residential (RS-zoned) land in and around Vancouver currently reserved only for millionaires. But I’ll ALSO continue to suggest we should be doing things to make the housing market work better, including (but not limited to):

  • Taxing Vacant Homes (and vacant lots!) like Vancouver’s new Empty Homes Tax
  • Raising Property Taxes, esp. in progressive fashion
  • Rebalancing tax burdens from income to property, as with the clever BC Housing Affordability Fund proposal
  • Cap the currently unlimited tax exemption of capital gains from sale of primary residence

All of these things would make investment in housing as a commodity less profitable and help remove some incentives currently in place to sit on empty properties, without renting them out, in order to accrue the capital gains by doing nothing as the property appreciates (e.g. speculation). But if we’re truly concerned about housing affordability, let’s not tie one hand behind our backs. Let’s keep bailing out water and plugging the leaks in our housing market at the same time.

What about the methods of the study themselves? They need some work. For instance, the author uses different measures and different data sources to compare affordability across time, with the most recent data (taken from Demographia – not gonna link to them) also the least transparent. The author also only focuses on market purchase price (as opposed to rent and/or cooperative share price), effectively setting aside those for whom affordability is a more life and death matter. I’m not going to do a deep dive here, in part because with respect to purchasing affordability, even had the comparison been carried out more carefully, the same results would obtain. There’s no doubt Vancouver has gotten more expensive in recent years!

But what about that supply issue? Have we been overbuilding as much as the author suggests, adding an eye-popping 1.19 dwellings for every new household created since 2001? I replicated this result based on census data I gathered right after the first media report came out, and it deserves its own blog-post (up next! spoiler: I’m pretty sure we’re not overbuilding). Before I get there let me leave you with recent vacancy rates for rentals in Metro Vancouver. If we’ve got too much supply, it sure hasn’t hit the purpose-built rental market. Latest update just came out. Good news! We’re almost back up to 1%.

Vacancy-MetVanHouseBook

 

Losing my religion

From the start, sociologists have been fascinated with how city-living influenced morality, religion, and mental life. Even medieval proto-sociologists, like Ibn Khaldun, wrote about the “natural groups” of Bedouins and sedentary town folk, chastising the latter for the corrupt state of their souls:

Sedentary people are much concerned with all kinds of pleasures. They are accustomed to luxury and success in worldly occupations and to indulgence in worldly desires. Therefore, their souls are colored with all kinds of blameworthy and evil qualities. The more of them they possess, the more remote do the ways and means of goodness become to them. Eventually they lose all sense of restraint. [link]

Where Khaldun saw moral decay in the settled urban life, Simmel (1903) saw the rise of individualism and a blasé attitude.

If one asks for the historical position of the two forms of individualism which are nourished by the quantitative relation of the metropolis, namely, individual independence and the elaboration of individuality itself, then the metropolis assumes an entirely new rank order in the world history of the spirit. The eighteenth century found the individual in oppressive bonds which had become meaningless-bonds of a political, agrarian, guild, and religious character. They were restraints which, so to speak, forced upon man an unnatural form and outmoded, unjust inequalities.

Put differently, Khaldun and Simmel roughly agree on the underlying urban dynamics, if not on their desirability. Left to its own devices, city-living reduces the hold of organized religion upon the soul. And yet, the very organization of religion demands a certain gathering together of like-minded people. In effect, organized religion requires the kind of density only really found in cities. Bit of a conundrum.

At any rate, this is really just setting up my curiosity over how religion is distributed by metropolitan area in Canada. Unlike in the US, we’ve got Census data (or in the case of 2011, National Housing Survey Data) on religious affiliation. It’s definitely not the same as religiosity or fervor or spiritual life. But it does tell us something about the reach of organized religion. As it turns out, all across Canada, most Canadians still have some religious affiliation.

 

Religion-Metro

Quebec remains decidedly Catholic, even if in many cases this marks more of a cultural affiliation than any belief or strict adherence to dogma. The vast majority of Quebecois still identify as Catholic, even in Montreal (64%), the Canadian capital of all things blasé. Nevertheless, Montreal, like other big (one million plus) metros, is far more diverse in the kinds of religion people practice than the rest of Quebec, with vibrant Jewish and Muslim communities. Metro Toronto adds large Hindu, Sikh, and Buddhist constituencies to the mix, and is also (no surprise) decidedly less Catholic than Montreal.

