Vancouver’s housing crash and the cost of living

A recent report estimates that B.C.’s housing price downturn, underway for the past year or more, has cost Metro Vancouver homeowners 89 billion dollars in notional home equity or almost $40,000 for every resident of the region.

This number, which appears to originate with a couple of retired millionaires on the west side of Vancouver, feels about right. Monthly stats from the Greater Vancouver Real Estate Board indicate that in the inner suburbs, the average owner of a detached home is losing more than $10,000 per month in estimated value. In the City of Vancouver and the District of West Vancouver, that number is more like $25,000 per month.

How much further can prices decline? At this moment, home prices from West Van to Abbotsford are still, in most cases, 85 to 130 per cent higher than they were 10 years ago. The cost of living has increased by 16.2 per cent during the same period, and wages (Statistics Canada, 2017) have tended to track the cost of living. Homeowners are still ahead of the game measured against what they would have made from other investments; would-be buyers still face a big affordability problem.

Fraseropolis Joyce Collingwood towersWhen Fraseropolis.com was launched in 2011, Vancouver-area detached housing prices were high and moving higher at an accelerating pace, but organized public concern was limited.

Through 2014 and 2015 the conversation around home prices heated up, and so, anecdotally at least, did the inflow of offshore money. But the benefits from the real estate boom were very attractive for many people payments to real estate agents and developers, construction and renovation jobs, landscaping jobs, retail sales of home furnishings, and windfall gains to the provincial government from the property transfer tax.

Starting in 2016, despite the benefits from a speculative market, governments have taken steps to cool things off, including:

  • A provincial foreign buyers tax
  • A federal mortgage “stress test” to confirm the financial position of all home buyers
  • A municipal vacant homes tax (City of Vancouver)
  • A provincial speculation tax to be imposed on all vacant non-primary residential properties in high-cost areas
  • A provincial investigation into the real estate effects of money-laundering, and a commitment to crack down on money-laundering in the housing industry.

So with all that, plus a chill in Canada-China relations, the price of housing in the Vancouver area is lower than it was a year ago. But prices are still high. Examples:

  • In North Delta, a suburban area that is relatively close to jobs in Burnaby, Surrey and Richmond, the benchmark price of a detached home dropped by 6.9 per cent from May 2018 to May 2019, to just under $900,000. It is still 61 per cent higher than it was 5 years ago.
  • Langley is an outer suburb with a growing employment base. According to the Fraser Valley stats, the benchmark price for a townhome dropped by 5.9 per cent in 2018-19, but is up 68 per cent over five years.
  • In North Vancouver, across the water from the City, there have been major additions to apartment supply. Prices dropped by 8.8 per cent in the year leading up to May 31 2019, but still showed a 55 per cent increase over five years.
  • In Port Coquitlam, where (my theory, based on 2011/2016 income numbers) an outflow of people from the City of Vancouver created a temporary housing price bubble, the benchmark price for a detached homes dropped by 12.2 per cent from 2018 to 2019, but was still 60 per cent higher than five years previously.

If we look back over 10 years, detached home prices in the Greater Vancouver Real Estate Board zone have doubled, or close to it, in most urban locations — except for, strangely, Ladner, an attractive enough area where prices are now inching up.  Townhome prices in the Greater Vancouver zone are 80 to 100 per cent higher than 10 years ago, except for Port Moody at 71 per cent. Outside of a soft market in South Delta (Ladner and Tsawwassen), apartment prices are 80 to 120 per cent higher.

In Fraser Valley Real Estate Board zone, detached home prices on April 30 are 100 to 115 per cent higher than 10 years previous, except for the fringe community of Mission. Townhomes are 75 to 110 per cent higher, with a low outlier (62 per cent) in Abbotsford). Apartment prices have risen by 95 to 130 per cent over 10 years except in Mission.

What happens next? Home prices have risen far beyond the local wage gains of the past 10 years, but there are other factors at play, even as governments try to discourage foreign investment. Retired managers and professionals continue to move to the west coast from other parts of Canada. Extended families continue to pool their wealth to acquire property for the long term.

In a recent commentary on CBC Radio, business analyst Mark Ting suggested that we may be past the halfway point in the downward trend for detached home prices.  The downward movement in apartment prices began more recently, and will be pushed along by a wave of apartment construction across the region, at the transit nodes (Brentwood, Lougheed City, Surrey Central) and in the urban villages (Langley City, Maple Ridge). This may result in a sustained decline in apartment values.

