Councillor George Affleck responded on Facebook to this post asking whether more supply can address afforability. Here’s his comment:
We must start by developing policies and managing the city so developers are encouraged to build homes versus commodities. (And by developer I don’t mean the big guys – let’s spread the net to include co-housing groups, co-op groups, churches, individuals etc.) Several city reports have pointed out that towers are not providing the “units” that will be occupied or affordable. But row houses and town houses could be … (affordable being relative these days).
Yet we have done very little to fast track, encourage, promote, change regulation policies or bylaws to build more of the homes staff keep saying locals want and will live in. Extracting the possibilities City Plan set up 20+ years ago would be a good place to start. (Your take on this would be good, Gordon Price *).
I will say I am impressed with City planning GM Gill Kelly’s thoughtfulness on the subtleties of developing Vancouver. I encourage everyone to read his report from Council yesterday.
Hope that helps…for now.
George
*From Gord Price:
Two thoughts on CityPlan, conducted in the 1990s over several years when I was on Council:
CityPlan focused on the existing neighbourhoods, primarily single-family, while growth was being concentrated in the megaprojects: comprehensively designed and zoned brownfield sites over 50 acres. Six of them were occurring simultaneously: Concord Pacific, Coal Harbour, Bayshore, Collingwood Village, Arbutus Gardens and Fraser Lands. In addition, we also rezoned Downtown South and Triangle West on the peninsula. Thousands of units could pour into the market every year at the height of development.
Therefore, we could take a slow, incremental approach to growth in the low-density, developed parts of the city since there was plenty of capacity to handle demand elsewhere – notably on parcels requiring little demolition or displacement of existing housing and rental stock, and away from neighbourhood groups which would contest any significant change in scale or character.
CityPlan never really entertained significant new capacity. The neighbourhood visions that resulted were modest, with growth concentrated on arterials and neighbourhood centres – and even some of those were contested, notably in Norquay, when actual zoning was proposed. Today, those visions are often used in defense of the status quo.
If there was a failure, it was the lack of immediate follow-through from the visions to actual changes in the zoning that reflected them. The process was way too slow, and then subsequently displaced by Sam Sullivan’s policy of EcoDensity.
Nor did CityPlan allow for the amount of ‘missing middle’ development that George noted above. If it had, it might have made a difference.
But, even so, we never imagined the consequence of the flows of global capital and external demand for our favoured housing stock that the city and region have experienced in the last few years. I’m not sure anyone could have – or what they would have done about it.
How is a town home or a single-family home any more or less commodified than an apartment? This is a strange (but common) conflation of issues.
It’s ok not to like towers, but believing that low-density homes aren’t commodities is a bad reason not to like towers.
Danny. The fact is we have had highly researched reports from staff that stated rowhouses and townhouses are less attractive to investor purchasers as a commodity, you know the ones who are buying single family homes and one-bedroom apartments and leaving them empty. And if we want a home to be lived in (not empty) and, as I noted “affordable” in relative terms, we as a Council have been provided with data that encourages our policymaking it should go that route. The report linked above is one of the first in my six years on Council that finally focuses on what is now being defined as the missing middle and that city hall has many overlapping and contradicting policies and bylaws (many created under Vision rule) that red tape is a major factor in getting anything built in Vancouver at all.
George
With high land prices at $2-4M per 50×130 for average lot in Vancouver putting four THs at 2000 sq ft on 3.5 levels or 8000 sq ft on a single family lot I arrive at these rough figures per TH:
500,000 to $1M land per TH
Plus
$300/sq ft to build ie $600,000 per TH
Plus
$100/sq ft for permitting, delays, soft costs such as sales & marketing ie $200,000
I arrive at $1.3M to $1.8M per skinny 3.5 story tall townhouses, or $650 to $900 per sq ft.
Cheaper than single family: yes
More housing: yes
Affordable: not really
==> Thus, let’s not confuse more housing with cheap housing !
Unless governments subsidize land, build or financing costs it will be very tough to produce townhouses below this value in Vancouver. That’s why folks move further out like Coquitlam, Surrey or Langley where land is cheaper. Hence, more rapid transit is important and a MetroVan-wide approach. Vancouver is, and forever will be, very very expensive. Better to educate the electorate about these basic realities and not pretend governments can fix it.
