Slowing metro market still holding its own

PETER SIMPSON
Sun

When exposed to monthly statistics on housing starts, multiple listing service sales, the seasonally adjusted annual rate and the value of building permits, I am sure most people don’t quite know what to make of it all.

Housing analysts recently revealed housing starts are up, and sales are down. See what I mean?

So, stay with me for the next few paragraphs and I will attempt to provide some clarity.

A housing start is when construction of a dwelling unit commences.

On a detached home or townhome, it’s considered a start as soon as the foundation is complete.

On lowrise or highrise condo buildings, the underground parkade must be complete and work started on the first residential floor.

A multiple listing service — or MLS — sale is registered when a firm and binding deal has been achieved.

The value of building permits refers to the total dollar value of permits issued for new residential construction. Expenditures included in this data are materials, labour and overhead. Land is excluded.

Seasonally adjusted annual rate — SAAR — is an adjustment that removes seasonal variations in sales data. According to someone way smarter than I, the SAAR is calculated by dividing the unadjusted annual rate for the month by its seasonality factor, thus creating an adjusted annual rate for the month.

Now that you’re caught up, here are some thoughts on the Lower Mainland’s housing market.

Canada Mortgage & Housing Corp. released its monthly housing starts numbers last week. Lower Mainland starts were up nine per cent in April, from April of 2007, and January-to-April figures were up 16 per cent compared to the same four-month period last year.

Not surprisingly, multi-family housing forms (condos, townhomes) accounted for 83 per cent of all housing starts, solidifying what will likely prove to be a long-lasting imbalance in market share.

CMHC Senior Market Analyst Robyn Adamache said “the foundation of this [homebuyer] demand rests in the region’s buoyant economy, which is generating jobs and drawing people to the area.”

Residential construction alone is creating many jobs. The 6,691 housing starts to the end of April generated 18,735 person-years of employment (full-time jobs for one year).

Responding to the siren call of provincial prosperity — housing affordability issues notwithstanding — singles and families are moving here from abroad and from other provinces. Demographers say the Vancouver area will need to accommodate another million people over the next 20 years.

This four-month strength in housing starts is noteworthy because 2007 was the best year for starts since 1993. Of course, today’s starts are a result of yesterday’s sales. Slower sales during the remaining eight months of the year could weaken activity, bringing starts more in line with earlier predictions. And builders might assume cautious wait-and see positions, delaying new projects.

There is no doubt the resale market has slowed somewhat. Lately, I have noticed an abundance of “For Sale” signs around my neighourhood, and “Sold” stickers are few and far between.

Delaying the purchase of a new home might cost you some cash. Economists and housing analysts believe cost pressures will continue to push prices higher, although they are expected to climb no higher than mid-single digit territory this year. Two years ago, the increase was a lofty 21 per cent.

Construction is scheduled to commence this year on many sold-out condominium projects. Ninety per cent of a recent condo offering in Surrey sold in just four hours. Just goes to show how popular well-priced, wellplaced condos are with first-time buyers eager to step onto the property ladder.

Also, downsizing empty nesters seeking less-complicated, lock-it-and-leave-it lifestyles are considering condos for their next move.

Looking ahead to December 31, cloudy crystal ball firmly in hand, should starts remain stable for the balance of the year, or even slip to levels below last year, builders will have averaged more than 19,000 homes annually since 2004.

And to think that just eight years ago, at the dawn of a new millennium, only 8,203 housing starts were achieved. Those fortunate enough to own a home since those dismal days have enjoyed quite a ride on the equity train. And it’s still chugging along, albeit at a slower pace.

In a column last month, I wrote that, according to CMHC, less than one per cent of Vancouver area new-home buyers qualified for the full GST rebate in 2007. Oops, my gaffe: it should have read Vancouver-area buyers of new single-family detached homes.

Condos, of course, are typically less costly than detached homes, and a greater percentage of condo buyers would qualify for a GST rebate. Still, the finance minister should seriously consider adjusting the rebate thresholds to bring them more in line with this region’s high housing prices.

A buyer of a new $450,000 detached home or condo has to pony up $22,500 in GST.

To use popular eco-buzzwords, taking that much green from a family is not my idea of sustainability.

Increased density, infill among solutions

BOB RANSFORD
Sun

I spent the last week working with planners, architects and housing professionals from across North America. We have been working on a development plan in Tsawwassen that promises to be a world-class model for how our sprawling suburbs can become more livable, more sustainable and more affordable.

