Can UDI or NPA or REIBC or any other advocate of more supply, supply, supply answer this question in a way that is intuitive, simple to understand and correct?  Otherwise, why should anyone believe them – particularly those groups who will be out in force to fight any significant rezoning of their RS-1 neighbourhoods?
From Business in Vancouver:

“What’s causing the supply shortage is the restrictive single-family home neighborhood zoning on 85% of our residential land base. That keeps out young families, middle income earners and renters, who can’t afford single-family homes,” said Anne McMullin, president and CEO of the Urban Development Institute, Pacific Region.
“We clearly need a regional housing strategy with more homes for more people,” she added. “That means more high-rise apartments along rapid transit corridors and more townhomes, rowhomes [and] multi-family low-rises.”
But recent studies show the reverse is true: fewer people can afford to buy condominiums in the Metro suburbs that have seen the greatest increase in supply over the past two years.
Spurred by the extension of rapid transit, Burnaby, Coquitlam, New Westminster and Surrey have seen explosive growth in strata projects, but they all share something else in common: as the residential towers ascend, housing affordability has eroded.

After record-breaking construction in 2016, Surrey had more multi-family housing starts– 2,390 and mostly condo apartments –in the first half of this year than in any other Metro Vancouver municipality, but condo affordability has fallen by 7.8% compared to a year earlier, according to a survey by credit union Vancity.
More here.


  1. Any discussion about unit prices needs to address the absolutely skyrocketing price of RESIDENTIAL LAND and various taxes, commissions and exactions on the same. Follow the money.
    Developers are still operating on a Return on Cost margin of about 15% (to 20% if they are lucky). Internal Rates of Return – factoring in the interest costs and cash outflows needed over 4 to 5 years needed to realize that profit – are c.12% (not MASSIVE by any stretch given some of the risk involved. These benchmark ratios have not changed so it is not so much “developer greed” driving prices upwards as many might suggest. Development management fees are calculated as 2% to 4% of total costs EXCLUDING land, so there are no huge winfalls there.
    Construction costs have escalated somewhat. Extended timelines for rezoning, development and building permits are also a factor in many municipalities. However, land supply and cost are the real issues. When I left Vancouver in 2013 to work in London, land was $250/ buildable square foot in the downtown core; when I moved back to Vancouver in 2016, it was over $500 / buildable square foot – a 100% increase in 3 years!
    I think that most people in the development industry would agree we are seeing the influx of more global capital – witness some irrational purchases as various syndicates buy and flip land on to other syndicates (Peter Wall’s flip of that site near Burrard and Nelson purchased for $18M sold less than a year later for $60M, and resold again months later for $66M is illustrative). The only thing changing in their sequential pro formas – other than escalating land costs – is an escalation in their anticipated selling prices … what will the market bear? Apparently a LOT!
    The “heat map” of racing land prices has radiated outwards as developers struggle and compete to secure developable sites. Most EVERYTHING out there has some complexity to it – be it environmental contamination, or political/planning risk, or assembly risk. Watch the City of North Vancouver’s sale of the 5 acre Harry Jerome site – it will be over $300/sf buildable. Transit Oriented sites along the Skytrain routes are trending up to and over $200/sf buildable as these assemblies represent substitutes for the convenience of inner city living.
    There are really very few “greenfield” sites – most development prospects entail destroying existing value in return for the opportunity to create more intense land uses on a given parcel of land. We are so land constrained – Montreal has 80,000 square kilometres of land in a circle with a 50km radius from the city centre; Toronto has 40,000 because of Lake Ontario; Greater Vancouver has only 18,000 square kilometres once you take away mountain slopes, the Fraser river, the US border and the Pacific ocean.
    Now more and more we have to RECYCLE developed land – witness the new Strata Dissolution legislation that allows the demise and sale of older buildings nearing the end of their service lives. More and more older stratas are being targeted.
    Who are the winners in all of this? …. anyone selling property is selling into a very constrained land market. For example, Homeowners along the Cambie corridor are organizing and selling their single family lots for 3 to 5 to 6 million. Capital gains free. Any business selling larger sites will trigger capital gains taxes. Governments selling land also win (witness any recent large land plays and you’ll see big numbers on sales revenue for any provincial, crown, or municipal sale of land). Also add the brokers who guide these deals – they are making their cut on hefty commissions.
    Governments are winners in other ways: Provincial Property Transfer tax fills BC’s coffers. The province collects tax on the purchase of development sites AND on the sale of the new units created – a double dip; as land and property prices double, so too does the Province’s cut – to the point now where annual real estate property transfer taxes now eclipse natural resource royalties in vale. Municipalities across BC also take their cut as they try to capture 75% of the “Land Lift” as properties are upzoned.
    By virtue of their land use powers, Cities can create “land” (buildable area) for free – so this is one tool we have at our disposal to create some degree of affordability. The question of who benefits is really one of equity – a classic planning problem: who benefits from the uplift? I think we’re hearing more now about inclusionary zoning as a planning tool to share the uplift but it still raises the question of access and fairness in the distribution of the benefits of rezoned development potential.
    Interested in other people’s perspectives on this.
    Michael Mortensen