In general, moving westward from Toronto, metropolitan residents are more and more likely to have no religious affiliation whatsoever. At the far western edge of Canada, little Victoria is the least religious of all, with fewer than half of its residents declaring any affiliation! Of note, Vancouver remains the least religious of the big metro areas, beating out Calgary, Edmonton, Toronto, Ottawa, and Montreal in roughly that order and following a West to East trajectory. Kind of interesting!

Yet Vancouver is also the most Sikh and most Buddhist part of Canada. Here the gateway status of Vancouver mixes in interesting fashion with its history of immigration. This leaves open an interesting question. As different immigrant groups arrive in Vancouver, are they making it more religious? Does Vancouver’s overwhelming secularism affect minority communities the same way it does everyone else? Or are new religious communities expanding in Vancouver as different groups gain density and the ability to organize more effectively?

Here I’ll just use visible minority status as an (imperfect) shortcut for different groups in Vancouver, breaking down religious affiliation accordingly, and comparing to the distribution we see across Canada.

Religion-Metro-VisMin

The figure above really demonstrates the assortment of religious tradition by different minority groups (as well as non-minorities). South Asians in Metro Vancouver are much more Sikh than in the rest of Canada. Arabs and West Asians are mostly – but not entirely – Muslim just about everywhere you go. South Asians, Filipinos, and Arabs are the most religious minority groups, despite their differing religious profiles. By contrast, Chinese and Japanese minority groups are the least religious (in marked contrast to Koreans – see the research of Judy Han on this, or just watch Kim’s Convenience).

Vancouver as a big metro area really is less religious, across nearly every visible minority group, than we see for Canada as a whole. The proportion of people identifying as having “No Religious Affiliation” averages almost 50% higher across visible minority categories in Vancouver, as compared to Canada.

Why? Good question. Has Vancouver led us to become too “accustomed to luxury and success in worldly occupations and to indulgence in worldly desires,” As Khaldun might have it? Or maybe Vancouver is just the Canadian epicentre of, “individual independence and the elaboration of individuality itself,” as suggested by Simmel. That western gradient might suggest a potent mixture of frontier-mythologizing, migrant self-selection, and Simmel-style urbanism at work. But I have to admit, I’ve got no problem going with Khaldun if it means I can pit local churches, mosques, and temples against the sheer ubiquity of Vancouver’s fancy sports cars.

Ok, here’s REM:

 

 

The World Comes to Canada

New immigration figures have come out from the 2016 Canadian Census! I should know: I spent three hours Wednesday talking about them on local CBC afternoon radio shows across Canada. To modify the great Johnny Cash…

I’ve been everywhere, man, I’ve been everywhere…

I’ve been to Toronto, London, St. John’s, Halifax, New Brunswick, Cape Breton, Saskatchewan, Winnipeg, Yellowknife, Calgary, and Montreal.

I’ve been everywhere, man, I’ve been everywhere…

I gave a couple of interviews in Vancouver too, but here people just want to talk to me about housing!

Back to immigration, mostly I was working off the handy Statistics Canada press release from that morning. My main takeaways were that:

  1. Immigrants to Canada look increasingly like a little miniature version of the world. For instance, our three biggest senders include the two biggest countries in the world (+ the Philippines)
  2. Immigrants to Canada are increasingly by-passing the big gateway cities (Toronto, Vancouver, and Montreal) and distributing themselves more broadly – especially into the Prairie provinces. Calgary, for instance, now well surpasses Montreal in terms of the proportion of its population foreign-born (29%)!
  3. Big Canadian cities continue to get more diverse. Most big Canadian metros now approach one quarter of their population made up of immigrants, with Toronto and Vancouver closing in on half (46% & 41%). Toronto continues to serve as the main gateway to the world, with Vancouver as a secondary gateway to the Pacific Rim and Montreal as a special gateway with a decidedly French password.

Unfortunately, I really didn’t get a lot of time to play around with immigration data on my own before talking to everyone about the Statistics Canada reports. This is always a little bit worrying: what if I missed something in my coverage? Finally, two days later, I’m checking my work a bit. Mostly it seems to hold up!

Here’s a simplified distribution of Canada’s new immigrants (arriving 2011-2016) according to birthplace from our last census compared to the distribution of the population of the world (2017 data from the Population Reference Bureau).

