The Metro Vancouver Real Estate Thread

[rofina]

Originally Posted by Changing City

Your number seems too high. The recently approved Bosa 'jenga' Ole Scheeren tower on West Georgia has a combined Development Cost Levy, Public Art and Community Amenity Contribution of $279,400 per unit. The average size of the units in that project is greater than 900 sq. ft. - over two thirds will be 2-bed or larger. The CAC, which is over $250,000 per unit, was offered by the developer based on the increase of land value that is created by adding the residential tower. This is one of the higher CACs, because it's a high density tower with a very high anticipated value (so the CAC as % of the land lift will be greater). Lower density projects with lower land lift should generate a lower CAC per unit.

If you really think that if the developer would charge $250,000 less per unit if they didn't have to offer a CAC, then you have a very different understanding of how housing markets work. Almost all the CACs are going to pay for the new and upgraded facilities that will be provided in the West End, with around $5m to support the Heritage Action Plan. You can see all the details here.

If the developer wasn't expected to pay a CAC, either land values would be even higher, or the developer would make an even greater profit, and the West End wouldn't see any benefit in the form of new or upgraded facilities.

Discrepancy in figures aside, I don't disagree with a anything you said.

That wasn't my intended point, Ill elaborate.

Land all across Metro Vancouver is being valued on highest and best use, based on speculation on zoning policy.

Cambie corridor is a fitting example - when up zoned few years back, the homes along Cambie went from a market value of $1.5 to $3.0 because of a change in density and potential for assembly - I'm using round numbers.

Point #1: Zoning policy is causing land speculation and valuing properties at far above their current use.

Downtown - I agree that the city has managed to extract value out of the developments by using the CAC's, I don't mean to dispute this. There is a benefit to added facilities for resident use.

Point #2: High rise construction will never bail us out of high housing costs because of construction costs will always be inherently higher, CAC's are high, and land costs are high.Important note: by no means is this a suggestion of not building high rise, it absolutely needs to be a major part of the housing stock. Going forward it cannot, and will not, be an affordable solution.

Lastly, if the above 2 are true (I believe so) what is a feasible and locally applicable solution?

Point #3: Firm zoning policy to allow smaller freehold or freehold/strata dwellings on the miles and miles of residential zoned land currently in the Metro. Firm zoning is key here - meaning no room for land lift via rezoning 3 years down road to a mid-rise or high-rise. It means 800-1000 sq/ft dwelling in residential areas - similar to what a laneway homes offer, only scaled to whole city blocks.

High rise is not a viable affordable housing solution, baring the willingness of government to move into non-profit building on donated land - ala Singapore. I don't see this being politically viable in the Metro.

[Changing City]

Originally Posted by rofina

Discrepancy in figures aside, I don't disagree with a anything you said.

That wasn't my intended point, Ill elaborate.

Land all across Metro Vancouver is being valued on highest and best use, based on speculation on zoning policy.

Cambie corridor is a fitting example - when up zoned few years back, the homes along Cambie went from a market value of $1.5 to $3.0 because of a change in density and potential for assembly - I'm using round numbers.

Point #1: Zoning policy is causing land speculation and valuing properties at far above their current use.

Downtown - I agree that the city has managed to extract value out of the developments by using the CAC's, I don't mean to dispute this. There is a benefit to added facilities for resident use.

Point #2: High rise construction will never bail us out of high housing costs because of construction costs will always be inherently higher, CAC's are high, and land costs are high.Important note: by no means is this a suggestion of not building high rise, it absolutely needs to be a major part of the housing stock. Going forward it cannot, and will not, be an affordable solution.

Lastly, if the above 2 are true (I believe so) what is a feasible and locally applicable solution?

Point #3: Firm zoning policy to allow smaller freehold or freehold/strata dwellings on the miles and miles of residential zoned land currently in the Metro. Firm zoning is key here - meaning no room for land lift via rezoning 3 years down road to a mid-rise or high-rise. It means 800-1000 sq/ft dwelling in residential areas - similar to what a laneway homes offer, only scaled to whole city blocks.