    1. Very well said Michael.
      You did not mention the forced 25% rentals in new buildings now in Vancouver. That will ease rentals somewhat, but make condos to buy even more expensive, especially if rental rates are forced by law below market.
      The CACs for the First Baptist site at the corner of Burrard and Nelson had CACs of well over $80M or over $250,000 per condo. More on this project here so clearly cities’ actions and fees force upwards pricing significantly.
      You forgot the ALR and ocean flats. Cities& province do have discretion here to create new landfor housing through legislation.
      The third thing causing excessive demand or pricing is weak tax enforcement on flips, assignments or multiple condos owned that we now finally start to see implemented.

  2. The myth that we can build our way to affordability is perpetuated by developers and the real estate industry. The real issue is managing demand.

    1. How do you propose to curb demand ? Disallow immigration ? Cut wages ? Forbid investment, both from outside BC and from abroad? Hint: none of these will happen.
      As such the ONLY way is more supply.

  3. Does anyone know what percentage of the existing housing stock is being replaced each year? Assuming a building lasts 100 years it would be normal to replace 1% and there might be 3% in some form of construction at any given time.
    But so many of our buildings are just plain crap. A 100 years is far too generous. And, by comparison, we don’t have very many historic buildings worth the extra effort to maintain longer. So it seems to me if it looks like 5% to 8% of our city is being rebuilt at any given time there is nothing particularly unusual happening. We just happen to be at a city’s age where lots of (often) poorly constructed buildings, first on their site, are reaching their best before date.
    I’m more concerned that we are building quality and energy efficiency into this round of developments so they won’t look like crap to future generations. Mostly, we’re not. That’s a bigger and more permanent issue than the current affordability crisis.
    I don’t believe that simply increasing supply will help. But not increasing supply? How can that work? Keeping old, drafty, poorly insulated buildings as our housing stock until they rot into the ground is not a solution. And the cost of a substantial seismic and energy retrofit may be more than many buildings are worth – and certainly less than their property’s potential.
    Conservatives will advise, as usual, keeping the government out of it. But it seems pretty clear that the deregulation of the movement of global capital combined with a hands-off attitude from senior governments in helping with this most basic of human needs has got us where we are today.
    Huge swaths of single-family are also a problem in that they create “density holes” that make living car-free more difficult for everyone – even in the dense areas. Part of the affordability issue can be improved by ditching the car(s). But current zoning spreads the city out too much.
    I guess we’re still waiting for clear, concise and intuitive answers.

  4. I can’t seem to write this in an intuitive way, but statistics hide all manner of sins.
    If you took a neighborhood with 500 condos and the price of every single condo went down, you would say that condos had become more affordable in that neighborhood.
    If you are rapidly building new condos in an existing neighborhood the median price of condos in that neighborhood can increase *even if the price of every single existing condo went down*.
    The median price would have increased, but affordability would *also* have increased. The median wouldn’t tell you anything useful about the affordability of condos in that neighborhood.
    The study ( is comparing median prices to median incomes, and says that because the median condo price is increasing faster than median income housing affordability is worsening. This is *not* a valid conclusion to draw, merely from those statistics.
    I’m not saying affordability is actual improving right now it is obviously not. But this study is not telling us anything useful at all, and is actually confusing the issue with invalid conclusions.

