The merriment in the real estate market has swept up sellers in every price range and category. There just aren't enough listings available to satisfy all the buyers out there. Prices rise in relation to abundance. Million+ dollars single-family homes are 66% of the detached housing stock in Metro Vancouver. Affordability or lack thereof is the issue of the day.
This has led to the usual outcry for restrictions on foreign ownership. Barbara Yaffe of the Vancouver Sun writes of it often. The big problem is that there are no stats on foreign owners, just anecdotal evidence which is not proven or reliable. Since the beginning of development in Vancouver there has always been a shortage of land. Metro Vancouver is sandwiched between mountains, ocean, rivers, the Agricultural Land Reserve and the US Border.
This has led to a lack of land for building homes and resulting pressure on prices. To put forward the Australian model of allowing foreign buyers to purchase new homes only in a bid to support the construction industry and leave older heritage homes standing would not work here. Offshore buyers on the Westside and elsewhere are building new homes. The construction industry is busy both in residential and commercial projects. If there was a restriction here local builders could buy an older property where the structure is smaller and less developed than those of today. They could knock the house down and build to the maximum square footage allowed on the lot. There would be no difference than what is happening anyway.
Just a day by Michael Whyte
Keeping New Structures in Harmony with the Old
There has been talk of some owners on the Westside of Vancouver taking a lower price for their home if a local buyer promises to live in the home and not tear it down. This is an impossible promise to enforce and is totally against human nature. One of the most active high-end Vancouver realtors stated when asked that his clients take the top offer and move on with their lives. A realistic commentary.
There is a lot of effort going into subverting any idea of keeping new structures in harmony with the old. In Richmond subdivisions built in the late 1970s and later with a provincial zoning regulation called a Land Use Contract (LUCs) are now causing municipal distress. This zoning was set up in what had mainly been an agricultural community to allow variation in design in the new homes being built. Lovely neighbourhoods like Westwind in Steveston were built under an LUC with smaller homes on bigger lots. Now that builders are desperate for building lots they are buying up homes in architecturally consistent established neighbourhoods and building to maximize site coverage and to take advantage of inadvertent omissions in the LUC regarding building heights. This has resulted in tall massive homes dwarfing the residences around them and infringing on sunlight and privacy. The speculation is that the Richmond City Council Land Use Committee will recommend a moratorium on the extra height and coverage allowed by an LUC. This will place all subdivisions on an equal footing in terms of their value to each other and a developer. We shall see.
Canadians Living in Smaller Cities are Happier
Along with worries about rising prices and monster homes there is also the loss of a sense of community. In a recent national survey it was discovered that Canadians living in smaller cities where homes are affordable and where they know their neighbours are happier than those under financial pressure and commuting stress in Metro Vancouver.
One of the leading complaints is about empty homes and condos all around Vancouver. In any destination city including London, Sydney and New York this is a common problem. It even occurs in resort communities where the large part of the population is only there for a season of the year. Second homes are allowed everywhere. Canadians own half of Scottsdale and Palm Springs and cities in Florida. However, it does mean that the economy is not supported by residents who are there for short periods of time. Under Canadian law a visitor to Canada can only spend 183 days in the country at a time so out of country buyers could not live here full-time anyway.
Rentals are an Issue
The lack of affordable housing in Vancouver also applies to rentals which are expensive and few. This has resulted in a lack of rental units right across the financial spectrum and has also put pressure on prices in the condo sector as young people are making every effort to get into the market as there are no rentals that are reliable. Even when investors rent out condos which are a large part of the rental stock they will often sell them when the market price of the unit goes up. A problem in the largely rental West End with it's .03 vacancy rate is rentovictions where the housing stock is old and the new owners want to upgrade the building and evict long term senior tenants to do so.
This has led to a rush of buyers for projects in Surrey which allows condo units of 316 s.f. starting at $94k. These are a take on the classic bed-sitter of olden times. They are well-designed and efficient. The Woodwards project in the Downtown Eastside of Vancouver offers popular small rental units but the City of Vancouver does not allow condos under 398 s.f. According to research Millennials are not interested in owning a car, want to live in the city and go out for entertainment.
Iconic by Kenny Louie
The Law of Unintended Consequences
The Law of Unintended Consequences is at work again in the City of Vancouver's efforts to densify major thoroughfares in the city. It started with the Canada Line being built down Cambie Street in time for the 2010 Olympics. City planners thought it would be a good thing to rezone sections of Cambie Street near Queen Elizabeth Park for multi-family development. In their little minds they equated this with building affordable housing. Big Laugh. The City Council and Planning Department were horrified when the owners of the lovely traditional homes that were rezoned held out for the highest price and weren't prepared to sacrifice their windfall so the city could build low cost housing there. In fact the developers who first put forward their public plans for 6 storey condo buildings discovered that the buyers for their product were downsizing and wanted larger suites not smaller ones. They had to reconfigure the building and sell units for a million dollars instead of $500k.
The most recent illustration of home owners not following the script from City Hall concerns speculation of future rezoning for Granville and Oak Streets. Homeowners are banding together to sell their homes to a single purchaser who is assembling the property for development down the road. A realtor who sold a parcel on the west side of Granville Street near 45th Avenue said the buyer paid $33.4 million for 9 homes. He is an offshore investor looking to park his money and not worried about how long it takes the city to rezone the property.
We are fortunate to have a positive economic forecast for the future of business and real estate in Metro Vancouver with continuing growth going forward. In Alberta and Saskatchewan homeowners who are under water on a mortgage (minimum 20% down payment) that did not need CMHC mortgage insurance can hand their keys to the bank and walk away. It may impact their credit rating but is a legal procedure. Not so in BC or Ontario. Homeowners who had executive jobs in the oil industry cannot sell their beautiful homes in Calgary as qualified purchasers are afraid to buy them even at a discounted price because they are worried they won't be able to sell them down the road. Rentals are in high demand.