UBC Theses and Dissertations

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UBC Theses and Dissertations

Returns on apartment properties for the period 1960 to 1970 in the greater Vancouver area Dale-Johnson, Frank Roderick Arthur


The Vancouver apartment market in the analysis period of 1960 to 1970 has been evolutionary and characterized by fundamental and massive change. The mix of housing starts has moved away from single family predominance to multi-family predominance. Land costs have increased at an accelerated pace as compared to the general economy or as compared to the total cost of housing. Rents have increased at a rate in excess of the cost of living. Tenants have formed organization fronts to oppose landlords. Interest rates have increased rapidly, thus upsetting a balance between yield and debt costs. Housing preferences have changed. Government regulations and federal taxes have altered and thus changed the rules of the game and the net returns to investors. The landlord and tenant act has weakened the position of the landlord, and government intervention, either direct or indirect, has become a very real and increasing influence on the housing market The result has been reflected in changes in the attitudes of investors first towards the increasingly speculative and sometimes irrational bull market that peaked in 1970 and lately to an equally massive and corrective bear market that has yet to run its full course. This study is an analysis of 69 properties located in the lower mainland area. The sample is comprised of both concrete and frame structures ranging in age from one year to sixty years and in size from 11 suites and a $15,000 annual income to 311 suites and a $615,000 annual income. The period under analysis is primarily the years 1960 to 1970 and the area analysed is essentially Vancouver, Burnaby and Mew Westminster. The purpose of the study is to analyse a representative sampling of properties with respect to their operational costs over a period of time and with respect to the yields that investors have obtained on these properties. The study is useful in that data of this magnitude have not been collated outside of the assessors' offices of various municipalities and such data that have been available to the assessors have not been analysed in this manner. The results of the study have shown that a number of rules-of-thumb currently in use in the analysis of apartment properties are misconceptions that often lead to erroneous conclusions. It has also been shown that the entrance of many unsophisticated investors into the market for the primary purpose of tax avoidance ha resulted in a very great bull market that was corrected and is still being corrected by the combination of four basic factors; the economic slowdown, the White Paper, high interest rates, and the change in the types of alternative housing available to the tenant, The study also gives insights into formative factors, such as indirect and direct government intervention into housing, that will shape the apartment market of the 1970's, A limiting factor in the study is the fact that the information required is of a personal and highly secretive nature and thus difficult to obtain. The result has been that the sample is not large enough and it has been drawn from sources which were co-operative and does not necessarily represent a random sample of the existing apartment property stock.¹ However, any bias does not invalidate the general conclusions obtained but only results in overrepresentation in some areas. In general, the information obtained was taken directly from audited operating statements thus alleviating most inconsistencies that may result from a deliberate misrepresentation of the facts. ¹37 of the 69 properties in this study are owned by doctors. The remaining properties are owned by contractors, financial institutions, owner-managers, full time property investors, individuals or corporations who derive a substantial proportion of their income from property, and other professionals such as lawyers. The basic conclusions arrived at are that those individual investors who purchase property on a sound economic basis and operate on a sound basis will make money while those investors who purchase on the sole basis of tax shelter and who operate haphazardly often suffer heavy capital losses.

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