Home ownership in the Lower Mainland: a diminishing prospect

Central Pitt Meadows, 2017

A report on housing from VanCity, a member-owned financial institution, finds a continuing decline in housing affordability in the B.C. Lower Mainland.

Home ownership costs are rising across the region as buyers look beyond the City of Vancouver. In the background, the report suggests that home ownership is a lost cause for an increasing number of British Columbians.

Housing affordability matters for a bunch of reasons. When downtown workers are pushed to live in the outer suburbs, it puts increased stress on transportation systems and it reduces (trust me) both quality of life and engagement in community life. As signalled by the Vancouver Board of Trade, high housing costs create a barrier to immigration from other parts of Canada for creative and capable talent. And, obviously, a shortage of affordable housing can push families and individuals into financial distress and even into the street.

“Home Stretch,” released on June 6, charts the rise in Vancouver-area housing prices from March 1, 2016 through February 28, 2017. The affordability calculations correlate median sale prices in given municipalities with median household income on a regional district basis (Vancouver or Fraser Valley.) The cost of purchasing a detached home in West Vancouver in February 2017 was more than 200 per cent of median income, and more than 150 per cent in Vancouver, both clearly unaffordable for most consumers.

Brentwood district, Burnaby, 2017

Purchasing a townhome in Maple Ridge or Abbotsford involved a commitment of about 25 per cent of median income, supportable if that’s where you want to live. However, the affordability of all housing  in the outer suburbs — detached, attached, or apartment — is quickly eroding. In fact, the long-time price advantage of apartments and townhomes is eroding across the region. The official property value assessment on my own Maple Ridge townhome flatlined after the 2008 financial crash, but it jumped in 2016 by more than 25 per cent. The provincial government’s 2016 foreign buyers tax may have cooled the speculation on detached homes in the most expensive markets, but demand for other housing is building.

Suburban apartment prices were almost dormant for several years; they rose in 2016. And looking at the most recent three-month data from the Greater Vancouver Real Estate Board, apartment prices are now on an even more rampant rise than the VanCity report anticipated.

The authors of “Home Stretch,” Landcor Data Corp., state that consumers should “seriously consider” whether a new home purchase in southwest B.C. is a Good Idea. They do not discuss the benefits of renting, quite possibly because the rental housing market is also difficult. There’s an almost complete lack of modern, purpose-built rental housing, as in all of Canada; most renters must rely on amateur landlords, with reduced security of tenure and uncertain property standards.

In the end, after 15 pages of data on home purchase costs, the VanCity consultants present recommendations to government that are weighted towards building rental housing supply, rather than trying to defend home ownership. Their recommendations to local and provincial governments are provided here in full, complete with the coveted approval of Fraseropolis.com.

Governments (all)

  • Place publicly owned land into a trust to deliver purpose-built and affordable rental housing. These may provide affordable rentals, allowing renters to save for a down payment (if home ownership is a goal).

Municipal government

  • Increase zoning for high-density multi-unit buildings and stipulate that new condos must include a set percentage of affordable rentals. Create incentives for developers to build affordable workforce and family housing.
  • Design growth centres with a dense core, with secured sites for affordable rental housing in proximity to mass transit and improve transit from suburban areas to central Vancouver, as well as inter-city transit throughout the region.

Provincial government

  • Encourage every municipality to have an affordable housing plan that is tied to providing safe, decent and affordable housing to its residents.
  • Encourage communities to permanently zone land (similar to the Agricultural Land Reserve) to provide capacity for affordable housing development in conjunction with regional housing trusts.
  • Dedicate a portion of the Property Transfer Tax annually to support the creation of perpetually affordable home ownership options across the province.

 

 

Metro Vancouver’s homeless report: where to from here?

2017-metro-homeless-report-cover

With a growing number of homeless camps (now estimated at 70) dug into Metro Vancouver communities, conversation on the issue has veered into a world of personal attacks and draconian proposals. One sample “solution,” endemic in community news chat threads, would re-establish the vast 1905-era asylum on its hillside in Coquitlam and lock homeless people inside.

This is a waste of time, of course. There’s no cheap or easy route to rolling back the homelessness problem. In fact, a new report from the Metro Vancouver regional authority is daunting in describing the actions that would be required even to hold the status quo. Continue reading

The shift to apartment living

Joyce-Collingwood urban village, Vancouver

Joyce/Collingwood urban village, Vancouver

A couple of decades ago, half the private dwellings in Metro Vancouver were classified as detached homes. That share has dropped steadily, to one-third or less. A growing majority of private dwellings are apartments, townhomes or duplexes.