  5. Michael, thank you for this analysis. I agree wholeheartedly that constrained land is one of the most important issues affecting affordability and supply. And “supply” is a qualitative word when applied to housing types, in which we have a great vacuum in diversity.
    You mentioned that 18,000 km2 of land is the total regional consideration within a 50 km radius after deducting the sea, the ALR and mountain slopes. Within the Metro the total area is further whittled down from about 2,800 km2 to a bit over 800 km2 in the Urban Containment Area when watersheds, the urban ALR and large parks are deducted. Take it to the next level and over 50+% (~400 km2) of the UCA is locked up by roads and large lots containing detached homes.
    Does this resulting exceedingly inefficient land use not require a rethink on a regional basis?
    Some call for the ALR to be opened up to development. First, since when does new urban development on a flood plain make any sense today? Second, the proponents invariably call for last-century low density subdivision zoning, and this will prove soon enough that even the ALR is land-constrained when such wasteful land uses quickly consume it all and creates horrendous external problems, like pollution and unaffordable transportation consequences. Third, late-century food security is cavalierly dismissed by such short-term thinking. The ALR is all about soil resource conservation, not the commodification of land use, and conservation will eventually have to meet out expensive flood remediation measures too.
    Even if all speculation and foreign money ceased to exist at midnight tonight, I would say we would still have a land management challenge tomorrow morning that measurably contributes to the affordability problem. I would guess that the land lift for rowhouses (hopefully with rental suites) carved out of blocks of today’s large lots containing detached homes would be less than half of that where towers rise near rapid transit. Yes, the land value will still rise; therefore we must learn to use less land when building housing, and accept that other things may have to drop from family budgets (e.g. cars, unnecessary overseas vacations …) while concurrently accepting rental income.
    There are some market solutions out there. One is lock-off rental suites contained within condos, with a separate entry. Another is Mingle units where two non-family members share use of a common kitchen and living room, but have private ensuited bedrooms. VanCity used to offer mortgages for them. Co-housing is still market based, but the owners fund and contract a multi-family development themselves and therein omit a developer’s profit.
    There are also some very powerful non-market models, and one is Vienna-style publicly-owned rentals. If thousands of publicly-funded rental units came on stream over a decade, there will be a marked impact on sales in the private market which in effect has defined the affordability crisis. All three levels of government own land, and funding of dedicated rentals could be shared among them. The buildings could be run as non-profits where rents cover everything up to the break-even point with moderate contingencies for management services, replacement reserves, repairs, depreciation, etc. Moreover, tenants cold be offered a range of lease options and wouldn’t have to deal with condo board personality gymnastics or hordes of AirB&B sub-rentals.
    Lastly, I take the claim that municipal development processing fees are onerous with a one tonne grain of salt. Developer / builder applicants are too often their own worst enemies and make shoddy or incomplete submissions (or multiple re-submissions), which only costs staff time and increases the length of the queue. Moreover, many applicants try to pull stuff that clearly contravenes city bylaws, and a huge amount of staff time is wasted dealing with them in the context of record development applications. Processing backlogs can be greatly reduced if applicants only had their act together the first time through.

    1. Well put Alex. We DO have a wicked land use and planning challenge even without the layer of demand stimulated by foreign investment.
      The ALR has been a great success and it would be stupid to erode it – silly to build on Class I and Class II land in floodplains.
      Planning and Design flexibility can be used to create compact 3 bedroom apartments (just one internal bedroom please); FSR breaks can enable for lock-out rental suites (thinking about the lower levels of London’s Georgian row houses where light wells create a habitable floor below grade). All on board with Co-housing and Co-op housing. And yI really believe that we can leverage the energy and creativity of market development to create a variety of housing choices … density and design are key tools.
      As a nation, Canada divested from older models of social housing in the 1990s. The up-front capital costs were not the problem; the ongoing operating subsidy and cost was really the looming “bottom of the iceberg” of taxpayer liability. Not sure how much we can divert from healthcare to housing … we have a double headed problem there.
      Finally, as one who reviewed for many years development applications on the City side of the planning desk, I do share your concerns about the fulsomeness of many development applications. Cities and planners do not shoulder all the blame here!

      1. I believe the light well (essentially a retaining wall at the front sidewalk lot line) in London’s Georgian townhouses was the origin of the term “terraced house.”

    2. “One is lock-off rental suites contained within condos, with a separate entry.”
      Except this lock of suite would not be capital gains exempt, so you may not actually get enough money out of the thing to cover the capital gains increases on that fraction of the property … for the same reasons that the math for laneway houses doesn’t really work … there if property values increase ~5%, about half of rent is needed to cover gains, ~10% = 100% to cover gains … for the recent ~30% property increases, you would effectively be paying for the privilege of someone living in your backyard, if you claim the property/income like you’re supposed to.
      Until this is sorted with the CRA, any ‘artisanal’ income (to use Jens von Bergmann’s term) doesn’t actually make much sense I think.

