Open this photo in gallery

Condo owner Brock Worobel says he is feeling extremely uneasy living at 53 West Hastings, near Vancouver’s downtown east side.

Mr. Worobel purchased his condo in the six-storey Paris Block, just west of Carrall Street, nine years ago. It is an award-winning commercial heritage building that was converted to condos with sleek, modern interiors in 2008. It was one of the first of several new residential buildings in the area aimed at a professional young buyer, a precursor to the Woodward’s Building that came a couple of years later. Mr. Worobel says he loved his neighbourhood – until the pandemic hit.

In the past six months, he says he’s seeing new faces on the street, including drug dealers doing business in the street below. There’s been vandalism to the building, including the entrance door, which was damaged and now needs replacing. The building manager cleans up used needles , human feces and trash from the doorway daily, and he has friends who won’t visit.

“Last night for example, across the street there was a fight between one of the vendors, and this guy pulled this massive knife out of his back pocket. I’m no stranger to the stuff that goes on down here, but that was a shock to see,” Mr. Worobel says.

“If you’ve been into the area lately, this one block of West Hastings is a dangerous no-go zone. This is social chaos. It’s social disorder. It’s a textbook case of what not to do when it comes to civil society. … No one would expect or accept to have to live in something like this.”

The increased crime and disorder of the Downtown Eastside is pushing into other areas. Vancouver Police Deputy Chief Constable Howard Chow noted a rise in serious crimes throughout the city, as well as an increase in needles on the street, visible drug use and garbage that’s accumulating on city streets. Residents have voiced concerns, and city council has responded with a motion to look at leasing buildings as temporary shelters, as one of a few options. They also announced provincial and federal funding of half a billion dollars, some of which Mayor Kennedy Stewart said would go toward vulnerable residents without proper housing.

But Mr. Worobel questions why the situation was allowed to become so dire. His strata council has considered hiring a security guard, but it would cost around $24,000 extra a year, and some residents have lost their jobs due to COVID-19 and can’t afford it, he says. Landlords in the building are seeing their tenants move out. Mr. Worobel worries that if he wanted to leave nobody would buy his condo, or even rent it, which means he’s stuck.

When COVID-19 struck, businesses throughout downtown shuttered and customers and workers left, and garbage and crime increased. Empty streets are always an unhealthy situation for an urban environment, and for the housing market. Downtown Vancouver now has the region’s worst sales to listings ratio, which is industry’s way of saying that sales have plummeted.

But the pandemic is only the tipping point: it isn’t the cause of disorder and suffering, says Andy Yan, director of Simon Fraser University’s City Program.

What we are seeing on Vancouver’s streets is the result of policy-making that chooses supply of market-rate housing without understanding the consequences for vulnerable groups of people, he says. It’s the reckoning of an urbanist movement in the past few years that has focused too largely on free market solutions without including vulnerable people in the equation. Downtown Vancouver illustrates how such oversight can go so horribly wrong, leaving all members of the community worse off.

“This is the ‘triumph of the city’ style thinking meeting the consequences and realities of displacement and inequality,” Mr. Yan says. “There is an inhumanity to it because these are market failures. The market is simply not designed to meet the housing needs of those existing low-income residents who live there.”

Hani Lammam, executive vice-president of Cressey Development Group, agrees that the dire downtown situation isn’t just due to the pandemic. From his developer’s perspective, he sees the situation as a result of what happens when rampant speculation drives up real estate prices and drives affordable housing out of the market. He says the city played a role when it rezoned areas of downtown and helped drive those land values up further, gleaning higher community amenity contributions from developers. His own company was squeezed out of the downtown area as a result, and hasn’t built a project there in a decade. He says they were squeezed further by government policies and new taxes that aimed to fix the lack of affordability that followed.

A side effect is that developers who paid too much for downtown properties are just leaving them undeveloped, he says.

"All this land that has been designated for condominium development and unfortunately been speculated upon by sometimes less experienced developers is now caught in a situation where it really cannot ever be developed economically based on what has been paid for it. So downtown Vancouver is at a standstill.

“I sit here and I look at what has happened downtown, and to an extent on the west side – and Vancouverism, this concept that has been celebrated, is actually failing,” Mr. Lammam says.

“While we do blame some of those bad actors that were chasing foreign buyers, I am going to take this opportunity to say that the rezoning policies forced that to happen – when the process of determining community amenity contributions [CACs] by the city of Vancouver became this pot of gold that city council at the time wanted to get their piece of.”