Post-2000 detached houses, Marpole, Vancouver

Post-2000 detached houses, Marpole, Vancouver

The trend is not news. Most of the available statistics, posted again in this month’s Metro Vancouver Housing Data Book,  date from 2011. Even so, the discourse around housing continues to highlight low-density, high-prestige home ownership, even when this housing type has moved beyond the reach of most working families. National media coverage of Vancouver-area real estate in 2015 and 2016 focused on the stunning rise in detached home prices, not on the more modest increases in townhome and apartment prices. Controversies around  residential development, from Marpole on Vancouver’s west side to Brookswood on the region’s eastern edge, are most often constructed around perceived injury to the interests of detached home owners. In a July 2016 legislative debate on measures designed to cool Metro Vancouver’s housing market, British Columbia’s finance minister noted that the absolute number of detached homes in the Metro region has dropped over the past 25 years despite the addition of more than a million people to the population. He called this data “fascinating”, as if he was coming across it for the first time. Continue reading

A conversation about short-term rentals

apartment-detail-reduced

A hypothetical example:

A young working couple struggles to pay the mortgage on a high-priced Vancouver-area home. They build a basement apartment, to code. They find a tenant and declare their rental income to Canada Revenue. The tenant causes trouble, and the B.C. Rental Tenancy Act makes the eviction slow and stressful.

Vacancy rates in Metro Vancouver, fall 2015. This map was not provided

Vacancy rates in Metro Vancouver, fall 2015 (CMHC) with irrelevant census code numbers. This map was  not shown in the fall 2016 report but the numbers were almost unchanged.

So they think: why not rent our apartment to tourists or business people online, through Airbnb? We’d probably make more money, and the agency will pay for any damages if there’s trouble. Continue reading

The brief debate on a new real estate tax

Burnaby Heights housing reduced

On July 25 British Columbia took a step into the unknown. The government introduced a bill to impose a 15 per cent additional tax on sales of residential property — but only within Metro Vancouver, and only “where the transferee or purchaser is a foreign national, as well as certain corporations or trusts that involve foreign nationals.”

B.C. Finance Minister Mike de Jong (CBC News)

B.C. Finance Minister Mike de Jong (CBC News)

In calling a rare summer meeting of the Legislature to approve this measure, the BC Liberal government was responding to rising public anxiety around the housing market. One-year price increases for detached homes were approaching 50 per cent in parts of Metro Vancouver. The Liberals had linked this price inflation to a shortage of housing supply; this site predicted in March 2016 that they would not take dramatic action to restrain demand. The opposition New Democrats called this special legislative session “the flip-flop session.” Continue reading

Vancouver home prices: don’t expect a government counter-attack

Edgemont, District of North Vancouver

Edgemont, District of North Vancouver

The current monthly report on Greater Vancouver real estate shows the benchmark price for detached homes in the west of the City of Vancouver crossing the $3,000,000 threshold. This is in an urban region where Statistics Canada reported the median household income as $73,390 in 2013.

Until recently, governments downplayed the significance of runaway home prices. The problem appeared to be mostly confined to detached homes in a few upscale enclaves. This has changed, with detached homes in a growing number of neighbourhoods crossing the $1,000,000 mark — in Burnaby East, for example, an area that mixes modest and middling properties. Apartment prices are rising sharply in Vancouver and Burnaby after years of slow or no increase.

Analysts and news media have identified the main driver as safe-haven investment from foreign sources, especially China — drawn by a liveable Chinese-speaking city, a cheap Canadian dollar, low interest rates and an open real estate market.  The British Columbia government has not confirmed this proposition, but it has started to gather data on the citizenship of property buyers, for what that’s worth. The provincial opposition leader has recently suggested that money-laundering is part of the foreign investment equation. Continue reading

Demolition in a vintage rental neighbourhood

High Style Living

Five years after tower construction first jumped the Skytrain line at Metrotown, the City of Burnaby continues to enable the destruction of 1950s and ’60s era rental housing in the area.

Rick McGowan, a neighbourhood activist and townhome owner, estimates that 560 rental units have been replaced by owner-occupied condo towers, or are slated for demolition. More worrying, he says, is the fact that there is no end in sight. Continue reading