As we drove around the local neighbourhood in which we were working, I chatted with one of the out-of-town housing experts about housing prices in the Vancouver area.

“You live in a beautiful area, but what you are doing to your people with the price of housing is obscene.”

Andres Duany is a global leader in town planning and community housing. He is based in the U.S., but has worked all around North America, in South America, in Asia, in Britain and in Europe.

The Vancouver region is the priciest metropolitan region in the country to own a home. Owning a detached bungalow in Vancouver takes up 74 per cent of a household’s income. A typical detached house in the Vancouver area costs more than $750,000, up nearly 15 per cent from a year ago.

I explained to Duany that municipalities all over B.C. are commissioning studies and debating a range of government initiatives to try to combat what has become almost a housing crisis.

“I can’t believe what I am hearing,” he responded.

“Why do you allow your citizens to hinder the supply of housing? Don’t you people understand supply and demand? This is so cruel.”

My friend is right. Why do we allow people to hinder the supply of housing?

We like to think we’ve done things right in the way we plan our communities here in this region. We talk about our livable region strategy with pride. In reality, we only have downtown Vancouver to point to as a true example of success.

Most of our suburbs can hardly be called livable. They are sprawling car-dependent places with little identity and little to support civic engagement.

Most suburbs offer the usual monoculture of housing in the form of the large single-family home — that highly priced “average bungalow.”

While we hold firm to the artificial line that was drawn to contain sprawl and supposedly protect farmland, we know that it is merely a policy tool as vulnerable to politics as any other policy is.

We’ve done little to demonstrate the value of agriculture and elevate local food security as part of our culture to ensure the true protection of that land.

Meanwhile, we’ve allowed pockets of development to continue in areas dislocated from established neighbourhoods, while every attempt to infill in established neighbourhoods is met with a horrible outcry from the public.

Any attempt to increase the supply of housing is met with resistance from those who fear change. The opponents of density in infill locations universally talk about protecting their quality of life.

In reality, all they are doing is restricting supply and guaranteeing continued high home prices.

High home prices are, in fact, eroding quality of life.

Those who dream about some magic bullet to deal with housing affordability are doing just that — dreaming. Government will never be able to solve the problem. Our housing is provided in a market governed by supply and demand.

Ending the obscenity of high housing prices means increased urban densities, more compact development in the suburbs, smaller homes, infill in established neighbourhoods and a reconciliation between urbanism and agriculture at the urban edge.

That means ordinary citizens need to advocate growth. Unfortunately, most people are more inclined to take action only when they feel threatened. Then they are quick to oppose.

Quality of life is threatened in our region by high housing prices. It’s time people rose up to oppose the restrictions that constrain our housing supply.

Buyers can tell completion date is realistic because of the progress already made

Sun

Project location:
Fairview, Vancouver Project size: 49 apartments and 7 townhouses, 11-storey building Residence size: 400 sq. ft. (studios)

—1,400 sq. ft. (townhouses) Prices: From $389,000
Sales centre: 1690 West Eighth Ave. Hours: Noon — 5 p.m., Sat — Thurs Web: museeliving.ca Telephone: 604-734-9100 Developer: Prima Properties Architect: Gateway Architecture Interior design: Creative Design

Works Occupancy: July building. A 22-foot-high entry, for example, and its double-height glazing brings in an abundance of natural light.

Before that, however, is another impressive common-property feature: a fountain and reflecting pool.

The second-floor courtyard has a rock garden, benches and lawn where residents can relax. The presentation centre, which is just off the courtyard, will later become the residents’ amenity centre and include a full gym.

All the homes have generously sized balconies and the townhomes and penthouses have their own private 500-square-foot rooftop decks with outdoor fireplaces.

City hall was certainly impressed when Prima and its architect negotiated their way through the regulatory regime before construction began.

“…very handsome and suitable for the area,’’ the Urban Design Panel said.

‘‘…a well resolved proposal which provides many benefits beyond that which would be achieved with an outright proposal,” Development Permit Board staff decided.

These endorsements earned Musee’s> developer relief – extraordinary relief – from the local zoning schedule.

Absent “the many benefits” brought to the table by Prima, the zoning permitted a building of about 17,000 square feet.

With “benefits,” it’s almost 35,000 square feet.

Absent the benefits, the permitted building height was 30 feet.

With benefits, it’s about 110 feet.

The “benefits” that impressed city hall staff included:

-enhanced pedestrian realm though landscaped setbacks on the street.”

– – “a landscaped corner bulge.”

— elimination of “two existing driveway crossings.”