High rise is not a viable affordable housing solution, baring the willingness of government to move into non-profit building on donated land - ala Singapore. I don't see this being politically viable in the Metro.

Gotcha. Thanks for clarifying.

I take your point about how anticipation of higher density raises land values, even if the City are going to take a chunk of the value as a CAC. I wonder if allowing higher density across the entire city, or better still the region, would really make housing cheaper. I agree in theory it should, but the Cambie example is interesting, because that lift from $1.5m to $3m of houses along Cambie Street wasn't based on actual change in zoning, but just the policy that permitted possible rezoning. It was the amount of density that was going to be allowed (at least triple the floorspace, and more than five times the number of units) that allowed developers to pay that increased price. It's possible that a similar anticipation of greater land value might occur if greater density was allowed across a wider area.

The other part of the equation is the prices buyers are willing and apparently able to pay. If there are enough people willing to pay over $1,000 per square foot in Lougheed, and $1,200 in Brentwood, it's a struggle to envisage a scenario where those prices come down significantly in the near future. Townhouses on Victoria Drive are around $900 per square foot, but at $1.25M they're still well out of reach of most buyers.

If prices do fall it will probably generate a significant collapse in the market for a while, because developers, if they can't sell at, or close to the prices they expect, will in many cases just stop building. That's apparently already starting to happen in Toronto; we saw something similar here a few years ago. And it's going to create a lot of (financial) pain for recent purchasers (who will also see their home values drop, if new prices are to fall). If rising mortgage interest rates and stress tests start to seriously limit potential purchases we might see prices level off quite quickly. Many observers expect them to fall - but that's been predicted for many years, and it still hasn't happened.

[rofina]

Originally Posted by Changing City

Gotcha. Thanks for clarifying.

I take your point about how anticipation of higher density raises land values, even if the City are going to take a chunk of the value as a CAC. I wonder if allowing higher density across the entire city, or better still the region, would really make housing cheaper. I agree in theory it should, but the Cambie example is interesting, because that lift from $1.5m to $3m of houses along Cambie Street wasn't based on actual change in zoning, but just the policy that permitted possible rezoning. It was the amount of density that was going to be allowed (at least triple the floorspace, and more than five times the number of units) that allowed developers to pay that increased price. It's possible that a similar anticipation of greater land value might occur if greater density was allowed across a wider area.

The other part of the equation is the prices buyers are willing and apparently able to pay. If there are enough people willing to pay over $1,000 per square foot in Lougheed, and $1,200 in Brentwood, it's a struggle to envisage a scenario where those prices come down significantly in the near future. Townhouses on Victoria Drive are around $900 per square foot, but at $1.25M they're still well out of reach of most buyers.

If prices do fall it will probably generate a significant collapse in the market for a while, because developers, if they can't sell at, or close to the prices they expect, will in many cases just stop building. That's apparently already starting to happen in Toronto; we saw something similar here a few years ago. And it's going to create a lot of (financial) pain for recent purchasers (who will also see their home values drop, if new prices are to fall). If rising mortgage interest rates and stress tests start to seriously limit potential purchases we might see prices level off quite quickly. Many observers expect them to fall - but that's been predicted for many years, and it still hasn't happened.

I agree on the developer front - developers have big overhead and need big projects to move the needle.

I think the relief in this market comes from smaller players, picking away at soft density that currently doesn't exist - like my 800 square foot example.

This wouldn't require tens or even hundredths of millions to build, and would allow small business owners to deliver in a more timely manner, while retaining a more "house like" feel to neighbourhoods.

I think these players could thrive in a down market, not being encumbered by huge construction costs, and large overhead.

EDIT:

One additional thought, looking at that Monogram project.

That I think is a great example of build form that should fill Vancouver. At $900 a foot I think its considerably too expensive - this is definitely a more than healthy margin for the builder. I would imagine those went up for $300 a foot plus land.

