The real problem with Vancouver’s outrageous house prices

[misher]

Delete this post please I was stupid.

[fredinno]

Originally Posted by GenWhy?

I mean, if we had zoning and City policy that allowed this then we'd be in a little bit less of a situation.


Parking minimums, unit maximums, primary/secondary unit definitions and limitations, and the emotional attachment to SF homes as they don't even exist rarely to this day (for most contain 3 homes) is what is one of the biggest factors in a lack of housing supply (strata, rental, co-op) as well as land / development cost.

Exactly, people always like to blame others, but never themselves. Hence, only the demand side is brought up in discussion, not the limited availability of supply.

[rofina]

Originally Posted by officedweller

Blog post by Michael Geller:

So why are developers so keen to build unaffordable condos along the Broadway Corridor?
I hope this helps explain why.
http://gellersworldtravel.blogspot.com/2018/12/so-why-are-developers-so-keen-to-build.html

Everyone should read this, don't want it stuck on bottom of page.

[Vin]

I'm taking a step further: I'm forcing people to read it. One thing Michael Geller missed out: Viewcones and other density limits restrict the number of units, and hence FSR, for a certain lot, further compounding the situation.


MONDAY, DECEMBER 3, 2018
So why are developers so keen to build unaffordable condos along the Broadway Corridor? I hope this helps explain why.
http://gellersworldtravel.blogspot.com/2018/12/so-why-are-developers-so-keen-to-build.html


Today Patrick Condon (a friend and colleague whose passion I admire) wrote a column in the Tyee. A media outlet I admire. He writes about a book by John Gray, a local writer I also admire.

In his column, Patrick criticizes the expensive condos that are going to be built along the Broadway Corridor.

"The one thing we know with certainty is that these potential 15 million square feet of new condos will not sell for less than $1,200 a square foot.
You can just barely get a tiny two-bedroom unit into 700 square feet. That means it will cost you $840,000 to get into that baby"

Why does new housing so often costs $1200 psf. Or more. Let's analyze what it costs to build a condominium.
What do you think is the current construction cost for a new concrete building meeting Vancouver's Building code? (Yes, Vancouver has its own Building Code which makes it more expensive to build here than say Burnaby or Richmond).
Is it $200 a foot? $250? $300? $350?

Based on my recent experience, it costs more than $400 a foot for a fairly standard product. Rental or condo. The estimated cost for a 6-storey concrete building on the West Side of Vancouver with which I am familiar is closer to $500 psf.

Now, what do you think the 'soft costs' are? These include consultant fees (on most projects there will be 15 different consultants), permits, DCLs, Metro DCLs, other municipal fees, taxes, Homeowner Protection Office fees, legal, insurance, development management. Guess! Did you say 10% of the construction costs? You're low.

Now let's talk marketing. The bank requires most developers to pre-sell at least 50% of the value of the project. In addition to sales commissions (3-4%), marketing costs are usually another 2-5% depending on size, location, etc.

Now there's financing. In addition to interest costs, how much do you think you must pay mortgage brokers and lenders to arrange a $50 million loan? $100,000? $250,000? $350,000? Guess again.
Now you must remember that although you buy land and pay construction and soft costs to build 100,000 sq ft, you can probably only sell 85,000 sq. ft. Why, you can't sell the corridors, stairwells, elevator, lobby, etc.

Meanwhile, we haven't even considered land cost or municipal Community Amenity Contributions. On June 20, 2018, Council approved new Broadway Corridor CACs of $330 to $425 psf. Really. I'm not making this up!

Now, let's turn to developer's profit. Most financial institutions want to see an estimated profit equal to at least 15% of the costs, recognizing that projects may well take 4 to 5 years from conception to completion. 17.5% is probably an industry norm these days.

So what's my point? Developers don't set out to build luxury projects. But when you add up the costs, you're at luxury prices. Those who recently purchased sites in Vancouver at $450 a foot or more need at least $1500 a foot to make a project viable. And right now, it looks to me like many won't get it.

Yes, you could replace the granite countertops and frameless shower stalls and stainless steel appliances with something a bit more modest, but the savings are bubkes. (https://www.thefreedictionary.com/bubkes)

So to Patrick and others, before criticising developers who only seem to want to build luxury housing, I suggest you study in detail a 2018 real estate proforma. Then you might better understand why those Broadway condos will cost $1200 a foot or more.

To see how we might reduce some of these costs, check out my 2017 SFU Affordable Housing Lecture. https://www.youtube.com/watch?v=mRexc_XABqw

I hope this is helpful. Comments?

