Douglas Todd: Vancouver is selling increased density to pay for more amenities. Is it worth it?

Douglas Todd
The Vancouver Sun

Opinion: Developers’ contributions to infrastructure are a “double-edged sword” that lead to too much luxury housing. But they also create “a big revenue stream,” says specialist

 The city of Vancouver website applauds the way property developers are increasingly providing hundreds of millions of dollars to help build housing, daycares, parks and community centres.

 

But some councillors and specialists warn the city is becoming dangerously dependent on increasing zoning density for highrises and other buildings in return for developers contributing heavily to infrastructure.

“We’ve created a monster,” says Councillor Colleen Hardwick, who maintained previous councils never intended that developers’ so-called community amenity contributions become a regular flow of money and facilities.

A Simon Fraser University sustainability specialist, Alex Boston, says amenity contributions are a “double-edged sword” that create “a big revenue stream,” but also lead to too much housing construction for the luxury market. Vancouver and other municipalities, Boston said, over-rely on them.

 

Still, the Vancouver city website is full of praise for the hundreds of millions of dollars that developers, in return for upzoning, have devoted to help create scores of amenities, such as the Marpole Family Place, the Jim Deva Plaza and the Creekside Community and Children Centre. 

 

Jim Deva Plaza in Vancouver’s West End on Friday, June 17, 2022. The plaza is a small sample of what has been built using contributions from developers in return for increased zoning density. Photo by Jason Payne /PNG

In a gesture of appreciation, the city of Vancouver offers to put developers’ names on bronze plaques outside each new facility.

The money and contributions involved are huge. One council report points to how a large bulk of contributions — worth more than $100 million in revenue and “in-kind” services — are coming from the upzoning of just four luxury towers in downtown Vancouver.

They include a glamorous 43-storey skyscraper at 1640-1650 Alberni. In exchange for the opportunity to build higher, the developer will provide $33 million worth of contributions in the form of market rental units, below-market rental units, heritage preservation and public art.

 

While the Vancouver city website says amenity contributions make it possible to reduce property taxes and support growth, Hardwick is among those who worry the frequent spot upzonings contribute to increasing land values and thus the cost of housing.

“We’ve created a business model for the city around selling zoning,” said Hardwick.

About 60 to 80 major rezoning applications are approved each year in return for contributions, according to a report.

Vancouver’s model is based on the idea that, in return for city council approving more density for a highrise or other buildings, “the city targets 75 per cent of all the increase in land value” as an amenity contribution. The developer can take home the remaining 25 per cent as profit.

 

Hardwick says those who maintain the heightened property values that flow from upzoning don’t contribute to higher housing prices are dealing in “malarkey.” 

 

This map, generated by the city of Vancouver, shows the location of amenities that are being contributed to by developers.

Developers are also expected to make financial or in-kind contributions, although to a much lesser extent, when councillors grant them “density bonuses,” or increased floor space under existing zoning. In 2021, the two methods led to developers being able to build five million square feet of more floor space.

A city report shows Vancouver has been bringing in roughly $200 million to $400 million a year from developers’ contributions, the majority from zoning upgrades. According to reports, developers have been funding about half the city’s facilities and infrastructure.

 

Councillor Jean Swanson acknowledges contributions are one of the reasons left-wing decision-makers such as herself keep voting to approve lavish highrises, even while most of their units are out of reach for the vast majority of people who live and work in the region.

“I voted for some more condos in a penthouse once because they provided a huge CAC — in the order of $1 million each,” Swanson said, “which is pretty hard to resist when it can be used for the community.”

That said, Swanson believes the contributions are both good and bad for the city.

“They are a cheap way to get dollars for amenities. The city is in desperate need of money to do what residents want, like get affordable housing, community facilities and deal with climate change.”

 

But Swanson would rather impose a progressive “mansion tax” on properties rather than build “lots of condos” in exchange for developer money.

Councillor Lisa Dominato said there is a role for the amenity contributions. “They support public infrastructure like community and culture facilities, parks, child care and non-market housing that would otherwise have to be paid for solely by taxpayers.”

That said, Dominato added, cities should not rely on them solely for capital projects.

Last year, council hiked property taxes by 6.3 per cent, a near record.

SFU’s Boston said Vancouver and other municipalities over-rely on the amenity contributions because “they’re a big, predictable revenue source. Property taxes and utility fees are insufficient to finance all the services required of municipalities, as well as some of the nice-to-haves.”

 

Vancouver already has existing zoning to accommodate 20 years of projected population growth, according to a city report, which also estimated that Vancouver, despite containing one-quarter of Metro’s population, has constructed 37 per cent of the region’s apartments.