Mr. Ting’s guessing assumes a relatively health economy; a global recession would presumably add to the downward pressure on home prices.

Fraseropolis Port Moody condos

 

Landing at Marine and Cambie

Fraseropolis Marine Landing perspective

The towers at Marine Landing seen from the north, April 2019

The Canada Line went into service just about 10 years ago, as a rapid transit connection between the City of Vancouver’s downtown and the international airport in Richmond.

Fraseropolis Marine Drive station

Outside the Marine Drive transit station. Starbucks, Subway, liquor store… “Lots of places in Bangkok look like this,” said co-tourist Calvin Hutton.

Tower development along the new line has been significant, although Vancouver’s plan for how it should fit together (the 276-page Cambie Corridor plan) was only recently completed.

North of the Fraser River oddly-named Marine Landing precinct (there were no Marines in sight on the day I visited, or uniformed servicepeople of any kind) is taking shape around the Marine Drive transit station.

Our friend Calvin Hutton met me at the station on a cold April morning. We found that the 100-metre-long retail lane outside the station gate makes an excellent wind tunnel. We walked from there to Oakridge, which is two stations to the north, through residential streets, parks and trails. We finished with an early lunch at Samurai Sushi, a busy takeout place that specializes in quantity.

What I noticed about the Marine Landing area was the sudden transitions from industrial to single-family residential to high-density. What looks like a former print shop is now a church, with an automobile repair business dated 1932 at the back of the same building, just across the alley from a co-op housing complex. The training centre for Montessori teachers is upstairs from a car leasing showroom. This is the kind of mashup that North American urban planners were trained to avoid through most of the 20th century, but it is actually very much to my taste.

Cambie and Marine are broad, busy streets — highways, really — and it is hard to envision this intersection as the heart of an  urban village. However, the services are arriving one by one — drug store, doctor, dentist — and there is more development on the way on the back streets, as a two-block area of houses is ripped out for something bigger — possibly including a food store? The city’s plan calls for more green space and a trail to the river.

At the same time, the city needs to protect the industrial uses that runs for three kilometres east and west of Cambie along the river. Too much industrial land in Metro Vancouver has been gobbled up for more chic purposes, especially in the City.

Fraseropolis Marine Landing 2

Marine Landing towers seen from the west, near the foot of a small city park

Fraseropolis Marine Landing 3

Industrial against residential, Ash Street

 

 

Fraseropolis Marine Landing 4

Development coming soon, Ash Street

Fraseropolis Marine Landing 5

Marine Drive Station bus loop under Canada Line guideway, with car dealership on the left and housing on the right

Fraseropolis Marine Landing 8

Detached home at the northern perimeter of the precinct

Fraseropolis Marine Landing 6

Mid-rise housing inside the northern perimeter 

 

Kerrisdale, vaguely defined

Fraseropolis W 41 Kerrisdale

Classic one-story shopfronts on West 41 Avenue,  February 2019

This is an urban village with extensive services, a large stock of apartment housing, some of it pre-1960, and elegant streets with fine detached homes — as you would expect on the west side of Vancouver.  In case you’re interested, the detached homes currently sell for between $2,000,000 and $4,000,000, even with the recent subsidence in the luxury housing market related to foreign buyer taxes, speculation taxes, money-laundering investigations and the like.

Fraseropolis Kerrisdale redevelopment

A two-storey commercial building on the West Boulevard, possibly 1930s, set for demolition and redevelopment

Residential and commercial properties on the main streets are under redevelopment pressure with new condos on the southern arterial and visible retail turnover. There is an influx of shops catering to Asians; this does not necessarily mean big money, but it might when there are large number of expensive cars parked on the streets, and expensively dressed 40ish couples of all ethnic types pushing baby strollers. The City website does not show a neighbourhood plan; there’s a 2005 “vision” document for a wide area that includes Kerrisdale, basically a wish list based on conversations with residents, but it doesn’t provide insight on what’s happening now.

The City’s website links to an interesting set of Kerrisdale demographics from the 2016 federal census, although it provides no hint on where Kerrisdale’s boundaries lie. Wikipedia says the City’s definition of Kerrisdale is counter-intuitive, including maybe half of what the visitor sees on the ground.  I can’t verify that. Let’s assume that the census numbers have some value as a guide. They show a population of 14,000 — a smaller number than in in 2011, perhaps as the postwar male incomers die off — with only 50 per cent reporting English as their mother tongue compared with 35 per cent Chinese.  A third of this population are renters.

