There’s no shortage of talk about a Canadian housing bubble:

In Vancouver, the price of a single-family home (as of June of this year) increased 39% to C$1.6 million from the year prior. Does that constitute bubble territory?
In an effort to stop prices from running away even further, I am sure you all know that the BC government has recently imposed an additional 15% transfer tax on Metro Vancouver homes purchased by foreign buyers (people who are not Canadian citizens or permanent residents).
The data that I have seen (here and here) suggests that foreign buyers could make up somewhere around 5-10% of the market. Given that many will now get creative in terms of hiding their foreignness, I am not so sure this new tax will have a dramatic impact on affordability. But it certainly sounds nice if you’ve been grouchy about home prices and thinking “those damn foreigners.” We’ll have to see how it plays out.
Having said all of this, if Vancouver is in fact in bubble territory, would that be so bad? Are we thinking about this the right way?
Here’s an alternative viewpoint.
I recently stumbled upon an old blog post by Tom Evslin (2005) called: Why we need bubbles. I discovered it via it Fred Wilson. Tom’s argument is that we need irrational exuberance because it provides the capital that allows for dramatic overbuilding. The overbuilding of things like rail infrastructure, internet infrastructure and – I’m adding this – housing infrastructure. And once this happens, it dethrones the incumbents and paves the way for future economic progress.
Tom’s focus is on technology, but I couldn’t help but think of the parallels with city building. Is the proposed Rail Deck Park in Toronto so bold that it’s only possible during a period of irrational exuberance? Should Vancouver instead be working to dramatically expand its housing supply instead of trying to tax away a portion of demand? Is a period of irrational exuberance precisely the moment where we lay the ground work for our future successes?
I’m not saying we’re in a bubble. I don’t believe in or know how to time markets. But I am asking whether the bubble headlines are missing the greater opportunity.
Earlier this year, architect Rem Koolhaas of OMA spoke with Mohsen Mostafavi (dean of the Harvard Graduate School of Design) to close out the 2016 AIA convention.
I still remember my first architectural theory class where the professor told us all that Koolhaas was the most important living architect of our time. And today, if you think about all of the stars that have grown out from his firm – such as Bjarke Ingels and Joshua Prince-Ramus – it is certainly a defensible argument.
Koolhaas is generally very critical of globalization and the market economy when it comes to creating good architecture. His view is that “pure profit motives” are leading to cities that are basically not designed.
This is a fairly common belief within architectural circles, which is why many celebrated names would rather work on a museum over a residential condo project. The latter is too motivated by profit. It’s not architecturally interesting.
I, on the other hand, have always believed in working within the confines of the market to try and promote great architecture and city building. I’m not saying that the market is perfect, but profitability is a constraint that every industry deals with. Architecture is no exception.
That said, there are other things that I agree with Koolhaas on. Below are 3 verbatim highlights taken from a Fast Company article summarizing his talk with Mostafavi:
Communication needs an overhaul.
“Architecture has a serious problem today in that people who are not alike don’t communicate. I’m actually more interested in communicating with people I disagree with than people I agree with.”
"To have a certain virtuosity of interpretation of every phenomenon is crucial. We’re working in a world where so many different cultures are operating at the same time, each with their own value system. If you want to be relevant, you need to be open to an enormous multiplicity of values, interpretations, and readings. The old-fashioned Western ‘this is’ ‘that is’ is no longer tenable. We need to be intellectual and rigorous, but at the same time relativist.”
Architecture’s greatest value in the future might not even be architecture.
“Architecture and the language of architecture—platform, blueprint, structure—became almost the preferred language for indicating a lot of phenomenon that we’re facing from Silicon Valley. They took over our metaphors, and it made me think that regardless of our speed, which is too slow for Silicon Valley, we can perhaps think of the modern world maybe not always in the form of buildings but in the form of knowledge or organization and structure and society that we can offer and provide.”
Preservation is a path forward.