Given that Vancouver has already upzoned “boatloads of property” to more than absorb future population growth, Hardwick maintains it’s time councillors slow down in their pursuit of amenity contribution, while reducing city spending.

Council, she argued, has “bitten off more than its historic responsibilities” by committing to devoting hundreds of millions dollars a year to housing and combating climate change.

[email protected]

 

More news, fewer ads: Our in-depth journalism is possible thanks to the support of our subscribers. For just $3.50 per week, you can get unlimited, ad-lite access to The Vancouver Sun, The Province, National Post and 13 other Canadian news sites. Support us by subscribing today: The Vancouver Sun | The Province. 

© 2022 Vancouver Sun

Coquitlam 3.4 acres of industrial sells $6.4 million above assessed value

Frank O’ Brien
Western Investor

Near Coquitlam Town Centre, the land is meant to develop into 100,000 square feet of strata industrial space in a joint-venture play

Price of more than $7 million per acre among highest in Metro Vancouver industrial land transactions this year. | Avison Young

Nicola Wealth Real Estate (NWRE) and PC Urban Properties have acquired 3.4 acres of industrial land at 2660 Barnet Highway in Coquitlam for well over its assessment.

Valued at $17.6 million by BC Assessment, it sold for $24 million in a deal brokered by Avison Young, Vancouver commercial agents Ryan Kerr, Ben Lutes and Garth White.

The site is currently improved with 37,000 square feet of industrial warehouse space in buildings that were constructed in 1972.

Plans are to nearly triple that space into 100,000 square feet of strata industrial units for owner-users and investors.

“We are excited to continue working with PC Urban to develop strata industrial projects in Metro Vancouver,” stated NWRE spokesperson Mark Hannah.

The sale price, at more than $7 million per acre, is one of the more expensive industrial land deals in Metro Vancouver this year.

Continued demand for industrial strata developments, including in the Tri-Cities, is behind the recent acquisition.

“The Tri-Cities of Coquitlam, Port Coquitlam, and Port Moody are starved for new industrial product,” noted Brent Sawchyn, CEO of PC Urban.

© 2022 Western Investor

Canada inflation rate could reach four-decade high

Ephraim Vecina
other

This could force the Bank of Canada into implementing even larger interest rate jumps

Canadian inflation is likely to reach its fastest pace since 1983, with a Bloomberg survey of economists pegging an average annual inflation rate of 7.3% in May.
Such a level will provide ample cause for the Bank of Canada to push through with a 75-basis-point interest rate hike in its next policy meeting on July 13, the survey found.
Approximately 80% of experts polled by Bloomberg, including representatives from all Big Six banks, are expecting an outsized hike of that magnitude in the next BoC meeting, follow the precedent set by the United States Federal Reserve.
Read more: Former BoC governor Dodge outlines key challenges for Canadian policy
Comments from the central bank’s head have cemented these expectations. BoC Governor Tiff Macklem said earlier this month that a benchmark interest rate of 3% or above is not out of the question. Macklem also alluded to the possibility of even larger rate increases down the line.
“The housing market is an important part of the economy. We are watching it closely, but our focus ultimately is on the whole economy and in getting inflation back to target,” Macklem said.
The rate is currently hovering at 1.5%, after hikes in three straight BoC policy meetings.

Copyright © 1996-2022 Key Media, Inc.

Toronto housing market is balance gradually returning?

Ephraim Vecina
other

Canada housing crash – what could make it happen?

Jonathan Russell
other

Plus: How to navigate home appraisals during Canada’s volatile housing market

 Is Canada’s housing crash imminent? Mortgage experts are saying—not so fast. While housing prices are dropping, we are still up historically. Here is what is happening to Canada’s housing market and here is how you can navigate home appraisals.

Are home prices in Canada falling?

In the current economic environment of rising interest rates, home prices in many cities across Canada have fallen month over month. Despite this current trend, however, home prices are still significantly higher than they were at this same time in 2021. According to the Canadian Real Estate Association, the average national home price sat at around $746,000 in April—which was 7.4% higher than in April 2021. That was despite the effect that higher interest rates have had on the housing market.

The Greater Vancouver Area, for instance, saw detached home prices drop just 0.4% since April—however, that is still more than 15% higher than it was last year during the same period. For attached homes, the prices rose 21.5% compared to those in May 2021, despite dropping 0.6% since April, according to the Real Estate Board of Greater Vancouver.

Meanwhile, in Toronto, home sales fell nearly 40%, even though they had risen nearly 10% since May 2021 and last month, the Toronto Regional Real Estate Board said.

What are experts saying about the likelihood of Canada’s housing crash?