Can-Arrivals-2016-World-Pop

Recent Arrivals to Canada really do look a lot like a miniature version of the World as a whole! That’s pretty cool. Most of the variation I can make out concerns Canada attracting slightly MORE immigrants than might be expected from:

  • The Caribbean   (hello Haiti & Jamaica)
  • West Central Asia and the Middle East   (a warm welcome to Syrian refugees!)
  • Southeast Asia   (the Philippines is an emigration powerhouse)

On the other hand, Canada attracts slightly FEWER immigrants than might be expected from:

  • Eastern Asia
  • Southern Asia

Why are so few Eastern and Southern Asians coming to Canada relative to their proportions in the world as a whole? From the perspective of Vancouver, of course, that seems like a decidedly weird question. Different cities get different mixes of immigrants in Canada, and Vancouver remains the Gateway to the Pacific Rim. Let’s look at the city breakdown.

Can-Arrivals-2016-World-Pop-by-City

No surprise: the distribution of immigrants into Vancouver is decidedly Asian – and especially East Asian. Toronto’s newcomers also look quite Asian in origin, but more South Asian than East Asian, and Toronto remains more diverse overall. Still, it seems the African, European and American immigration streams remain a little squished in Toronto relative to the world’s population as a whole. Not so in Montreal! There streams are dominated by arrivals from the Americas, Africa, and Europe in proportions exceeding the world population. Thanks for balancing us out, Montreal! I added Calgary to the mix too, and Calgary really demonstrates how Southeast Asians (again, especially Filipinos) are really filling out Canada’s labor needs as fast the opportunities arise to do so. Otherwise Calgary, like Toronto, looks pretty darn diverse!

Just to demonstrate where immigrants are arriving from in conjunction with where they’re going to, I’ve re-plotted immigrant origins by destinations below, separating out the big gateway cities (I’m adding you, Calgary, because you really shine in this census release. I’m expecting a special thanks from mayor Naheed Nenshi!)

Canada-gateways-Origin

Most recent immigrants are still arriving through the big Gateway cities of Toronto, Vancouver, and Montreal. But these metros are no longer dominating migration quite as much as they used to, and where groups go really varies by their region of origin. Some groups, like immigrants arriving from Southeast Asia, are mostly avoiding the big Gateway cities, heading instead to Calgary and other places actively attempting to recruit them via new and improved provincial migration programs.

And with that, I bid our new immigrants welcome! And I offer up the full version of that Johnny Cash song.

The Million-Dollar Mansions and Migrants of Metro Vancouver, 2011 edition

Just who lives in all of these million-dollar and above properties concentrated in Metro Vancouver? I don’t yet have the micro-data for 2016 that would allow a deep investigation. But 2011? That I can do!

Here I’m playing around (once again) with the Canadian Census Analyser maintained by CHASS at U Toronto (access through UBC Library). All my analyses were run on-line: they’re basically just custom cross-tabs from the NHS (our replacement for the long-form census in 2011), sorting by characteristics of household heads and weighted according to sample weights. Metro Vancouver is about as low as I can get as a geographic level for microdata without getting special permissions (and tiny sample sizes).

First I wanted to get a breakdown of who was living in million-dollar homes in 2011 by age and where they lived five years before (2006). This gives us a sense of both who’s lived in these places for awhile, and who bought recently. Note: Even though I refer to these as “mansions” below, I don’t actually know what they look like or even how big they are – I just know they were valued by their owners as over a million dollars. Still a fair amount of money in 2011! (Also worth noting: in 2011 we were still coming off of the Great Recession, which only gently brushed Vancouver…)

Mansions-Migrants-1-AgeLocation

Hey, what do you know? The vast majority of households living in million-dollar homes in 2011 had been living in their places since at least 2006. A good proportion of these householders were older – likely retired – but not actually the majority. Most were still clearly working age. The next biggest group of households are those who moved into their current place from elsewhere in the metropolitan area of Vancouver. Very, very few moved into a million-dollar mansion from someplace in Canada outside of Metro Vancouver. Seriously: who could afford to do so? Most other cities in Canada are far cheaper than Vancouver. So a lot of what we see in terms of people moving into million-dollar mansions around Metro Vancouver are locals trading homes with one another.