Quick math;

Land: $1,500,000
Build: 6 units at average 1250sq ft X $350 a foot = $2,526,000
Finance/Sell/Misc: $500,000
Total:$4,625,000

Split across 6 units: $770,833.00 cost a unit.

Selling for $1,250,000 thats a lot of profit.

[Changing City]

Originally Posted by rofina

One additional thought, looking at that Monogram project.

That I think is a great example of build form that should fill Vancouver. At $900 a foot I think its considerably too expensive - this is definitely a more than healthy margin for the builder. I would imagine those went up for $300 a foot plus land.

Quick math;

Land: $1,500,000
Build: 6 units at average 1250sq ft X $350 a foot = $2,526,000
Finance/Sell/Misc: $500,000
Total:$4,625,000

Split across 6 units: $770,833.00 cost a unit.

Selling for $1,250,000 thats a lot of profit.

I'm pretty certain that the 6 townhouse project is on two lots - 703 and 709 Victoria Drive. The math works slightly differently -

Land: $3,000,000
Build: 6 units at average 1250sq ft X $350 a foot = $2,526,000
Finance/Sell/Misc: $500,000
Total:$6,026,000

Split across 6 units: $1,004,333 cost a unit.

Selling for $1,250,000, that's a 19.7% profit, which is probably in the ballpark, and why they cost as much as they do. It also shows how difficult it is to build reasonably priced family homes when a tear-down (and so the land cost) is $1.5 million. Even though sale values for more expensive (or overpriced) properties on the west side are coming down, they're still a lot more than this area. West side homes will therefore cost even more, and eastside homes closer to Downtown are still expensive as well, Houses on 25 foot wide lots in Strathcona are all offered at $1.5 million +, and for now they're still getting multiple offers over asking with no conditions.

[rofina]

Originally Posted by Changing City

I'm pretty certain that the 6 townhouse project is on two lots - 703 and 709 Victoria Drive. The math works slightly differently -

Land: $3,000,000
Build: 6 units at average 1250sq ft X $350 a foot = $2,526,000
Finance/Sell/Misc: $500,000
Total:$6,026,000

Split across 6 units: $1,004,333 cost a unit.

Selling for $1,250,000, that's a 19.7% profit, which is probably in the ballpark, and why they cost as much as they do. It also shows how difficult it is to build reasonably priced family homes when a tear-down (and so the land cost) is $1.5 million. Even though sale values for more expensive (or overpriced) properties on the west side are coming down, they're still a lot more than this area. West side homes will therefore cost even more, and eastside homes closer to Downtown are still expensive as well, Houses on 25 foot wide lots in Strathcona are all offered at $1.5 million +, and for now they're still getting multiple offers over asking with no conditions.

Fair point - did not realise this utilised 2 lots, that's a game changer.

I can't come up with a reasonable way to reduce land costs other than a price crash. While unlikely, its entirely too risky to wait for as well, while things continue to deteriorate.

The only other solution, continuing to use this development as an example, would be to allow smaller units and increase the number to 10.

Something like 10 units at approximately 800 sq/ft would give a slight FSR bump, reduce costs per unit, while keeping build out costs relatively same.

Regardless - its clear the issue is not an easy one to solve. Particularly given our City's continued NIMBYism and reluctance to change.

[SpongeG]

Greater Vancouver's luxury real estate market is softening, report shows

Royal LePage report says sales are down but prices still climbing — for now

CBC News · Posted: May 10, 2018

Spring sales in the Greater Vancouver area's luxury real estate market are down but prices continued to climb, according to a new report.

Sales activity in the region decreased in the first quarter of 2018: the sales of detached luxury homes decreased by 38.2 per cent compared to 2017 and the sales of luxury condominiums decreased by 26.5 per cent, the study by real estate company Royal LePage said.

Despite this decrease in sales, the report noted there were still price gains.