Many experts in Canada’s mortgage industry appear unconvinced that Canada will experience a full-blown housing crash. Instead, experts have told Canadian Mortgage Professional that the low-rate environment during the early part of the COVID-19 pandemic has spurred the inevitable drop the market is currently experiencing toward more normal levels.

In other words, the unsustainable pace set in April 2020 has tailed off, but Canada’s housing market is still seeing high standards historically. “The last couple of years, we’ve been going at 150 km/h down a 100 km/h highway, and right now we’re slowing back down to around that 100-120 km/h range,” explained Shubha Dasgupta, president and CEO of the Pineapple broker network. “So really, we haven’t even dipped below the speed limit yet. We’re still above it—we’re breaking in and around that, but it just feels like we’re going a lot slower.”

Christelle Mwamba of Mortgage Scout agreed. “I want to make sure everybody knows we are not going to crash,” she said. “We’re not crashing—it’s just a correction. It’s really important for people not to focus too much on the headlines and actually be knowledgeable.”

What will happen to home appraisals amid Canada’s volatile housing market?

Due to Canada’s volatile housing market, brokers and clients alike are being forewarned that home appraisals may come in at significantly lower values than the listed or agreed price. This warning also applies to brokers and clients who agreed on purchase prices as recently as the middle of February, according to Home Value Inc.

Despite home prices rising year over year in the Greater Toronto Area, or GTA, home prices dropped three months in a row, in some areas more dramatically than others. In the Kitchener-Waterloo region, for instance, the average price of a detached home is roughly $200,000 lower than it was in February. And across the GTA, average home prices in May were $121,000 less than they were three months before.

What should you do if your home appraisal comes in at a significantly lower value?

If your home appraisal comes in at a significantly lower value amid Canada’s housing market volatility, you could speak with the realtor and real estate lawyer to figure out if you can whittle down the property price. This option would apply especially to anyone whose appraisal means that you fail to secure a large enough mortgage to cover the payments on the property.

If you required an appraisal on a property that you are refinancing, it is important that the house looks especially presentable and approachable, says Leah Zlatkin, mortgage broker and LowestRates.ca expert, who added that you should also highlight your home’s features to any appraiser that comes through the property.

Brokers can also trigger an automatic valuation model, or AVM. This would be a good option if you are doing a refinance and need less than the property value for the mortgage. For instance, if your property is worth $1.15 million but you need roughly $400,000 in mortgage money, you can value the property at less than $1 million to secure an AVM instead of meeting with an appraiser. Because current market conditions mean there is usually a longer wait time for an appraiser, this can be a particularly good option.

 

Copyright © 1996-2022 Key Media, Inc.

Kitsilano resident group rejects proposed social housing building, calls for better model

Tahmina Aziz
other

 A vocal group in Kitsilano is once again rejecting plans for a social housing building in the neighbourhood.

The 13-storey building would provide 129 social housing units to low-income people and those experiencing homelessness.

Kitsilano Coalition released a statement on Thursday, arguing that congregate housing is not the appropriate solution for people experiencing homelessness and suffering from mental illness and addiction. 

“We’re housing too many vulnerable individuals all in one place,” said Karen Finnan, a member of the organization.

“If you wanted to quit smoking, would you want to be in a building where there’s another 120 smokers? So, we feel for people to have the best motivation and the best options to move on to a better life, they’re better housed in with all the rest of us.”

Mental health and addictions expert Julian Somers said Finnan’s concerns are valid.

“The problem with congregating people altogether is that the culture that they’ve been apart of on the street becomes the culture of the building. And there really is no opportunity for mobility, for an experience of basic change,” he explained.

But the province supports shared living and says the model has proven to work.

“It’s a really positive thing to respond to the homelessness crisis we face as opposed to leaving people in their vehicles, leaving people in tents and parks, and letting that problem just get worse,” said David Eby, B.C.’s Attorney General and minister responsible for housing.

“(The model) is very similar to other buildings that have opened up in other parts of Vancouver where people were concerned and then the building opened and then they realized their concerns were misplaced,” he added.

Eby said he sympathizes with the group and will ensure their concerns are addressed.

“There’s not a lot of social housing on the west side of the city and it’s not very common that people are asked to support this kind of housing,” he said. “I want to reassure to people if issues did come up, that I would be quick to respond to them because we need housing like this across the city.”

Darrell Burnham, the CEO of Coast Mental Health, which operates a number of congregate affordable housing units, agrees with Eby and said the model can be a success.

“I think it’s safe to say that most of our sites are invisible to the community as the tenants go about their daily lives,” he said in a statement.

“It’s very common, almost the norm, to have community pushback and concerns about the development, but with competent management and good communications, these concerns generally go away within the first year of operation.”

But Somers, who is also a professor at SFU, strongly disagrees and said there are more effective ways to address the homelessness crisis.