Congrats on the NPA seat win.
Thomas, that is a very West Side calculation. 50-footers in deep Guildford do not go for $4M. Yes, the post was about Vancouver, but the same inefficient land use issue prevails (rather invisibly I have to say) throughout the Metro.
Yes as stated, cheaper further out. Affleck nor Vancouver council makes policy for Surrey.
It will be entertaining to watch the NPA change their policies from the validity of discussing the Missing Middle and allowing widespread upzoning of RS zones to couching, parsing and diluting it down once they hear from their traditional West Side detached house-owning constituency. However, when hard campaign donation rules kick in the Crème can no longer be counted on to flood the party with money, and chances are they could actually stick to the message we hear now with tinkering winning over tortuous revisions.
Vision has avoided the issue for a decade, right through record development, campaign donation and housing price peaks. The harder Left is more interested in social program issues and taxing mansions. Pete Fry’s Green party handout was four pages of nothingness, except of course for acknowledgement of the issues with platitudes used as solutions.
Alex. I think that many of the things the NPA was saying in the by-election show that party is willing to be brave. Hector won the by-election on topics that some might say would alienate our base. But as Gord notes in his comments, the city is changing quickly and in ways nobody could have predicted. Our government must adapt to this as should the residents. This does not mean we have to be obnoxious in how we build the city. But we need a plan, we need pre-zoned density, and we need speedy processing times.
Mayor and council could have stuck to their guns and taken the harder line proposed against demolishing heritage houses or refused to allow tacky lot-filling McNansions. But they didn’t and caved to the vocal minority of millionaires who moaned about how that damaged their equity (nevermind that those who moaned the most bought those homes at a fraction of their current overinflated worth).
I voted against the character home reports in the end. The fact the name changed from heritage to character was a first clue the focus was changing. The toothless policy that only Vision supported will gutt neighbourhoods’ souls and save very few truly significant heritage. A better solution might have been too look at an improved heritage bank to save identified heritage homes and even streets. But Vision have pretty much dismantled the bank because it was an NPA thing. Politics over pragmatism for Vision.
Well George I see we lost a “protected” Shaughnessy mansion to fire overnight…
George, thank you for taking the time to address these issues in this forum. Much appreciated.
Many people (including me) do not vote for party blocs on council, but for individuals based on their policies, record and responses in the press and social media. Yours and Hector’s comments on supplying the Missing Middle in housing through careful (hopefully incremental) upzoning of the massive supply of land shackled by RS zoning stand out from the pack and will hopefully influence council policy before and during next year’s election. Perhaps 2018-19 will be the period that local government will do its fair share to address affordability concurrently with today’s efforts by the CRA on untaxed foreign money, and when the provincial government’s upcoming policies will bear fruit.
Your reference to staff research which discovered that the rowhouse typology would be less attractive to speculators is very interesting. I had a gut feeling about this, but no data. A rational conclusion could be drawn that non-luxury rowhouses won’t be an attractive option for bigger developers where greater density and numbers of units would be marketed offshore. So that leaves the small and medium-scale (~2-10 lots at a time?) where the high demand for appropriate family housing in decent neighbourhoods is local and, I suspect, huge. The design flexibility of attached single-family homes is very significant, from simple two-story structures built on slab-at-grade to those full basement suites with three storeys over.
Is there a chance you could post a link to the report(s) here on PT?
I hope to also read that the NPA is not committed to strata tile exclusively based on the fact that rowhouses will not be classified as multi-family. The often onerous strata impositions could be supplanted through design approvals (true separation of load-bearing walls — no party walls) and by simpler mandatory contracts between every adjoining unit. The city would be doing everyone a great service by posting several acceptable versions of these contracts online, and tying them to occupancy permits and the tax and title records of sales.
Thank you for your informative comments.
In the Netherlands, detached houses are very uncommon while row housing is ubiquitous. I have three cousins in the Netherlands and all live in row houses. They were very surprised at our wasteful ways here when they saw all the detached houses in our fair city.