What about migrants? People who moved to Metro Vancouver from outside Canada are definitely there, but overall in 2011 they represented a relatively small proportion of million-dollar mansion owners. Even in terms of new buyers, they represent less than a quarter of million-dollar mansion owners who moved in between 2006 and 2011. That’s big enough to have a substantial effect on the market! But by no means did most purchasers of million-dollar properties in Metro Vancouver come from away. Most buying in the years prior to 2011 were already locals.

Of course, people have been flocking to Vancouver from all over the world for quite some time, so even if they’d been in Vancouver for awhile by 2006, they still might’ve been born elsewhere. We can break down million dollar mansion owners by where they were born as well as by where they were five years ago. Here’s what that looks like:

Mansions-Migrants-2-Pob-Location

No surprise: the modal million dollar home owner was born in Canada in 2011 (shaded red above), with another big chunk born in the UK (orange). I put Americans (like me!) in pink, just for fun. The other large group of million-dollar home owners I highlighted come from Eastern Asia (in shades of blue above). Why are so many million-dollar homes in Vancouver owned by immigrants? Some of this, no doubt, has to do with the “skill” and wealth-based selection processes of the Canadian immigration system. But another important part of the story – especially for those in blue – probably involves the enormous real estate fortunes being made all around the big cities of the Pacific Rim (where most East Asian migrants are coming from). A lot of East Asian immigrants to Vancouver are probably housing lottery winners in their countries of origin, and Vancouver property looks relatively cheap from many places across the water! Wealthy East Asian buyers account for over half of those moving into million dollar homes directly from outside of Canada between 2006 and 2011.

But are the majority of migrants moving to Vancouver from Eastern Asia (or elsewhere) moving into million dollar homes? Not so much. Here I break down the proportion of householders living in million dollar homes by place of birth and where they lived five years prior to the 2011 census.

Mansions-Migrants-6-Percent-Pob-Location

Most residents of Metro Vancouver (born immigrants and native-born) live in more modest dwellings, rather than million-dollar mansions. Of note: for those born in Canada and living in Canada five years prior to the 2011 Census, just under 10% lived in million-dollar mansions. Many immigrant groups, but by no means all, exceeded this figure. Those born in the USA, the UK, South and Western Africa, China, Hong Kong, and other parts of East Asia all fell in the 15%-20% range for the proportion of household heads living in million-dollar plus homes. Of course that means the vast majority of migrants, over 80% in most cases, were NOT living in million dollar mansions in 2011.

What about people who moved to Canada from another country in the last five years? Interestingly, this includes a fair number of Canadians. Something to keep in mind when we talk about “foreign wealth!” At any rate, those who’ve recently lived overseas tend, overall, to be even less likely to live in a million dollar mansion than those who’ve lived in Vancouver for more than five years…with two notable exceptions: China and Pakistan.

I don’t actually know what to make of Pakistan – except that it might just be a small sample-size issue. The same sample-size issue probably helps explain why Jamaicans look so wealthy – though it’s possible I’m just missing all the wealthy Jamaican neighbourhoods in Vancouver. For China, it does appear that recent migrants are more likely to live in million-dollar mansions than earlier (pre-2006) migrants. This accords with broader perceptions that Chinese migrants to Vancouver are increasingly selected for wealth. That said, the vast majority of new immigrants from China (over 80%) still weren’t living in million-dollar mansions in 2011.

Now that we’ve got some general idea of the distribution of housing wealth in Metro Vancouver (from five years ago anyway), I’ll try and return to an enduring mystery in my next post: what’s up with low-income households owning million-dollar mansions?

 

Lottery winners of the Pacific Rim

Sociologist Harvey Molotch famously suggested that cities should be understood, first and foremost, as Growth Machines. The big takeaway is that the urban political class and overlapping landholding class tend to agree with the basic idea that growth is good and should be encouraged. For the landholding class, in particular, growth is good for their bottom-line. Land value goes up as more and more people are encouraged to concentrate in the same place (particularly if they’re wealthy people). So big landholders, who also often drive local politics, actively and aggressively push for growth. They’re aided and abetted by numerous other parties, including local media. Along for the ride in more or less passive fashion are local home owners, many of whom might be understood as “lottery winners” as they watch their property values soar. Sound familiar, Vancouver?*

Of course, “lottery winnings” from housing wealth are only really available for people to tap into if they a) sell their housing and move somewhere cheaper, or b) avail themselves of complicated financial instruments akin to mortgages. But this sets up a really interesting dynamic, especially with respect to immigration. People can move from a “lottery winning” locale to a much less dynamic real estate market and pocket a lot of change along the way, arriving as a wealthy immigrant. In places with less developed mortgage systems, this pattern can be further complicated, as sellers will have accumulated few loans against their housing before selling (setting aside, for the moment, those who don’t own property).