Co-tourist Robert Smarz and I visited Kerrisdale twice in early 2019. On the second visit we approached from the north on the Arbutus Greenway, a multi-use pathway and linear park reclaimed by the City from Canadian Pacific Railway after lengthy and undignified bickering. The sidewalks on the two commercial streets are lively on a Saturday morning and the shopfronts are engaging. The traffic, in this setting is too heavy and too fast. We saw plenty of opportunities for coffee, but saw nothing that appealed to us for lunch, so we retreated on both occasions to a pub in North Delta for beer and sausages.

Fraseropolis Kerrisdale demoviction

Demoviction?

The southwest and northwest quadrants of Kerrisdale feature mid-rise apartment towers from the 1960s and ’70s, echoing the feel of Vancouver’s West Side near Stanley Park. Further east there are older and more modest rental buildings, part of the cross-Canada wave of 1950s rental construction.  Bob and I were a bit distressed to see redevelopment signs on buildings along the East Boulevard, indicating that the old affordable units will soon be replaced by fewer, larger, owner-occupied apartments. The City of Vancouver has been a leader in encouraging the development of new rental housing, but I am concerned that the residents of these Kerrisdale units will simply be put out onto the street, as they would be in most other parts of the Metro Vancouver region.

[This is post #41 in the our Urban Villages series.]

 

Fraseropolis Arbutus Greenway

The Arbutus Greenway, seen from the 45 Avenue crossing

Fraseropolis Kerrisdale apartments

1960s-era apartment buildings on the west side of Kerrisdale

Fraseropolis Kerrisdale townhomes

Fraseropolis Kerrisdale houses

Fraseropolis Kerrisdale Balsam

Homage to San Francisco at West 41 and Balsam

Back in Langley City

Fraseropolis Langley City square

The central square in downtown Langley, where they have music and such when it is not raining

This is a promising urban village in Metro Vancouver’s South-of-Fraser, with a wide array of locally owned businesses and housing choices. The arrival of Skytrain, connecting with Surrey and Vancouver, is anticipated sometime in the 2020s, and this will bring new population growth and business activity.

We reported on the City of Langley’s urban centre in September 2013, and scored it at a relatively high 76.0 as an urban village despite the presence of too many car-dependent strip malls. At that time, the City’s government was working to achieve a greener feel and continued housing development in the downtown area. I would say they have made some progress. City policies have also discouraged chain stores and restaurants from locating in the core. Continue reading

Industry in the big city: evolution, decay or disappearance

Fraseropolis Southeast False Creek 1

Automotive shop, possibly c. 1920, at the boundary of Southeast False Creek and the Mount Pleasant Industrial Area

Old-time Vancouverites often describe 1986 as the year that everything changed.

Expo 86, staged on the north shore of False Creek, brought the world to Vancouver. Once a rail, seaport and mill town, Vancouver became a place where the primary economic activity is the purchase and sale of promises. Continue reading

The Interurban Tram, 1950-51

Fraseropolis Interurban tram 1951 from YoutubeMy sister Morna has shared a link to a one-hour video record of interurban trams in Vancouver and Burnaby, dating from 1950 and 1951.

A brief history on the TransLink website states that these self-propelled street railway cars were “like streetcars, only larger and more powerful.” The video speaks to a time when the pace of life was slower. The area that is today’s Metrotown (at about 20 minutes) appears semi-rural.

Seeking the best cities for work in B.C.

In early December, BC Business published its annual “Best Cities for work in B.C.” index.

Infill housing, Sapperton, New Westminster, 2017

The publishers and their research partner, Environics Analytics, deserve credit for collecting and posting data on 46 B.C. cities, from Squamish (ranked #1 for 2019) to Port Alberni (ranked last).

Unfortunately, I don’t know what they are trying to communicate. Is the District of North Vancouver (ranked #3) a good place to find a job, or a good place to live if you want to look for a job? What kind of job? How does high average income in a community affect the on-the-job experience of a teacher, a firefighter or an electrician who happens to work there? Or are we simply talking about the local opportunity to earn a higher income in our chosen profession? ($51,000+ is available to a Step 1 Category 4 schoolteacher in New Denver in the Kootenays, $48,000 for the same teacher in North Vancouver, so…) Why are municipalities that sit next to each other so far apart on the scale? Continue reading