Cory Raven | 604-220-9399

 
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Bob Rennie: Priced to Sell


In search of new models of affordable housing

 
In the past year, prices for homes have dropped throughout B.C., and yet what might be considered “affordable housing” is still in desperately short supply. Construction costs are down, as the demand for new homes has subsided, but the cost of land remains high. Indeed, not only do we have a shortage of developable land in Vancouver – and elsewhere in B.C. – but that shortage is compounded by a restrictive zoning and entitlement process.
 
The lowest cost for which you can build a home, excluding land, is well over $325 per square foot; land costs alone add another $50 to $200 per square foot (depending on the city and building you’re living in). Your average Vancouver couple – say, a hospital worker and a police officer – can no longer afford the mortgage on a home in the community in which they work.
 
So who’s to blame for the affordability crisis? Is it the greedy developers? I would argue no. Developers in Vancouver work on very narrow profit margins – 50 per cent smaller than the typical developer south of the border.
 
Is it the condo investor who’s preventing an increase in affordable housing stock? Again, no. Without that investor, there would be no new rental units coming on the market (it doesn’t take two hands to count the number of actual rental buildings built in Vancouver in the past 10 years).
 

As unsatisfying as it is to say, the problem is beyond our control: we remain a desirable place to live, and as long as we keep our borders open there will always be someone willing to pay the price of entry.

That’s not to say there aren’t creative solutions out there. Two projects I’ve worked on in recent years point the way to affordability, each offering smart ways of densifying a community and spreading land costs. At Woodward’s the developer Westbank/Peterson was allowed to build 536 market condominiums and obtained 300,000 square feet of density to be transferred to future development sites. In exchange, they agreed to build 200 non-market social housing units, which will be turned over to the city and managed by the Portland Hotel Society.
 
Similarly, at L’Hermitage at Robson and Richards, the developer Millennium added density by purchasing two building sites next door to the condo development – including the drug-infested Passlin Hotel, which consisted of 47 single-room-occupancy units – tearing them down and replacing them with 47 new single-room accommodations. In return, Millennium was “bonused” enough density by the City of Vancouver to add four floors to the top, where big-ticket condos could be built and sold – and thus make this scenario work for both city and developer.
 

Of course, the examples above are about creating social housing for society’s hardest hit. But for those hospital workers and police officers, living in a single-­room accommodation is not an answer. For them, affordability is a question of innovative financing, with one possible solution being what

I call the “Optional Affordability Program.”
 
 

In this scenario, municipalities allow developers of any site to add 10 per cent or even 20 per cent additional (affordable) suites to current zoning. Let’s say it’s 20 extra condos that are, on average, 1,000-square-foot two-bedroom units, with a land value component of $100,000 each. The municipality would place a charge on title equal to $100,000, allowing those units to sell for $100,000 less – with all subsequent buyers paying market value less the charge on title (plus some specified inflation rate).

The charge on title can be paid off at any time, allowing the condo to then travel with market values. That $100,000 would then be paid back to the city, with the money going (presumably) toward other housing needs.
 
Vancouver will never be a cheap place to live. In fact, it never was. But with some creative thinking about zoning and financing, we can build a sustainable community in which more people, from all walks of life, can afford to live where they work. That should be our priority.
 

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Please excuse the mess while I upgrade my website.  In the meantime, you may access all my blog posts by clicking here.
Please excuse the mess while I upgrade my website to provide you with even more timely and topical information on our market and the process of buying and selling.  In the meantime, you can access my blog by clicking here
Cory Raven
Telephone:604-220-9399
Cory Raven - Managing Broker
RE/MAX Select Realty
4806 Main Street
Vancouver, BC
V5V 3R8