One concept which I have seen is to extend housing into the (mostly) north south residential streets by eliminating the street parking areas. One could then probably fit a side by side duplex at each block end.
Keep in mind the context as an immigration city for 100+ years. Land in Vancouver was cheap cheap cheap even 40 years ago. Why build tiny rowhouses or ugly European inspired 5 story buildings to the curb if you could get a single house with a large yard for less ? Well before cheap air travel and massive Asian immigration Vancouver was a tough to reach far away outpost of the Canadian empire. The issue of expensive housing really started with Expo 86, massive Asian investments and immigration, falling interest rates and cheaper and cheaper air travel from within Canada.
As such the question is “what to do now” .. and building row houses on single family lots may not be the best landuse today. It might have been the best landuse when it was a greenfield development 50-80 years ago, but it is not now. To get more housing on very expensive land you have to be denser than a 1 FSR, at least 2 or 3 or higher. Even then it is tough to break below $1000/sq ft
Trying this again as first attempt to answer did not take:
You can see all the reports here: http://vancouver.ca/home-property-development/why-an-empty-homes-tax.aspx
Scroll to: Report to Council on options for addressing empty homes (June 2016) (1.5 MB).
On page three, this line jumped out at me and I asked staff to confirm that the kinds of homes that we should build, develop policy to encourage and speed the building around was not condos but duplexes, rowhouses, and townhomes. These would be the most “affordable” and least empty. Also least likely for speculation.
2. There are 10,800 empty housing units in Vancouver – 9,700 are condominiums and apartments
The City’s March 2016 study on empty housing found that 4.8 per cent of housing units in Vancouver were un-occupied in 2014, a rate that has stayed relatively stable since 2002. However, this represents nearly 10,800 empty housing units, of which nearly 90 per cent are condominiums and apartments. According to the study, the percentage and number of empty single-family and duplex properties in Vancouver remains the same as 2002 at around 1 per cent (~1000 houses). See Appendix A for the full consultant report.
Hope that helps.
George
George, do you believe that market and non market stacked townhouses represent sufficient density and flexibility to make inroads on affordability, and are you in favor of pre zoning suitable areas for that purpose?
Keith: It matters not what he believes. What matters is what can be done on very expensive land. Only massive government subsidies or outright confiscation can bring about affordable housing in Vancouver to purchase. Rentals can be forced though, by forcing a minimum percentage of rentals in newly constructed private building, thus forcing prices of new (and thus existing) units up. My understanding is that this is the new Vancouver policy now.
As shown above stacked townhouses on SF zoned lots are $1.3M+. Maybe slightly cheaper if smaller and on multiple lots. Tough to impossible to go below $1M for a 1250-1400 sq ft new TH in Vancouver. Doable further out, or with massive government subsidies.
Thomas, I don’t believe that “massive government subsidies” are required for private development. I would opt for increases in density to use expensive land far less wastefully.
Keith and Thomas. A combo of government (all levels) of planned affordable housing and other measures to speed up the right supply of market housing. Pre-zoning, predictable CACs, controlled costs, and other ideas. Again — some of these ideas are embedded in the 2050 report.
Indeed they do help at the margin, but are tiny overall, George, maybe 10% or less of eventual property value.
Please be honest with your electorate: it is tough to impossible to build affordable housing in a fully built out city with very high land prices. To build new something old – with existing value – has to be acquired and then demolished. Government cash or free land is limited, such as this http://vancouversun.com/news/local-news/city-of-vancouver-donates-25-million-in-land-to-build-358-affordable-homes Langara golf course comes to mind, too.
Mixed use could be done better. For example at the corner of Burrard and 4th a three storey commercial building is going up. Why is this not 6 or even 8 stories with 3-5 stories of rental or condo units above the commercial portion ? Ditto at the new Falsecreek Flats hospital: very little if any residential in the zoning.
In addition, we need to reduce expectations of folks that live or want to live in subsidized housing: it can’t be well located, well built, large units. They’d be small, fairly ugly, cheaply built and in noisy locations. It can’t be the role of the state to provide subsidies except for the most vulnerable or weakest part of society. Just because you were born in Vancouver as an able bodied person does not mean you deserve state subsidies for a home in Vancouver.