"We’ve tried to discover domains and areas in architecture which are not a simple vulgar multiplication of uninspired global projects. Recently, we have looked at preservation. The beautiful thing about preservation is you begin with something that already exists and therefore is already local. By definition, a preservation project is an homage to earlier cultures and mentalities to which you can add a new dimension, a new function, a new beauty or appeal. Almost every impulse signals that globalization needs rethinking or adjustment.”
I just stumbled upon an interesting Architectural Review article from last year called: Architecture is now a tool of capital, complicit in a purpose antithetical to its social mission. The author is Reinier de Graaf, who is an architect and partner at the firm OMA.
The focus of the article is on inequality; capitalism vs. socialism; Thomas Piketty’s book, Capital in the Twenty-First Century (which is now on my reading list); and on how Modernism lost its social mission and got repurposed as a tool that just serves capitalist interests. It went from an ideology to simply an architectural style.
Here is an excerpt:
“Once discovered as a form of capital, there is no choice for buildings but to operate according to the logic of capital. In that sense there may ultimately be no such thing as Modern or Postmodern architecture, but simply architecture before and after its annexation by capital.”
Given that I am initially trained as an architect, but that I work as a real estate developer, this article hits home for me. But unlike the author, I am not as fussed by this intertwining of capital and architecture. In fact, I have always believed that the more architecture can understand its economic milieu, the more likely it can affect positive change.
Of course, there’s the question of whether that economic milieu is even the right one in the first place. I’ll echo this blog post (on the limits of capitalism), by saying that I consider myself a capitalist, but not an absolute capitalist. Capitalism isn’t perfect.
I like Reinier’s description of income vs. wealth (borrowed from Piketty):
He identifies two basic economic categories: income and wealth. He then proceeds to define social (in)equality as a function of the relation between the two over time, concluding that as soon as the return on wealth exceeds the return on labour, social inequality inevitably increases. Those who acquire wealth through work fall ever further behind those who accumulate wealth simply by owning it.
What are your thoughts?
There’s no shortage of talk about a Canadian housing bubble:

In Vancouver, the price of a single-family home (as of June of this year) increased 39% to C$1.6 million from the year prior. Does that constitute bubble territory?
In an effort to stop prices from running away even further, I am sure you all know that the BC government has recently imposed an additional 15% transfer tax on Metro Vancouver homes purchased by foreign buyers (people who are not Canadian citizens or permanent residents).
The data that I have seen (here and here) suggests that foreign buyers could make up somewhere around 5-10% of the market. Given that many will now get creative in terms of hiding their foreignness, I am not so sure this new tax will have a dramatic impact on affordability. But it certainly sounds nice if you’ve been grouchy about home prices and thinking “those damn foreigners.” We’ll have to see how it plays out.
Having said all of this, if Vancouver is in fact in bubble territory, would that be so bad? Are we thinking about this the right way?
Here’s an alternative viewpoint.
I recently stumbled upon an old blog post by Tom Evslin (2005) called: Why we need bubbles. I discovered it via it Fred Wilson. Tom’s argument is that we need irrational exuberance because it provides the capital that allows for dramatic overbuilding. The overbuilding of things like rail infrastructure, internet infrastructure and – I’m adding this – housing infrastructure. And once this happens, it dethrones the incumbents and paves the way for future economic progress.
Tom’s focus is on technology, but I couldn’t help but think of the parallels with city building. Is the proposed Rail Deck Park in Toronto so bold that it’s only possible during a period of irrational exuberance? Should Vancouver instead be working to dramatically expand its housing supply instead of trying to tax away a portion of demand? Is a period of irrational exuberance precisely the moment where we lay the ground work for our future successes?
I’m not saying we’re in a bubble. I don’t believe in or know how to time markets. But I am asking whether the bubble headlines are missing the greater opportunity.
Earlier this year, architect Rem Koolhaas of OMA spoke with Mohsen Mostafavi (dean of the Harvard Graduate School of Design) to close out the 2016 AIA convention.