...

http://www.cbc.ca/news/canada/british-co...rket-is-softening-report-shows-1.4656221

[SpongeG]

Housing restrictions add hundreds of thousands to Vancouver home prices

Greater Vancouver gap between building cost and market price largest in Canada

By Hayley Woodin | May 15, 2018

The cost of land restrictions and zoning regulations has a dollar amount, and in Greater Vancouver, it comes with five zeroes.

According to new research from the C.D. Howe Institute, “excessive regulation” around building single-family homes in the region added $600,000 to the price of an average home between 2007 and 2016.

The analysis also shows that barriers to building single-family supply make up about half the cost of housing in the area – the highest level in Canada, and one on par with Manhattan, New York.

...

https://biv.com/article/2018/05/vancouver-housing-restrictions-dramatically-increase-prices

[whatnext]

When they said you couldn’t use doorknobs, you knew regulations were out of control.

[Changing City]

The C D Howe study has a very tiny flaw. They looked at how much it costs to build a house, how much it sells for, and concluded the difference could be attributed to land restrictions and zoning regulations.

"Construction costs included labour and materials as well as a 17 per cent markup to account for developers’ profit margin. It does not include the cost of land." Quoted in the Vancouver Sun - my emphasis added.

As they're looking at the whole of Metro Vancouver, over 10 years, I would expect the escalation in the cost of land would be one of the most significant factors - especially in the City of Vancouver where almost every development requires redeveloping something that is already built.

[GilmoreStation]

Vancouver Pre Sale Condo Market Cools In April
http://vancitycondoguide.com/vancouver-pre-sale-market-cools-in-april/

This is a great news for a condo investor like myself

[VarBreStr18]

Originally Posted by GilmoreStation

Vancouver Pre Sale Condo Market Cools In April
http://vancitycondoguide.com/vancouver-pre-sale-market-cools-in-april/

This is a great news for a condo investor like myself

If indeed this trend is true and continues, the higher more expensive floors sales will definitely be affected, much like sale of hi end SFH slowing down . Instead of lowering price, developers will throw in perks like extra parking, free locker, decoration allowance.... .Don't expect a correction in condo price any time soon.

[rofina]

Some on the ground anecdotes:

- SFH in under $1.5 range is seeing good size price reductions, $200,000+ often.
- Nearly all sales I'm seeing in that range are under ask, some $100,000+ under ask.
- Listings are finally growing swiftly, and outpacing sales at about 2-1 on a daily basis.
- Sales are slow, and very slow considering decade old trends, seasonally adjusted. Spring market definitely never sprung this year.
- Condo sales have finally slowed down too.

Its very likely the market has rolled over. How deep will the correction be is what interests me most.

[whatnext]

Don't think this was reported here, though it will have a big impact on those looking to secretly stash money away in Canada:

China and Canada will exchange tax and financial information for the first time this fall, a move that will give Canadian authorities a window into the activities of some foreign-property owners who evade Canadian taxes in real estate markets such as Vancouver.

The exchange will also give Chinese authorities an ability to track down economic fugitives in Canada.

“It’s valuable for Canada because it gives [the country] more access to more personal financial information than ever before from China,” said Richard Kurland, a Vancouver immigration lawyer who described the development as “huge.”...

https://www.theglobeandmail.com/canada/b...e-tax-financial-information-with-canada/

[SpongeG]

Charging stations latest cost for new condo buyers

Mandatory EV plug-ins latest in myriad of costs borne by Vancouver new condo buyers

By Frank O'Brien | May 30, 2018

Three hundred dollars isn’t much but the mandatory cost for an electric vehicle (EV) charging station is the latest ding in government fees and regulations that now add more than $220,000 to the cost of a typical new Vancouver condominium, according to industry studies.

Last year electric vehicle represented 0.9% of total vehicle sales in British Columbia and they make up just 0.2% of vehicles on B.C. roads, according to Statistics Canada and Fleetcarma data. Yet, starting in 2019, 100% of new condo buyers in Vancouver will pay to have an electric car charging station installed in their parking garage.