What does this imply for immigration around the Pacific Rim? Much of immigration takes place to and from the big “gateway cities” of the Pacific Rim. These gateway cities tend be very expensive markets locally because the flow of international migrants drives much of real estate dynamics. Partially as a result, local prices can drift upward from what might be expected by local incomes. But gateway cities are also quite diverse in terms of the success of their local growth machines. As a result, some “lottery winners” are far wealthier than others. By selling their home in an expensive growth machine and moving to a cheap one, migrants can cash in their lottery winnings.

Where should we expect this to be a feature of immigration streams in the Pacific Rim?

I recently stumbled across Numbeo, providing crowdsourced estimates for property prices by square meter of size (as well as rents, etc.) for cities around the world. I still have a lot of questions about this data (and I’m more than happy to entertain critiques!), but they seem quite transparent in their methods, and I can see their stuff is already being used in (forthcoming) academic articles, so it seems like worthy play material. Using their estimates for property prices (in Canadian dollars), I put together the following comparison:

Pacific-Rim-Comparison-Price

I’ve highlighted Vancouver in blue as a big gateway into Canada. Of note: when it comes to the Pacific Rim, anyone selling their home to the left of Vancouver before migrating to same could arrive with a great deal of wealth, especially if they’re moving from a city centre! Vancouver looks cheap to arrivals from Hong Kong, Singapore, Beijing, Shanghai, Tokyo, Shenzhen, San Francisco, Seoul, Sydney, and even (to some extent) Taipei. “Sell your place, move to Vancouver, and get rich!” could also work at least moderately well for arrivals from London and New York City.

On the whole, this provides some important evidence to contextualize patterns of immigration into Vancouver. Positioned as a gateway into Canada from the Pacific Rim, we should expect a lot of East Asian immigrants to arrive quite wealthy just from selling off their homes in their city of origin! That’s setting aside a host of related issues (e.g., Canada’s selective immigration policies – including its relatively terrible investment class program, China’s selective emigration policies, intergenerational concentration of wealth in single children) that favor wealthy immigrants, as well as others (e.g., China’s capital controls and less developed mortgage system) that complicate the story.

Recent (and generally good, I think!) reporting in Vancouver has emphasized the crooks among Vancouver’s wealthy immigrants – and by all means, go get them! But this has a tendency to obscure how you don’t have to be crooked to arrive in Vancouver with money to spend. You just have to be lucky. And there are lots of real estate “lottery winners” scattered around the Pacific Rim, including many homegrown right here in the Lower Mainland.

Lots more to think about, but I’d love to hear more about a) the Numbeo data! and b) how this maps onto people’s thoughts about Vancouver’s role as gateway to the bustling growth machines of the Pacific Rim.

 

*- This dynamic is viewed as providing home owners a material interest in siding with growth machines. Of note, Molotch’s analysis is pretty solid with respect to North American cities at their founding and through most of the Twentieth Century, and it still mostly holds for central cities. But anti-growth coalitions began to arise and drive metropolitan politics pretty quickly, most dramatically in the suburbs, where NIMBYism and exclusionary policies are pretty much the norm. Lots to say about that, including both that “material interest” can be interpreted quite flexibly and it’s not the the only thing driving NIMBYs, but I’ll set it aside for the moment. How do Growth Machine stories explain other places? Growth Machine analyses are often received critically in Europe, where they don’t seem to work as well, but have been largely embraced – at least in modified form – across much of Eastern Asia. In China in particular, the political economics of urban growth have received a great deal of attention, in particular the collusion between local politicians and local developers (paywalled examples here and here, or see books like Li Zhang’s excellent In Search of Paradise: Middle-Class Living in a Chinese Metropolis for a view from the ground). But less attention has been paid to the more or less passive “lottery winners” of Eastern Asia’s rapid urban growth. In the context of China, of course, urban growth was joined to the privatization of housing, producing many double-winners (as well as many new losers, especially rural migrants to cities). See Forrest & Izuhara (sadly pay-walled) for a really nice view of how intergenerational housing wealth accrues – or fails to do so – in Shanghai. It’s one of my regular teaching tools!