[squeezied]

Originally Posted by Vin

I'm taking a step further: I'm forcing people to read it. One thing Michael Geller missed out: Viewcones and other density limits restrict the number of units, and hence FSR, for a certain lot, further compounding the situation.

Geez, just let the article stand on its own without bringing view cones to everything. Eliminating view cones will barely make a dent in Broadway's affordability. Adding more units to a development may make it more economically viable for the developer but won't lower the selling price of the units. There'll just be more of the same expensive units. The market rate ultimately determines the price.

You'll get better affordability rezoning the rest of Vancouver's single family houses to low/mid rises than eliminating view cones.

[Vin]

Originally Posted by squeezied

Geez, just let the article stand on its own without bringing view cones to everything. Eliminating view cones will barely make a dent in Broadway's affordability. Adding more units to a development may make it more economically viable for the developer but won't lower the selling price of the units. There'll just be more of the same expensive units. The market rate ultimately determines the price.

You'll get better affordability rezoning the rest of Vancouver's single family houses to low/mid rises than eliminating view cones.

Viewcones have never been eliminated, so how come you are so certain they will not help improve affordability? I did say it could be one of the contributing factors, and certainly not all of it.

[squeezied]

Originally Posted by Vin

Viewcones have never been eliminated, so how come you are so certain they will not help improve affordability? I did say it could be one of the contributing factors, and certainly not all of it.

Look at any neighbourhood that has been adding taller buildings in the past couple years: Marpole, Brentwood, Metrotown, etc. They aren't getting any more affordable. And look at Oakridge, do you think if the height were to hypothetically reduce from 40+ stories to 10 stories the units would be more expensive? To repeat myself again:

Adding more units to a development may make it more economically viable for the developer but won't lower the selling price of the units. There'll just be more of the same expensive units. The market rate ultimately determines the price.

[rofina]

Originally Posted by squeezied

Geez, just let the article stand on its own without bringing view cones to everything. Eliminating view cones will barely make a dent in Broadway's affordability. Adding more units to a development may make it more economically viable for the developer but won't lower the selling price of the units. There'll just be more of the same expensive units. The market rate ultimately determines the price.

You'll get better affordability rezoning the rest of Vancouver's single family houses to low/mid rises than eliminating view cones.

This makes sense under normal circumstances. But not with the amount of tax built into every new unit of housing.

CAC's alone will make any unit along Broadway beyond affordable.

If they go with higher range of $425 a foot that's $300,000 a unit assuming a not extravagant 700sq/ft unit.

One theoretical condo, before its anything more than what I just typed, will already cost a minimum of $300,000. That's pretty insane.

Assume land costs being cut in half ( not likely )
Assume labour costs being cut in half (no chance, we face a long term labour shortage in the trades)

And that unit is still a minimum of $600,000 under the most optimistic scenario imaginable.

We will never build an affordable unit of housing under the current system. Its literally impossible.

[scryer]

Originally Posted by squeezied

Look at any neighbourhood that has been adding taller buildings in the past couple years: Marpole, Brentwood, Metrotown, etc. They aren't getting any more affordable. And look at Oakridge, do you think if the height were to hypothetically reduce from 40+ stories to 10 stories the units would be more expensive? To repeat myself again:

To make a claim that height is a non-factor, you will need to start providing evidence and resources. The article that was posted, from what I took from it, is that the cost to build in BC is already very high. Now again, with these articles we have to take it with a grain of salt.. This is a very complicated issue and the thing that Vin has been emphasizing is that relaxing height restrictions would only be a small detail to contribute to a more affordable Vancouver. And honestly, these height restrictions are extremely superficial and they only serve the folks that can 'enjoy' these views (most of which are rich folks in Point Gray or the average tourist in QEP).

More height = more sq. ft = supposedly more supply. Need I say more?

We cannot stand by idly anymore while the current and future generations work themselves like donkeys just to afford a 600 sq. ft condo.

[GenWhy?]

Soooo much misinformation.

[squeezied]

Originally Posted by scryer

To make a claim that height is a non-factor, you will need to start providing evidence and resources. The article that was posted, from what I took from it, is that the cost to build in BC is already very high. Now again, with these articles we have to take it with a grain of salt.. This is a very complicated issue and the thing that Vin has been emphasizing is that relaxing height restrictions would only be a small detail to contribute to a more affordable Vancouver. And honestly, these height restrictions are extremely superficial and they only serve the folks that can 'enjoy' these views (most of which are rich folks in Point Gray or the average tourist in QEP).

More height = more sq. ft = supposedly more supply. Need I say more?

We cannot stand by idly anymore while the current and future generations work themselves like donkeys just to afford a 600 sq. ft condo.

