Ah, the three-storey walk-up …
The nadir of architectural design in the 20th century, built by the hundreds (if not thousands) in Vancouver from about 1945 to 1955.
According to the Goodman Report, the newsletter of the dominant realtor for these buildings in the region, the typical 15-to-20 suite apartment currently sells for between $100,000 to $190,000 per unit, depending on location – or appoximately $2 million.
For the last three decades, these buildings have been a reserve of lower-middle-income affordable rental housing. And since they were built as rental units, they can’t be converted easily to condominium – and indeed, can’t compete with the newer housing stock that provides built-in laundry, parking for every unit, lots of electrical outlets, decent plumbing, etc. This combination had kept a ceiling on the rents achievable by landlords, who, so long as they get a reasonable cash flow, have had no incentive to sell since they would then incur a capital gain.
When the real-estate market was hot in the late 1980s, these buildings were being targeted for demolition and replacement by luxury condos. In Kerrisdale, the eviction of long-term elderly tenants created a political nightmare for the NPA under Mayor Gordon Campbell. Low-rise apartments were being replaced by highrise condos with less units. Result: population density reduced, housing affordability lost, views compromised, tenants distressed, neighbours angry, politicians unhappy. Pretty much a lose-lose all the way around.
The Council responded by imposing a rate-of-change condition on vulnerable neighbourhoods like the West End, in addition to a rezoning that took away much of the incentive to redevelop. More positively, developers were redirected to the arterial strips, the megaprojects and the new neighbourhoods like Downtown South to build their condominiums without having to displace any existing residential accommodation. This combination took the pressure off, rents remained stable, evictions were almost unheard of, and, as they say, the dog didn’t bark.
Until recently. Now that there’s a scarcity of land for new condos, there have definitely been growls and yaps in the rental market as some landlords try to use existing regulations to push up rents. But the real crisis is yet to come.
Here’s a warning. The Canadian Real Estate Association is joining others to lobby the Conservative Fiannce Minsiter to eliminate the capital gains tax for individuals when they sell investments, so long as they reinvest those gains with six months. The association argues that landlords with smaller holdings – hello, three-storey walkups – would sell their buildings and acquire ‘replacement properties,’ hence leading to an increase in the rental stock.
I wonder. Perhaps it would also start a churn in the market, leading to a rapid escalation in the price of these buildings, without guaranteeing that any more rental buildings would come on stream. Given the cost of land, labour and materials, and the automatic registration of new multiple-unit buildings as condominiums, I don’t see much possibility of lower-middle-income housing being constructed. And if there’s any significant loss in the affordability of the three-storey walkup, then, believe me, the pit-bull of politics will be unleashed.