...

https://biv.com/article/2018/05/charging-stations-latest-cost-new-condo-buyers

[WarrenC12]

Originally Posted by SpongeG

Charging stations latest cost for new condo buyers

Mandatory EV plug-ins latest in myriad of costs borne by Vancouver new condo buyers

By Frank O'Brien | May 30, 2018

Three hundred dollars isn’t much but the mandatory cost for an electric vehicle (EV) charging station is the latest ding in government fees and regulations that now add more than $220,000 to the cost of a typical new Vancouver condominium, according to industry studies.

Last year electric vehicle represented 0.9% of total vehicle sales in British Columbia and they make up just 0.2% of vehicles on B.C. roads, according to Statistics Canada and Fleetcarma data. Yet, starting in 2019, 100% of new condo buyers in Vancouver will pay to have an electric car charging station installed in their parking garage.

...

https://biv.com/article/2018/05/charging-stations-latest-cost-new-condo-buyers

What does that bolded part even mean? If that's a cost to the entire building, it's negligible.

I'm currently trying to navigate retro-fitting, and it's a huge hassle.

Edit: I see they are just piling on to the "taxes and fees" argument for expensive housing. Complete BS. Anybody who understands supply and demand will know that if government fees were to disappear overnight, prices would not change. Developers will charge whatever they can get. Prices are already coming down due to a decrease in demand.

When builders stop redeveloping, we can look at their costs.

[rofina]

Originally Posted by WarrenC12

What does that bolded part even mean? If that's a cost to the entire building, it's negligible.

I'm currently trying to navigate retro-fitting, and it's a huge hassle.

Edit: I see they are just piling on to the "taxes and fees" argument for expensive housing. Complete BS. Anybody who understands supply and demand will know that if government fees were to disappear overnight, prices would not change. Developers will charge whatever they can get. Prices are already coming down due to a decrease in demand.

When builders stop redeveloping, we can look at their costs.

No - we discussed this in another thread.

The $220,000 is the approximate charge per unit, by some accounts even higher.

High-rise pre-sales in downtown Montreal are at around $360,000 total cost.

I think whats infuriating is that in Mtl you can have a finished unit, profit and all for under 1/3 more than just development charges in Vancouver.

Little absurd...

[WarrenC12]

Originally Posted by rofina

No - we discussed this in another thread.

The $220,000 is the approximate charge per unit, by some accounts even higher.

High-rise pre-sales in downtown Montreal are at around $360,000 total cost.

I think whats infuriating is that in Mtl you can have a finished unit, profit and all for under 1/3 more than just development charges in Vancouver.

Little absurd...

I'd love to see a real developer pro-forma on that stuff. Also, what's property tax in Montreal? You have to pay one way or another for sewer, water, parks, roads, etc. It's not like the money collected is evaporating.

[LeftCoaster]

I think you need to look at the City's finances to see how that money is evaporating...

[WarrenC12]

Originally Posted by LeftCoaster

I think you need to look at the City's finances to see how that money is evaporating...

Vancouver's taxes are below the average in the Lower Mainland and very low when compared across Canada. If you have something specific and relevant you take issue with, by all means...

http://vancouver.ca/your-government/annual-budget.aspx

[whatnext]

Originally Posted by WarrenC12

What does that bolded part even mean? If that's a cost to the entire building, it's negligible.

I'm currently trying to navigate retro-fitting, and it's a huge hassle.

Edit: I see they are just piling on to the "taxes and fees" argument for expensive housing. Complete BS. Anybody who understands supply and demand will know that if government fees were to disappear overnight, prices would not change. Developers will charge whatever they can get. Prices are already coming down due to a decrease in demand.

When builders stop redeveloping, we can look at their costs.

Agreed, $300 per unit is negligible. I'd like to see the NDP offer more assistance to stratas to retrofit for charging stations, if they're going to raise the carbon tax, some of it should flow back to initiatives like that.