No, I'm the one implying that "relaxing height restrictions would only be a small detail to contribute to a more affordable Vancouver". Albeit a very very small impact.

Originally Posted by squeezied

Eliminating view cones will barely make a dent in Broadway's affordability.

Maybe you could provide evidence and resources to refute my claim? I understand the basics of supply and demand. The vast majority of the region does not have view cones. Which neighbourhood has become more affordable by building taller buildings? As I've said before, rezone the rest of Vancouver to allow low or midrises and you'll have better affordability than eliminating view cones.

And view cones for rich people in Point Grey? You either don't know where Point Grey is or you don't know where the majority of the view cone origins are.

[squeezied]

Originally Posted by rofina

This makes sense under normal circumstances. But not with the amount of tax built into every new unit of housing.

CAC's alone will make any unit along Broadway beyond affordable.

If they go with higher range of $425 a foot that's $300,000 a unit assuming a not extravagant 700sq/ft unit.

One theoretical condo, before its anything more than what I just typed, will already cost a minimum of $300,000. That's pretty insane.

Assume land costs being cut in half ( not likely )
Assume labour costs being cut in half (no chance, we face a long term labour shortage in the trades)

And that unit is still a minimum of $600,000 under the most optimistic scenario imaginable.

We will never build an affordable unit of housing under the current system. Its literally impossible.

A $700,000 condo will still sell for $700,000 despite whatever fees or charges the city imposes. There’ll just be a point where the fees are so high that it makes no economic sense to develop at the current market rate. The developer may try selling at a higher price (within reason) to recuperate some of the fees and charges but they’ll just have a harder time. A $700,000 condo at market rate won’t sell for $1,000,000 just because of additional fees and charges, people will just look elsewhere outside the city.

[scryer]

I think I may need to wait for you, Squeezied, to edit your posts before I even attempt to respond (as you quoted and responded to yourself in the first post?) and I might be misunderstanding something.

Either that or I'm cool taking a break from this thread.

Now where was that popcorn emoji?

[Vin]

Originally Posted by squeezied

Look at any neighbourhood that has been adding taller buildings in the past couple years: Marpole, Brentwood, Metrotown, etc. They aren't getting any more affordable. And look at Oakridge, do you think if the height were to hypothetically reduce from 40+ stories to 10 stories the units would be more expensive? To repeat myself again:

They are more affordable relative to Vancouver's condos. Imagine if they were all 6-storey apartments: prices would probably still be similar, but a lot more people will have to live even further away from the transit stations or downtown.

Oakridge is different. The buildings are built for the luxury market, just like Vancouver House, and never intended for the middle-class. There will be a lot more affordable apartments and condos around Oakridge in the future once the City allows tall highrises to go in.

[GenWhy?]

Originally Posted by Vin

They are more affordable relative to Vancouver's condos. Imagine if they were all 6-storey apartments: prices would probably still be similar, but a lot more people will have to live even further away from the transit stations or downtown.

Oakridge is different. The buildings are built for the luxury market, just like Vancouver House, and never intended for the middle-class. There will be a lot more affordable apartments and condos around Oakridge in the future once the City allows tall highrises to go in.

In the future? When land and construction costs come down? Is affordable a 1-bed under 700k or under 990k?

[logan5]

Originally Posted by scryer

More height = more sq. ft = supposedly more supply. Need I say more?

That’s so wrong. FSR determines how many sq feet. You don’t need to go 40 or 50 stories to meet the FSR. Metrotown for example has an FSR limit (for residential) of 5. That can be done in a 12 story building easily. And when you build taller, the units cost more to build.

Are you trolling?

[Vin]

Originally Posted by GenWhy?

In the future? When land and construction costs come down? Is affordable a 1-bed under 700k or under 990k?

You don't see that kind of price range at Edmonds, Kingsgate, Surrey Central, Coquitlam, Lougheed or New Westminster high-rise neighbourhoods, do you?

Metrotown isn't the only high-rise district outside Vancouver now. There are many other areas made affordable because more people can live in a relatively smaller district with all the tall buildings.

[Vin]

Originally Posted by logan5

That’s so wrong. FSR determines how many sq feet. You don’t need to go 40 or 50 stories to meet the FSR. Metrotown for example has an FSR limit (for residential) of 5. That can be done in a 12 story building easily. And when you build taller, the units cost more to build.

Are you trolling?

The towers are well-spaced, and residents don't feel claustrophobic as most have pretty decent views. If you were to squeeze everyone into 12-storey buildings, you will need to create rows of wall-to-wall apartment blocks. Forget about squares, plazas, or pocket gardens then. Everyone would be looking into each other's bed or living rooms. No matter how you see it, you always create higher density with taller buildings.

scryer isn't trolling at all.