On top of the extra 35,000 “benefits” feet the developer got another 5,200 by helping to finance the rehabilitation of a Gastown heritage property. It bought a “heritage density transfer” from the owner of the Gastown property.

“Transfer of density carries a public benefit to support retention of the city’s heritage resources,” the city hall discussion of Prima’s application notes.

The Musee homes are certainly substantial. The granite Kitchen countertops are one and-a-half inches thick – slightly higher than what most condo projects offer. All the kitchens have European stainless steel appliances, with Bosch four-burner gas cook-tops, self-cleaning wall ovens, flat-front dishwashers and Fisher and Paykel refrigerators with bottom-mount freezers and ice-makers/water dispensers. Homes also have Panasonic stainless steel mircowaves.

The bathrooms are elegantly appointed with either glass vanity tops with integral basins or polished granite with square undermount sinks, deep soaker tubs with porcelain skirts and modern style wood grain cabinetry with long polished chrome pulls.

The suites also have electric fireplaces and roller-blinds on the windows. The penthouses have air conditioning.

Sales manager Adrian Gomes says there has been a lot of interest from Vancouverites from large Westside households wanting to downsize, as well as from downtown Vancouver condo-owners who want to move into a quieter residentia l neighbourhood.

Gomes adds that from the fifth floor up, there are “awesome” views of English Bay.

Every unit will be allotted at least one parking space; however, the townhomes and penthouses will have two parking spaces in their own private garages on 8^th Avenue.

Four property owners are collaborating to create a cultural district near BC Place

Frances Bula
Sun

A Vancouver Art Gallery on the waterfront and a refurbished BC Place are only the first steps in what could be a new high-density urban entertainment/cultural hub on False Creek, the likes of which Vancouver has never seen.

The four property owners in the northeast sector of False Creek are collaborating to create a new district that would see a cluster of mixed-use towers, hotels, multi-level walkways, green spaces, plazas and a ceremonial staircase in the area around BC Place and the Plaza of Nations at the south foot of Georgia.

Those ideas have until now been working their way slowly through a high-level city planning review, with some uncertainty about whether city and developer visions for the district meshed.

The Plaza’s owner, Canadian Metropolitan Properties, commissioned the London firm that includes renowned “eco-skyscraper” architect Ken Yeang to come up with a design, one that startled city planners last October with its soaring angular towers, sky walkways and density. The developer was told to take it away until the review is complete.

But the province’s announcement Friday that the gallery will be built on the site of the old Expo 86 Enterprise Hall at the Plaza, which occupies a prominent position on False Creek, firmly orients the planning to the landowners’ vision. It will require city planners to design a district to mesh with such a prominent cultural institution, and it will also force them to adjust their planning for a cultural precinct higher up Georgia, around the Queen Elizabeth Theatre.

“We think the city now has the pieces to rethink this whole area,” said James Cheng, the architect working with Canadian Metropolitan, which sold the land for the art gallery for $1 as part of a complex negotiation with the province. “And we think it’s a very, very exciting vision.”

He has developed a plan for the Plaza specifically and he is part of the collaborative landowners’ team that has developed a plan for the whole area. Cheng said that plan will take Vancouver to a new level of innovation, beyond its current success with its podium-and-tower downtown that has achieved international recognition. The city was taken by surprise.

Deputy city manager Jody Andrews said staff only found out about the province’s decision Friday morning, hours before the announcement.

Andrews refuted the idea that the city was bypassed, but he did say the city’s two related planning reviews — of northeast False Creek and of the cultural precinct — will now have to be “re-reviewed.”

“There’s no question with this new announcement that we will have to factor that in. Staff are going to work very hard to fold that into the review.”

Besides Canadian Metropolitan, the other owners in the district are Concord Pacific, with land on either side of the plaza, with whom Cheng also works; the province, which owns BC Place and land around it; and Aquilini Investments, which owns GM Place and land around it. Cheng said there has also been some discussion about the idea of relocating the existing casino, now in Enterprise Hall, to a large new River Rock-style facility on the Smithe side of BC Place. All four developers want to build towers of some description and one of the biggest debates between them and the city is what mix there should be of office and residential.

The city has been pushing to get developers to build office space in downtown Vancouver. Many of them, who have become accustomed to the dynamics and profit levels of the residential market, say there’s not enough demand outside the central business district. The Aquilini group recently abandoned a project to build an office tower beside GM Place, saying it couldn’t make it pay.