      1. I believe the lock-off rentals in condos was pioneered with Michael Geller’s SFU UniverCity development. I’m not sure how the numbers clattered in the decade since then. I would think they would vary within the Metro. A West Side laneway home would no doubt escalate in value a lot faster than in Newton.
        I first saw an ad for the Mingles concept with the Atelier on Robson x Homer a few years back. It seems like a valid way to get a foothold into the market, but then you’d really have to enter into the arrangement by knowing your Mingle partner well, or at least with wide open eyes. Human nature, you know.
        Nonetheless, new zoning initiatives to fill the massive gap in the middle would require new levels of transit service, and that all needs to be planned now.

    3. A sensible ALR and ocean flat land creation strategy would make sense in BC vs an outright “don’t touch it” approach. No one wants to pave over all fertile land nor build only low density, but many new cities have emerged with medium density where tidal mud used to be, be it Miami area, Bay Area near San Francisco, in Holland, French Riveria, St. Petersburg area in Russia or Indonesia. This debate needs to be restarted in the Lower Mainland with sensible people on a committee to represent green view, social housing views, industrial folks, developers, retail folks, park space folks, bird watchers etc .. as nor all of ALR is very fertile (maybe 10%?) and many ocean flats are available for sensible diking and redevelopment.
      Here’s a land fill project in SF Bay area, namely Redwood Shores,_California
      Here’s a project in Jakarta that uses UBC and Surrey-like land monetization strategies to finance it
      Here’s one project in Holland
      And there are dozens more elsewhere. OK elsewhere but not here ? Why ?

      1. Why not use the land we have more wisely first? It’s truly disturbing to see such large swaths of unkempt single family eyesores throughout the region. Unkempt because the owners can’t afford it and simultaneously do not value it.
        Way cheaper to redevelop those parcels into better uses than service greenfield or land that will be underwater in a few decades.

        1. Because it is tough to force sales of houses. Yes sensible reasoning too is in order but we also need more industrial land, retail land, commercial land, park space AND housing. It’s the only major Asia Pacific port region in Canada, in a country with a goal of 100M people with 4B+ folks in Asia. A bridge to V Island ought to be discussed also.

        2. Thomas, the Netherlands has an area only slightly larger than Vancouver Island and has a population of 17 million. I would argue that every square km of the netherlands is more livable than any square km of Metro Vancouver. Their farm land is extremely well protected. There is no reason for us to not have a very livable region without sacrificing any of our precious farmland.

      2. Thomas, thank you for opening your views on the ALR a crack to conservation. FYI all (i.e. 100%) land contained in the ALR is arable. Arable land in BC is as rare as gold. The preservation efforts of almost 50 years ago are still relatively intact because everyone realizes that.

  6. The simple answer is right here: Stop the constant destruction and reconstruction of Vancouver and build a new walkable city from scratch using current best practices somewhere in the lower mainland that can be connected to the Skytrain network.

    1. Sounds like a complicated answer. Why not take advantage of the fact that tens of thousands of houses are at the end of their lives and densify in strategic pockets that are already near transit and/or amenities?

    1. Exactly so build a high density walkable mixed use city in such places and reduce the development pressure on Vancouver.

        1. There are many social, political, regulatory, and physical barriers in Vancouver that slow and constrain development to a crawl and make it difficult to meet the demand for affordable housing. Barrier free locations created by a Provincial Urban Development Agency could spearhead projects housing up to say 50,000 people. Such a strategy would relieve current neighbourhood redevelopment pressures. Time to stop the invasive destruction of existing housing stock and the attendant consequences for the environment.

        2. My enthusiasm depends on the where – not the other way around.
          Where in Vancouver could you house 50,000 people that isn’t already a neighbourhood or industrial land of which there is also a shortage? If you’re talking Metro and talking ALR then there is no enthusiasm.

        3. If you wanted 50,000 people around a Skytrain station, you could do it within a 650m radius at 110 units per acre.
          Density Examples here:

          People 50,000
          PP/unit 1.8
          Units 27,778
          UPA 110
          Acres needed 253 = 1,021,934 m2 of site
          Gross Up for Streets and Open Space 130%
          Gross Area of Land Needed = 1,328,515
          Area (M2) = Pi*R^2 = 1,328,515
          Pi 3.141592654
          Radius (M) 650 m

        4. At the edges of that radius it’s about a 15 to 20 minute walk to SkyTrain. In any case Jolson alludes that you can create this neighbourhood and still relieve existing neighbourhoods of development pressure.
          I support the missing middle density but it still makes more sense to me to build denser near SkyTrain stations – at least the 300m inner ring.
          I think missing middle housing works best with missing middle transit: LRT/trams.