[Vin]

These are the people we should be supporting: the YIMBYs. Let's hope there is a new wave of people who can really change how we do housing and build-density in this city.


Mark Marissen: YIMBYs will dominate future Vancouver politics
https://vancouversun.com/opinion/op-ed/mark-marissen-yimbys-will-dominate-future-vancouver-politics


Vancouver’s housing crisis is the “new normal.” This has profound political implications, which have already shaken up Vancouver’s politics.

Prior to the crisis, successful municipal politicians usually catered to the NIMBY (Not In My Back Yard) crowd, those reflexively opposed to building new housing.

Since the 1920s, Vancouver has reserved more than 75 per cent of its residential land for single-family homes to keep the NIMBYs happy.

This zoning was originally designed to keep “ethnics” and the poor away from most neighbourhoods, especially on the West Side.

Fast forward to today.

On Vancouver’s downtown peninsula, where density has always been allowed, it’s starting to feel like a mini-Manhattan, but most of the rest of the city remains stubbornly suburban, causing this crisis.

Even if measures aimed at curbing demand soften the market significantly, virtually no young person now has any hope to own a piece of Vancouver.

It’s not surprising that they’re calling for radical change. They want more housing of every kind and they’re getting organized.

Vancouver activists, calling themselves Abundant Housing, joined others from U.S. cities like San Francisco and New York to create a local YIMBY movement — short for Yes In My Back Yard.

YIMBYs cut across political lines.

They’re urbanists who support lifting the barriers to building the housing everyone needs.

They’re liberals, socialists, environmentalists and transit boosters, but they also support reducing the red tape that keeps many homebuilders in permitting purgatory.


Independent Vancouver mayoral candidate Shauna Sylvester listens as Non-Partisan Association mayoral candidate Ken Sim answers a question on rent control as candidates for Vancouver council participate in a panel discussion on housing. GERRY KAHRMANN / PNG

Vancouver YIMBYs come to public hearings to support housing projects in a city with a near-zero vacancy rate.

Their arguments for things like allowing “four floors and corner stores in every neighbourhood” now have good proof points from Portland and Seattle, where high rents have now dropped due to recent building booms.

In San Francisco, YIMBYs have been at it for a little longer. Pro-housing London Breed was elected mayor this year, but YIMBY-backed candidates were defeated recently in their first big play for the next rung at city hall.

In Vancouver, YIMBYs can be found in various camps across the political spectrum.

In October, 37-year-old Hector Bremner won a council by-election for the Non-Partisan Association with a YIMBY platform.

The old guard from the NPA — the party almost as old as exclusionary zoning itself — didn’t pay much attention until Bremner started advocating for legalizing student housing near the University of B.C. in one of the richest parts of the city.

The NIMBYs on the NPA board fought back and blocked him from running for mayor under their banner.

With 100 days to go until the municipal election, Bremner launched his own party, YES Vancouver.

YES recruited a diverse, inclusive slate of candidates and produced the most comprehensive, detailed YIMBY manifesto for a political party ever, but proved to be no match to the cacophony of candidates and more established brands.

But the conversation certainly shifted.

In one of its last acts before the election, Vision Vancouver did a minor YIMBY thing by legalizing duplexes throughout the city in an attempt to wedge urbanists away from the NPA and the Greens.

Mayoral candidates Shauna Sylvester and Kennedy Stewart found themselves agreeing with Bremner about housing often at mayoral debates. Scores of independent candidates pushed YIMBY ideas.

YIMBYist One City got one candidate elected with the help of organized labour.

Pro-housing Stewart beat the less-enthusiastic-about-housing Ken Sim for Mayor but, it appears so far that the majority of councillors are zoning reform skeptics.

Stewart may have a challenge getting his housing plans through. If he fails, look for a stronger, more united movement in the months and years to come.

[squeezied]

Originally Posted by scryer

I think I may need to wait for you, Squeezied, to edit your posts before I even attempt to respond (as you quoted and responded to yourself in the first post?) and I might be misunderstanding something.

Either that or I'm cool taking a break from this thread.

Now where was that popcorn emoji?

Are you pretending you don’t understand my post so you don’t have to address what I said? Or maybe I just have to spell it out to you.

I quoted myself to show that I’m the one implying view cones are a small impact to affordability, not Vin. Where has Vin said view cones are only a small component to affordability?

Anyways for popcorn fun, I’d like to see you provide the ‘evidence and resources’ on how view cones are for rich people in Point Grey.