He said the best option for those overcoming addiction is independent, recovery-focused housing, which allows people to effectively reintegrate back into society.

“Why is it that we are not embracing an evidence-based approach that costs the same, reduces crime far more effectively, reduces medical emergencies far more effectively?” Somers said.

The city is holding a public hearing on the proposal on June 28.  

 

© 2022  All rights reserved.

Kitsilano resident group rejects proposed social housing building, calls for better model

Tahmina Aziz
other

No need to panic about cooling housing market crash unlikely

Joel Schlesinger
The Vancouver Sun

Desjardins Economics notes sales expected to slow in Canadian Residential Real Estate Outlook.

Desjardins Economics says a Canadian real estate market correction is going on, but not a crash. Photo by Luke Hendry /Postmedia
Canada’s housing market is cooling, but it’s not cause to panic, suggests a new report by a leading Canadian financial institution.
Desjardins Economics recently issued its Canadian Residential Real Estate Outlook, noting that pandemic fuelled demand that saw the nation have world-leading price gains has begun to abate amid high prices in large markets like Toronto and increasing borrowing costs.
Nationally, the market’s average home price could fall more than 15 per cent from February this year by December 2023.
Still, even by then, average home prices will remain 30 per cent above average prices at the end of 2019. At the time, the average price in Canada was $530,000, increasing to slightly more than $790,000 this past February, which is considered the peak of the market.
That’s a 50 per cent increase in value over two years, it stated.
Since February, prices have started to fall, dropping by more than six per cent in March and April alone. Sales fuelled the decline dropping by more than 30 per cent over those two months combined. The report added expected increases in borrowing costs will further weigh on the market in the coming months. These headwinds aside, the report authors made clear a correction in overheating prices is underway but not a “collapse.”
As well, price corrections will be uneven by region with British Columbia (-15 per cent), Ontario (-18 per cent), Quebec (-12 per cent) and the Maritime provinces (-18 to -20 per cent) expected to see the most significant drops in price by 2023. In contrast, Alberta may see a price retraction of six per cent, trailing only Saskatchewan (-2 per cent) and Newfoundland (-5 per cent) with the report noting all three provinces will see muted impact due to continued strength in the energy sector.

© 2022 Vancouver Sun

Howe Street corner office sells at full list of $1.29 million

Western Investor Staff
The Vancouver Sun

Strata office of 1,051 square feet in downtown Vancouver sold for nearly $350,000 over assessment value.

Re/Max Commercial Advantage, Vancouver, for Western Investor

Property type: Office strata

Location: 801, 1081 Howe Street, Vancouver

Property size: 1,051 square feet

Zoning: DD (Downtown district)

BC Assessment value: $950,000

List price: $1.298 million

Sale price: $1.298 million

Date of sale: May 31, 2022

Brokerage: Re/Max Commercial Advantage, Vancouver

Broker: Steve Da Cruz

 

© 2022 Western Investor

Here is how much the average apartment costs to rent in Vancouver in June 2022

Elana Sheperta
Western Investor

Canadian rental prices have seen the highest month-over-month increase in years.
Canada has seen the biggest rental increase in June 2022 in years, according to Rentals.ca. Find out prices in Toronto, Burnaby, Oakville and Burlington.Photo via Feng Wei Photography/Moment/Getty Images
A new report finds that rental prices across Canada have seen the biggest month-over-month increase in years — and Vancouver continues to see the highest rent in the country. 
Online apartment rental platform Rentals.ca has released its June 2022 National Rent Rankings report, which analyzes the average rental prices for its listings in May. 
Across Canada, the average rent for apartments in May was $1,888, which represents a year-over-year increase of 10.5 per cent. 
“This also represents a month-over-month increase of 3.7 [per cent], the largest monthly increase since May of 2019,” note the report authors. 
Vancouver continues to see the highest rental prices in Canada, for both one and two-bedroom units. The average cost of a one-bedroom apartment in May 2022 was $2,377, which is a 1.8 per cent increase over last month and a whopping 19.1 per cent year-over-year increase. 
Two-bedroom apartments cost an average of $3,495 in May, marking an increase of 5.1 per cent over last month and a staggering 24.1 per cent increase year-over-year. 
Toronto has the second-highest rental prices in the country, with one-bedroom units averaging $2,133 in May; two-bedroom units averaged $3,002. 
Another B.C. city, Burnaby, rounded up the top three most expensive cities in Canada. One-bedroom apartments cost $2,012 while two-bedroom units cost $2,645 in May. 
Two Ontarian cities completed the top five highest Canadian rental markets in May: Oakville and Burlington.

Rent Vancouver and beyond: Average prices across Canada for apartments to rent

© 2022 Western Investor