        5. Michael Mortensen;
          The form of development appears to be Soviet Era Apartment Blocks, double loaded corridor, single aspect orientation to daylight and fresh air (except for corner units), units that never ever receive direct sunlight, most units unsuitable for families with young children, anonymous buildings filled with indefensible space that soon become gang infested. We have been here before. We blew them up back in the sixty’s.
          Not sure what is calculated in “net acres”. Can you provide an example of an actual built neighbourhood that reflects your numbers? I suspect not, because after all of the many considerations that produce quality livability both inside and outside, we likely will see the classic Vancouver Point Tower and it will only be a question of how many, and how high these towers need to be in order to fit on such a small site area. Yes, there will be townhouses for families at the ground level and some might even receive sunlight but they will not be affordable, nor will the units in the towers. This is because the location is Vancouver.
          Your calculations will not lead to affordability for those who seek access to home ownership. That is why I propose rail connected locations created by a Provincial Urban Development Agency in areas of sufficient land capacity such that persons appropriate and affordable housing can be constructed from scratch using current best practices.
          Why the resistance? Why the insistence on Vancouver densification?

          1. … not suggesting “Soviet Block” forms of development. We have great models at high intensity. Double loaded buildings with single aspect units can be just fine for a range of households; b.t.w. I’ve seen plenty of dismal, crumbling UK housing estates with ‘dual aspect’ single loaded units piled into enormous Soviet style ground scrapers.

        6. Agreed. And 29th.
          But I think Jolson is talking about something quite different though he refuses to say.

          1. Developers in London – a city 4x Vancouver’s population – build almost less housing on an absolute basis. They’ve been short 30,000 units a year for the last decade. Not a great example.

        7. Michael Mortensen;
          Infill has not solved the affordability problem, although it does add inventory.
          Enough with the deflections, apparently you cannot provide examples.

        8. Ron van der Eerden;
          Yes, good observation I am talking about something quite different. Think of it as a method to divest all the pile on costs that result from working in Vancouver, think of it as a method to eliminate land speculation, think of it as a strategy to reduce construction costs, think of it as a way to actually build affordable communities, there is nothing false about it and the where question hardly matters.

        9. Michael Mortensen:
          Thank you for the challenging discussion. It has inspired my thinking in unexpected and promising directions. It is always fruitful when the creative process unfolds in real time over real issues. In the coming weeks I will publish here on PriceTags (Gordon willing) the concept plans and drawings for a new city paradigm which I have tentatively dubbed “Bicycle City”. They say a picture is worth a thousand words and I am rather worn out over all the typing on the subject of affordability, not that drawing is any easier, but I can clearly see a solution in my mind but it will take time to articulate. I am looking forward to the discussion that will follow. Affordability is the issue of our time and it is connected to so many things that define who we are as a civilized society and how we need to live in balance with the biosphere that sustains us. We really need to solve this problem. Thank you again for your thoughts.

  7. “Governments are winners in other ways: Provincial Property Transfer tax fills BC’s coffers. The province collects tax on the purchase of development sites AND on the sale of the new units created – a double dip; as land and property prices double, so too does the Province’s cut – to the point now where annual real estate property transfer taxes now eclipse natural resource royalties in vale.”
    Offset by staggering increases in Homelessness, Drug addiction (Fentenoyl crisis), seniors losing rental units, crime, etc. etc.
    We pay for it one way or the other.

    1. We can add to that the huge increase in the provincial component of school and other provincial taxes due to much higher price increases in Metro Vancouver compared to rest of province. (I assume a province wide mill rate, so please correct me if I am wrong). Also a huge windfall from the loss of the home owner discount and senior discount for property taxes which many more people now face, especially in Vancouver. The sad part of this is that Vancouver faces a bigger burden by having more special needs children and higher costs but does not get additional provincial funding for same.

        1. I understand that the city sets the mill rate for some city services based on their budget and the value of properties. However a large portion of the property tax goes toward education, and it has a different mil rate. How is this mil rate calculated? Similarly, some services are regional. How would this mill rate be calculated?

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