Thomas, until every square foot of city owned land is covered with non market housing, the cost of land is a non issue. The city owns plenty of land, there is a lack of provincial and federal funding for non market housing since the Chretien Liberals bailed in the mid nineties. Many cities have a significant portion of publicly owned housing stock, Vancouver has 5%. This is a shockingly low figure in a city with high land costs and soaring rents. Even New York City manages 10% public housing. We can do much better.
It seems that the new provincial government is prepared to put up money to hit some hard targets of housing for this province. It’s long overdue. Planned rentals in newly constructed buildings seem to disappear when the final approvals are made because of the compromise of profits.
+1 to this to some extent … I don’t believe the city should ever build out ALL of its land, but there is significant low hanging fruit. I did a calc with Jens von Bergmann once and its easily 30000 units worth at pretty modest densities (Missing Middle Style).
Thomas provided above a conceptual performa for townhouses on land currently zoned RS1 with a 50-foot lot. Here’s a few more scenarios based on an average value between 10 actual randomly-selected detached house listings on 33-footers in East Vancouver, and their subdivision into rowhouses.
Average value: $1.8M (standard 4,026 ft2 lot @ $448/ft2)
Two standard lots @ end of block = 8,052 ft2 = $3.6M
Subdivided crosswise into seven average 16 x 64 ft rowhouse lots
= 1,056 ft2 = $473,000 basic land cost
Net developable land area after deducting setbacks:
(10-ft front, 20-ft back) = 572 ft2, average 55% lot coverage
Proposed allowable FSR: 2.2 (2,320 ft2)
$350 / ft2 base wood frame construction cost, independent load-bearing walls
(with $25 / ft 2 contingency for minimal waste + recycled materials)
$75 / ft2 soft costs (consultant fees, permits, etc.)
= $425 / ft2 construction costs
Total cost: $873 / ft2
ROWHOUSE 1 – $2 million (with mortgage helper and 20-foot back yard / terrace)
16 x 36 ft floorplates @ four finished floors (with basement level) = 2,304 ft2
(1,750 ft2 main residence, 576 ft2 basement suite)
Strata: Main unit (two or three bedrooms): $1.5M. One bedroom suite: $505,000
Conclusion: Marginal differential in East Vancouver in comparison to SDHs. Affordable only with two adult incomes and a rental income in the main unit. Will offer some savings over SDHs on West Side. Marginal savings with two-lot crosswise subdivision with additional small backyard.
ROWHOUSE 2 (smaller starter home, no private yard outside of setbacks)
Two end lots subdivided crosswise into 14 lots. 10-ft setback from street, 6-foot sideyard setback from adjacent RS1 property (includes walkway).
Slab-at-grade wood frame construction = $280 / ft2 construction cost.
Front (with 10 ft setback):
Land @ 560 ft2 = $250,880
Structure (two floors @ 400 ft2 @ 72% lot coverage & 1.43 FSR)
= 800 ft2 @ $355 / ft2 = $284,000
Total cost = $535,000.
Rear (with 6-foot setback):
Land @ 496 ft2 = $222, 200
Structure (same area as front, 80% lot coverage, 1.62 FSR) = $284,000
Total cost: $506,200.
Conclusion: Ground-accessed units are affordable compared to SDHs. Demonstrates the benefit of using less land per unit for fee simple housing.
***
The geometry of this exercise would also work with back-to-back attached single-family homes on adjacent mid-block lots, with the rear units facing the lane. The rows could contain 12 attached units before a break for fire and pedestrian access. Basically, this would subsume six RS1 lots and replace 18 currently allowable units with 36 units if suites were included.
“… replace 18 allowable units with 36 if suites were included on the front row units, and 48 in all units.”
… and the CRA doesn’t hit you with taxes on said unit.
Why not? Why shouldn’t an income property be taxed because it is attached ? Only if it is detached? Perhaps we ought to tax incomes less and houses/condos generally more, like WA or TX ? That would be the better approach to monetize the vast amount of foreign capital here.
There can be provision for very minimal on-site car parking, in some situations with a bonus granny flat above if the city allows negotiated extra density for avoiding outright demolition of existing non-character houses and recycling the viable materials from them. The additional units would help balance out the otherwise additional labour costs of dismantling and recycling.