Cheng said if the area is going to work as an entertainment and culture hub, it has to have a strong proportion of residential property or it will be a dead zone at night.

Another issue that’s being debated is how much activity to have on the waterfront, both on the private land and in the park that will be developed between the Plaza and Science World.

That’s something that an American public-space expert, Fred Kent, also said when he did consultation work for the city recently, said Cheng.

© The Vancouver Sun 2008

 

Bob Rennie says developers need to look at cheaper ways to build condos

Sun

Demand for housing in downtown Vancouver will only increase over the next few years, and developers need to look at cheaper ways to build high-density condominium units, real estate marketer Bob Rennie told an audience of 700 developers and realtors Thursday at the Fairmont Hotel Vancouver.

Rennie, whose company Rennie Marketing Systems has sales volumes exceeding $1 billion annually, said this means building Ikea-styled interiors rather than the high-end finishing that has pushed units in the downtown to $879 per square foot.

“We’ve all figured out the luxury market for high net-worth individuals from China, Korea, Iran, and [with] money from Europe,” said Rennie, who cited the Woodward’s project as proof you can build housing for two levels of affordability.

Rennie said it would be possible to make affordable units if cities give away excess density and if developers’ profits were capped at 10 per cent.

“There’s an insatiable demand for affordability downtown as we see price levels rise and supply disappearing,” said Rennie, adding that Vancouver’s population density is currently fourth-highest in North America behind New York, San Francisco and Mexico City, and is projected by 2021 to become the second-most- dense city, trailing only New York.

He said it’s time for all the stakeholders in Vancouver’s housing future — developers, residents and governments — to stop working in isolation and work together to make it possible for people to afford to buy housing in the city where they work, and to prevent pricing a young generation out of the market.

Rennie said 48 per cent of Vancouver residents surveyed said they would make a condo their principle residency, and the same number said they would raise a family in a condo.

In 2007, 76 per cent of all MLS-listed housing sales west of Main Street were condos, compared to 70 per cent in Burnaby, 66 per cent in Richmond, 56.5 per cent in the Tri-Cities area, and 39 per cent in Maple Ridge, where detached houses are still relatively affordable.

Whichever way the housing is built, it must be ecologically efficient. The same survey of Vancouver residents revealed that 96 per cent of people listed the top amenity to their housing as energy efficiency.

© The Vancouver Sun 2008

Eric Beauchesne
Sun

The housing market is cooling, the only question is by how much, according to government and private-sector forecasts released Thursday.

Sales of existing homes, which have fallen for four straight months now, will plunge 15 per cent this year from last year’s record level, and the average increase in prices will ease to five per cent, Scotiabank forecast Thursday.

After many false calls, there is now convincing evidence Canada‘s housing market has come off the boil, it said. In fact, once adjusted for inflation, the average resale price in Canada declined for the first time in seven years during the first quarter, Scotiabank said.

“Price gains should slow further in 2009 with the return of a balanced market for the first time in a decade,” said Scotiabank economist Adrienne Warren. “Meanwhile, housing starts are projected to gradually moderate, returning toward underlying annual household-formation levels of around 180,000 by the end of the decade, from the current 225,000 unit range.”

The cooling, however, should moderate in 2009, she said in an interview.

Scotiabank’s projected plunge in sales this year was nearly double the 8.5 per cent drop expected by the federal housing agency, which also released its forecast for sales, prices and housing construction starts for this year and next.

However, neither Canada Mortgage and Housing Corp. nor Scotiabank expect a major housing market meltdown, as followed previous housing booms in the 1980s and 1970s, or has occurred over the past year in the United States.

“Despite a slowdown of . . . sales, demand remains strong by historical standards,” CMHC said, projecting that home prices would continue to outpace inflation this year and next, rising 5.1 per cent this year to a national average of $323,000, and 3.3 per cent next year to $333,500.

Scotiabank’s Warren said there are a variety of reasons for confidence in the continued health of the housing market. Unlike in the U.S., home prices in Canada are not substantially overvalued, the real estate market is not overbuilt and households are not over-leveraged, she said.

Still, the 10 per cent average annual increase in home prices over the past half decade was unsustainable, and a return to more historical norms is a welcome development, Warren said.

“At the end of the day, we predict a soft landing for the Canadian housing market, with somewhat lower sales and construction,” Warren said.

However, Scotiabank cautioned that a major risk to the outlook would be a deeper and more protracted downturn in the U.S. economy, with more serious repercussions for Canada‘s economy and jobs and incomes.

© The Vancouver Sun 2008