I don’t usually do a lot of postings on Vancouver’s real-estate market since it’s a favoured topic in so many other places.  But Tom Durning passed along a post from a Portland blogger who picked up on an interesting anomaly:

During this “Great Recession,” property values and employment rates have been declining across North America, with my hometown having one of the worst unemployment rates in the US.

“[‘s] office market has logged seven building transactions this year capped off by Germany-based Deka Immobilien’s recent $263 million purchase of Bentall V, a 33-story tower in the heart of the city’s district. Just as impressive, prices have held up well. By contrast, only five office properties valued at $5 million or more have sold in Manhattan in the first two quarters of this year, and average prices paid are off 32%, according to Real Capital Analytics, a New York-based real-estate research firm.”

Nevertheless, Wall Street Journal reported that ’s property market is remarkably robust.

The writer goes on to discuss our residential market:

Vancouverites might have mixed feelings about this in terms of residential property values. Although declining property values have caused people to lose equity in their homes, or even lose their homes as mortgages rates reset, the declining property market is a boon for future homeowners in overinflated markets, with people waiting until the market bottoms out. In places like where average home prices are, say, half a million dollars (Canadian Real Estate Association 2008), many people cannot afford to own homes. Unaffordable homes are often a topic in ’s local news (and international news!).

And then picks up on the lane-housing initiative:

This may explain why has so much lane housing, especially to people in the Southeast of North America, where lanes are few, if nonexistent. Lane housing, basement suites, and other kinds of secondary suites on a property allow homeowners to rent out part of their home, which helps pay for these expensive houses. Luckily, ’s land use regulation allows secondary suites.

Good Magazine has an article about lane housing and how pre-fabricated buildings can help homeowners install secondary suites. About 70,000 or more lots in are eligible for lane housing. It is interesting to note, however, that the pre-fab homes described in Good Magazine could cost about $130,000. This means homeowners would need at least 13 years to break even at typical rental rates. So, although lane housing can improve walkability, density, and other New Urbanist/ Smart Growth ideals, it might not help make housing more affordable.


  1. That was a good WSJ article. Although the Bentall V sale was probably somewhat of an anomaly, strong residential real estate markets are not. It’s nice to read articles in the US financial media that illustrate how Canada is not following the same story line as in the USA — and offering their comparative perspective as to why.

  2. Oh, and on the laneway housing not taking off because of a 13 year payback, there’s another way to look at it.

    If you borrowed money to build a coach house that you could rent for say $1500/ month, it could actually lower your monthly payments.

    For example, suppose you already have a line of credit against the equity in your house at 2.5%, perhaps with our friends at Vancity. Borrowing $130,000 would cost you just under $600/month amortized over 25 years. If you rent the place for $1500 — or more — then you’ll be $900 ahead each month which can be applied toward the mortgage payment on the main house.

    Even if your interest rate is 5%, your monthly cost is only $750, still leaving you with a spare $750/month.

    I think more than a few people will develop their lane exposures.

  3. New York’s commercial real estate was ravaged by the Wall Street meltdown. No investor wants to buy an office building there without a clearer notion of when the dust will settle. Vancouver, with little to no new office development could be viewed as fairly stable, no massive layoffs to empty the office floors. Also, for foreign buyers, the prospects of an increasingly strong Canadian dollar give them the paper profits due to exchange rates when they convert back to euros, greenbacks, pounds.

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