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Originally Posted by someone123
I hear this a lot but I suspect it's mostly incorrect.
The market for condos and detached homes are not very independent. They are both forms of housing and many people look at buying whatever housing they can. A lot of people living in condos in Vancouver would buy detached houses if they could afford them. Conversely, if there were lots of huge, cheap condos, I strongly suspect they would put downward pressure on the detached housing market.
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That is true, although see the paragraph below about why I think it is economically unfeasible at this current point to build large condo units profitably.
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The real bottleneck in Vancouver is the availability of land, not housing as such. Condos could in principle be much more affordable than they are because the amount of land required per square foot of condo space can be much lower than what's required for a detached house, i.e. you can build an 80-storey condo tower with a 1/2 acre footprint or a detached house on 1/8 of an acre (or whatever; this is a theoretical difference of orders of magnitude).
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In theory, yes. But in order for a large condo tower to be built in an existing single family home neighbourhood, city services (utilities, the local road network, etc.) would have to be upgraded dramatically. This is the theoretical basis behind zoning and land use regulation and, as we know, upzoning - or the right to build at higher densities - almost instantaneously increases property values, often substantially, because property sellers know that in a city like Vancouver, almost anybody would take the bait. Therefore, I don't think you can compare the value of land occupied by a single family home and lament that you could build X number of condo units and sell it for Y dollars on that same piece of land. The instant you rezone for higher densities, you have to compete with higher land prices, and this lowers the ability for developers to build larger units.
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Unfortunately, Vancouver's planning rules severely constrain multi-unit construction, particularly outside of the largely already built out downtown area. Most of Vancouver's land is occupied by low density detached dwellings and commercial buildings. Whether not not it would be desirable to replace all of the city with highrises is debatable, but that would be one potential housing solution that's been taken off of the table.
Condo prices haven't gone up as much in recent years but they are still hugely expensive for what you get and unaffordable for an average person. Seriously, in metro Vancouver you can pay $350-400k for a suburban 2-bedroom wood frame condo. This only sounds "affordable" to Vancouverites because their concept of real estate pricing is anchored to absurdly expensive detached housing.
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I don't think this option is "off the table". Tens of thousands of new units have been built in this city, it's just that they're condominium units. The fact that these condominium units have barely appreciated in value suggests that supply is, in fact, keeping up with demand within this market. That they are expensive to begin with is somewhat beside the point: Vancouver has always been the most expensive housing market in Canada, and probably always will be (high prices tend to generate their own demand, since normal microeconomic laws do not apply to housing, which is an asset more than a good). What matters more is that the price appreciation is relatively stable.
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