Mark Carney, governor of the Bank of Canada, has chosen his weapons in a battle against a problem all too familiar to many Americans – a housing boom marked by rising debt and frothy real-estate prices in some markets.
Mr. Carney, like central bankers in other places fighting real-estate booms, is leaning on tougher regulations for banks and home buyers, rather than on higher interest rates, to prevent Canada’s rising housing prices from going too far.
“You don’t turn to monetary policy first,” Mr. Carney said in an exclusive interview with The Wall Street Journal. “The principle is that there are other tools that are the best tools to address the risk of excesses developing in housing, and they should be deployed first. In Canada, we have deployed those other tools. As a consequence, we expect moderation in housing activity.”
The Canadian Real Estate Association estimates the national average price of homes sold in May was 376,817 Canadian dollars, or about US$384,510, up 8.6% year-to-year. That is being pushed up in part by historically high sales prices in exclusive Vancouver neighborhoods, and broad-based gains in Toronto. But prices excluding Vancouver were still up 5.6% year-to-year.
The average home price in Vancouver in May, meanwhile, was C$831,555, which was a 25.7% jump from May 2010. In Toronto, prices were up 8.7% to C$446,593.
Mr. Carney has been trying to draw attention to excesses building up in housing, a trend that has emerged in Canada just four years after a historic housing bust in the U.S. In a speech in Vancouver earlier this month, the central banker called the city an “extreme example” of potential problems building elsewhere in the country.
Central bankers world-wide have been debating for years how to respond to the threat posed by potential asset bubbles. Before the U.S. housing bust, many Federal Reserve officials felt the central bank shouldn’t try to address bubbles. Fed Chairman Ben Bernanke has acknowledged that the Fed failed to adequately regulate banks during the housing boom.
Some economists also blame the Fed for failing to push interest rates higher in the last decade to slow the run-up in building and residential real-estate prices.
In many other markets today – including China, Hong Kong and Israel – central banks and bank regulators are turning to regulatory tools to prevent home prices booms from turning into outright bubbles.
“That is a major shift from five years ago,” said Martin Barnes, chief economist at Bank Credit Analyst, a Toronto-based research service. “They have at least acknowledged that they can no longer ignore asset bubbles.”
Economists still don’t agree on whether higher interest rates should also be used to stop bubbles. Many central bankers see them as a last resort.
For her wedding over the weekend, Nina Johnson had worked through a predictable checklist of locations in town: hotel ballrooms, restaurant halls and catering outfits.
In the end, though, she opted for the most glamorous, upscale and stylish setting she could find — a parking garage.
“When we saw it, we were in total awe,” said Ms. Johnson, 26, an art gallery director. “It’s breathtaking.”
Parking garages, the grim afterthought of American design, call to mind many words. (Rats. Beer cans. Unidentifiable smells.) Breathtaking is not usually among them.
Yet here in Miami Beach, whose aesthetic is equal parts bulging biceps and fluorescent pink, bridal couples, bar mitzvah boys and charity-event hosts are flocking to what seems like the unimaginable marriage of high-end architecture and car storage: a $65 million parking garage in the center of the city.
They are clamoring to use it for wine tastings, dinner parties and even yoga classes. Or taking self-guided tours, snapping photographs and, at times, just gawking.
Created by a colorful Miami developer and a world-renowned architecture firm, it appears to be an entirely new form: a piece of carchitecture that resembles a gigantic loft apartment, with exaggerated ceiling heights, wide-open 360-degree views and no exterior walls. The structure, 1111 Lincoln Road, is so distinctive that Ms. Johnson put its image on her 230 wedding invitations.
It is, in many ways, an ode to Miami’s flashy automobile culture. Rather than seeking to hide cars, as garages have done for decades, it openly celebrates them.
While car enthusiasts rejoiced, eager to showcase their Aston Martins and Rolls-Royces, something unexpected happened. Ordinary people, many from far beyond Miami, came too — with no intention of parking there.
“I went to the top and worked my way down,” said Peter Lampen, an architect who traveled 1,200 miles from New Jersey to see the seven-story garage.
Ben Traves, a graduate student, has taken so many photographs of the building that security guards have shooed him out. “I am just really drawn to it,” he confessed the other day as he toted his camera around the structure.
The garage has an unlikely back story. Its developer, a contemporary art collector named Robert Wennett, bought the property in 2005, inheriting a drab-looking bank office and an unremarkable parking lot at the corner of two well-known boulevards, Lincoln and Alton Roads.
Quirky zoning regulations in the city, which is chronically short on parking, made it profitable to build a large garage — not everyone’s vision of a grand gateway to the retail and restaurant-filled streets that surround the site.
Mr. Wennett, who sprinkles his properties with $1 million Dan Graham sculptures and admits that he hates most of the garages he has ever parked in, aimed high, interviewing 10 top architects around the world. He settled on Herzog & de Meuron, a Swiss firm best known for transforming a power station into the Tate Modern gallery in London and designing the Olympic stadium in Beijing (known, by its appearance, as the Bird’s Nest).
Mr. Wennett told the architects that he wanted something close to the grand hall of a train station — big, airy, light-filled and head-turning. What they produced, in early 2010, was all those things: a garage with floor heights of up to 34 feet, three times the norm; a striking internal staircase, with artwork embedded in its base; precarious looking (and feeling) ledges that rely on industrial-strength cable to hold back cars and people; and a glass cube that houses a designer clothing store, perhaps the first in the middle of a parking garage.
In a final flourish, the architects created a soaring top floor that doubles as an event space, with removable parking barriers. It can be rented for about $12,000 to $15,000 a night.
“This is not a parking garage,” Mr. Wennett said. “It’s really a civic space.”
And a private home. Mr. Wennett built himself a large penthouse apartment on the roof.
The Canadian Real Estate Association estimates the national average price of homes sold in May was 376,817 Canadian dollars, or about US$384,510, up 8.6% year-to-year. That is being pushed up in part by historically high sales prices in exclusive Vancouver neighborhoods, and broad-based gains in Toronto. But prices excluding Vancouver were still up 5.6% year-to-year.