Developers typically pay CACs to the city when a property is rezoned. CACs are based on the “land lift,” or the increase in the property’s value.

“And of course the greatest land lift is achieved when you build a super luxurious product, because you can sell it for $3,000 a foot,” Mr. Lammam says. "And so, then the land must be worth $600 a foot. But if the conclusion is it’s worth $600 a foot, then I cannot build an affordable product based on underlying land valuation. So developers were forced to go and build these lavish buildings and of course there’s no market here, ‘so let’s go sell it in China.’

“The city wasn’t just greedy; they drove it in that direction,” Mr. Lammam says. “That had a snowball effect, because once this project achieved this selling price, then every other property valued is based on that success – whether it was a rezoning or not a rezoning. So, I would say we got caught up in that in some of our west side projects, where in order for us to buy the land we had to pay so much for it, because the [comparables] with the marketplace now, we could sell for $2,000 a foot, or $2,500 a foot.”

The reasons may vary, but business players and homelessness activists alike are looking for government to help the community recover.

Craig Stanghetta, business owner and designer known for the interiors of many popular restaurants, including Savio Volpe, Kissa Tanto and Bao Bei, has had his office in the area for years, and he’s shocked at the decline. Fellow business owners in the area have been hammered by the economic downturn and again by the influx of additional crime and vandalism, he says.

“I am a terrified bystander right now,” Mr. Stanghetta says. "I think that there is a bit of leadership required, where I think the idea of how to help a disenfranchised segment of the population is not working.

“All I’ve seen is it get worse and worse. … .I am left wing in my political leanings, but it comes down to pragmatically how you have to go about your day, and I have pretty much an all-female staff and if they don’t feel safe coming into the office – then that’s a broken system. It’s not fair, frankly. So I am hoping there is a re-evaluation of [the situation] for the greater good.”

Jon Stovell is president and chief executive officer of Reliance Properties, which owns several rental projects throughout downtown, including Canada’s first micro-suite rental building Burns Block at 18 West Hastings St. That building is seeing high turnover due to open drug use and heightened disorder, including people urinating at the entrance and spitting on the building speakerphone. Police have accompanied sanitation workers on their clean ups of the street.

A 240-square-foot unit is renting for $1,360 a month on Reliance website. A 300-square-foot apartment is available for $1,500 a month.

Mr. Stovell, whose office is in Gastown, says he’s been attacked on social media for publicly complaining about the area’s mounting social problems. But, he says, we need to discuss the matter of separating drug addiction and treatment from illegal behaviours, which still need to be addressed in order to protect members of society.

“If you’re an alcoholic you’re not allowed to drive drunk … but when it comes to crime related to drug addiction it seems [illegal behaviours] are increasingly being treated as part of the malaise of drug addiction, and therefore are being increasingly permitted and overlooked by society.”

Housing activist Wendy Pedersen blames inadequate rent control for vulnerable groups as a major contributor. Rents increase as soon as tenants of single-room occupancy (SRO) hotel units vacate. Because of previous city policy, hundreds of welfare-rate SROs have been lost in recent years and social housing has not kept pace by a long shot. Investors who’d purchased properties occupied by low-income residents have paid or harassed tenants to leave, she says. Also, landlords have evicted a lot of people who were living as guests of SRO tenants.

“Yeah people will get more desperate, and maybe people are more edgy and angry because of the situation that they find themselves in. I think I would be angrier and edgier too,” says Ms. Pedersen, who’s lived in the Downtown Eastside for 30 years. "There is a lot more garbage on the street, but I think when you have more people the street you get more garbage If they can’t be a guest, if they can’t rent a place because rooms are converting out of reach, if BC Housing has 15,000 people on their waiting list, where are they going to put their garbage?

“You are in crisis survival mode. I’d be throwing my garbage on the street took, especially if I had a mental-health issue untreated and the drugs I’m taking are contaminated. It’s obvious.”

Ms. Pedersen asks people to see the failure with the system, and not the individuals.

"They need to advocate for systemic solutions, and not get on the wrong side of this, which is to punish the individuals, criminalize people, criminalize the homeless and people addicted to drugs.

“Housing is key. It’s one of those fundamental pillars that needs to be solved.”

Your house is your most valuable asset. We have a weekly Real Estate newsletter to help you stay on top of news on the housing market, mortgages, the latest closings and more. Sign up today.