I still remember my first architectural theory class where the professor told us all that Koolhaas was the most important living architect of our time. And today, if you think about all of the stars that have grown out from his firm – such as Bjarke Ingels and Joshua Prince-Ramus – it is certainly a defensible argument.
Koolhaas is generally very critical of globalization and the market economy when it comes to creating good architecture. His view is that “pure profit motives” are leading to cities that are basically not designed.
This is a fairly common belief within architectural circles, which is why many celebrated names would rather work on a museum over a residential condo project. The latter is too motivated by profit. It’s not architecturally interesting.
I, on the other hand, have always believed in working within the confines of the market to try and promote great architecture and city building. I’m not saying that the market is perfect, but profitability is a constraint that every industry deals with. Architecture is no exception.
That said, there are other things that I agree with Koolhaas on. Below are 3 verbatim highlights taken from a Fast Company article summarizing his talk with Mostafavi:
Communication needs an overhaul.
“Architecture has a serious problem today in that people who are not alike don’t communicate. I’m actually more interested in communicating with people I disagree with than people I agree with.”
"To have a certain virtuosity of interpretation of every phenomenon is crucial. We’re working in a world where so many different cultures are operating at the same time, each with their own value system. If you want to be relevant, you need to be open to an enormous multiplicity of values, interpretations, and readings. The old-fashioned Western ‘this is’ ‘that is’ is no longer tenable. We need to be intellectual and rigorous, but at the same time relativist.”
Architecture’s greatest value in the future might not even be architecture.
“Architecture and the language of architecture—platform, blueprint, structure—became almost the preferred language for indicating a lot of phenomenon that we’re facing from Silicon Valley. They took over our metaphors, and it made me think that regardless of our speed, which is too slow for Silicon Valley, we can perhaps think of the modern world maybe not always in the form of buildings but in the form of knowledge or organization and structure and society that we can offer and provide.”
Preservation is a path forward.
"We’ve tried to discover domains and areas in architecture which are not a simple vulgar multiplication of uninspired global projects. Recently, we have looked at preservation. The beautiful thing about preservation is you begin with something that already exists and therefore is already local. By definition, a preservation project is an homage to earlier cultures and mentalities to which you can add a new dimension, a new function, a new beauty or appeal. Almost every impulse signals that globalization needs rethinking or adjustment.”
I just stumbled upon an interesting Architectural Review article from last year called: Architecture is now a tool of capital, complicit in a purpose antithetical to its social mission. The author is Reinier de Graaf, who is an architect and partner at the firm OMA.
The focus of the article is on inequality; capitalism vs. socialism; Thomas Piketty’s book, Capital in the Twenty-First Century (which is now on my reading list); and on how Modernism lost its social mission and got repurposed as a tool that just serves capitalist interests. It went from an ideology to simply an architectural style.
Here is an excerpt:
“Once discovered as a form of capital, there is no choice for buildings but to operate according to the logic of capital. In that sense there may ultimately be no such thing as Modern or Postmodern architecture, but simply architecture before and after its annexation by capital.”
Given that I am initially trained as an architect, but that I work as a real estate developer, this article hits home for me. But unlike the author, I am not as fussed by this intertwining of capital and architecture. In fact, I have always believed that the more architecture can understand its economic milieu, the more likely it can affect positive change.
Of course, there’s the question of whether that economic milieu is even the right one in the first place. I’ll echo this blog post (on the limits of capitalism), by saying that I consider myself a capitalist, but not an absolute capitalist. Capitalism isn’t perfect.
I like Reinier’s description of income vs. wealth (borrowed from Piketty):
He identifies two basic economic categories: income and wealth. He then proceeds to define social (in)equality as a function of the relation between the two over time, concluding that as soon as the return on wealth exceeds the return on labour, social inequality inevitably increases. Those who acquire wealth through work fall ever further behind those who accumulate wealth simply by owning it.
What are your thoughts?
Share Dialog
Share Dialog
Share Dialog
Share Dialog
Share Dialog
Share Dialog