City of Vancouver ODP

[whatnext]

Originally Posted by chowhou

Use your brain for once. There are a ton of unsold condos, and we've seen a 5+ year reversal in home prices. Why do you think that is? Do you think the prices would have fallen as much if developers were not allowed to build what they did?

We're mostly lucky that developers miscalculated demand for housing near and before COVID.

It doesn't have to be this way, we would have built even more supply if regulatory costs and government supply management were not constraining supply.

So you think developers will knowingly build into a declining market?

We were just lucky their greed lead to some overbuilding.

[chowhou]

Originally Posted by whatnext

So you think developers will knowingly build into a declining market?

We were just lucky their greed lead to some overbuilding.

They would if their profit margins remained positive due to lower regulatory costs or higher permitted revenue (i.e. density).

[WarrenC12]

Originally Posted by chowhou

They would if their profit margins remained positive due to lower regulatory costs or higher permitted revenue (i.e. density).

whatnext is confused by the basic math of property development.

[seamusmcduff]

Anyone have any pro formas they're willing to share? I find they're really helpful to understand why allowing a larger increase in FAR helps distil the cost of the land, and decrease the percentage of the cost of each unit that goes towards the land. When the market drops, which is really the price of the land dropping (not the buildings themselves), it has a smaller impact on the viability of a project since this is a smaller proportion of the development costs of each unit. This means that allowing a higher delta to the FAR allows projects to remain viable a lot longer as prices decrease, instead of developers stopping projects any time there's a slight dip in the market

For example with multiplexes only able to go from 0.7 FAR to 1 FAR, any drop in land value is going to have a much more noticeable impact on viability since the percentage of the home cost that is the land is much larger

And yes, I know that when you allow for more density in an area the land value goes up, but it doesn't go up at a 1:1 rate compared to the allowable FAR increase.. You can go look in the Renfrew and Rupert areas where homes were prezoned to allow 6 stories to see this for yourself. Homes are still $1.6-2.5m which is (depressingly) very similar to what it was before.