“… conceptual pro forma ….”
Will there ever be an edit button on this site?
Yup .. edit button useful indeed
Your detailed ( and my high level ) math shows that this ground level TH approach would indeed create more needed housing but not a lot cheaper than concrete mid- or high-rise condos. But different housing options, often better suited for folks with kids that wish a bit of a yard. So in essence, yes, it is a housing form that ought to be pursued further in Vancouver.
Btw: I think your built costs and soft costs ( incl acquisition, land transfer taxes, hold costs, demolition costs, engineering, permitting, ..) are a tad too low for planning intensive long delay Vancouver.
Rowhouse #2 above is obviously the more affordable model. I don’t believe the construction cost will top much over $300 / ft2 with slab-at-grade, efficient two-storey layouts, and possibly prefab components produced at large scales by a larger firm with multiple projects.
You are right about the soft costs WRT to the transfer tax, but design fees wouldn’t be outrageous with standard kit design (which can actually be very cool in the right architect’s hands), and permit fees are pretty easily calculated from tables.
Probably half the delays through city hall are caused by the applicants themselves through inadequate submissions or incompetence, and most of the other half by record volumes and backlogs (which can be factored in the consultant’s schedules). Over-exuberant, nitpicking inspectors and such cannot be blamed for everything.
Demolition isn’t that expensive ($15,000 on average), and that’s why it’s always the first resort with builders under current zoning. What will be expensive is dismantling existing structures, denailing the lumber for reuse, recycling other material and so forth, and allowing additional density to help defray the overall per ft2 costs would be very helpful.
I believe the demand for something similar to Rowhouse #2, even with an additional $75,000 thrown on for your unforeseen costs, could become very popular, especially if strata councils are absent and there are walkable, mixed use arterials nearby.
Hi Alex: PT would need to change to a new technical platform in order provide a way for a reader to edit their posted comments. We keep thinking about it, for other reasons, but cost and increased administrative complexity stand in our way.
OK. Thanks Ken. Need to edit better before posting when time permits.
Sadly, all of this talk about missing middle etc ignores the elephant in the room. As long as we allow uncontrolled amounts of foreign capital into real estate, local buyers will get the short end of the stick. Raising interest rates and introducing stress tests will only negatively impact local wage earners and do nothing to stem the tide of foreign buyers.
If you want to know why doctors, lawyers and senior managers can no longer afford a home on the West Side, look no further than the owner of the torched Shaughnessy mansion, one of three Vancouver houses the owner holds. This is just one example. It is time to set aside the typical Canadian timidity about offending people, and have a frank and honest discussion.
Foreign capital provides, on balance, far more upside than downside as capital provides jobs ( for architects, planners, designers, elevator mechanics, lawyers, realtors, window installers, concrete pourers, property managers, landscaping firms etc ) and associate massive tax revenue.
Without foreign ( read Asian ) capital BC’s economy would not have been so bouyant the last 2-3 decades. In fact, it would have been a have not province like much of Eastern Canada is today.
For every buyer there is a seller – making hundreds of thousands or millions buying cars, condos, houses and thus, paying taxes and providing jobs.
Think of the opposite: all foreign capital leaves. You’d see an immediate substantial drop in house prices, substantial increase in unemployment and massive tax revenue loss leading to massive debts. That is better why ?
The overarching missing discussion is why are we taxing incomes so high, yet consumption, incl real estate consumption, so little ? Plus, do we need to charge more for ESL, education or healthcare to folks that exploit this current tax regime ie declare the main read winner’s incomes abroad yet live here in tax free multi-million homes. Plus, do we enforce gains or incomes on real estate well enough or is there wide exploitation of our weak tax enforcement?
Taxing it to what end Thomas? So all the workers live in government provided housing, while the bulk of the land is held by offshore interests? That’s just setting up a new feudal system!
When I’ve been in the rest of Canada it doesn’t bear any resemblance to the economic wasteland you’re trying to portray. And for every non-skilled construction job we’d lose building superfluous condos, we’d gain one in tech and other sectors now being scared off coming to Vancouver by outrageous home prices.
You apparently dream of a world that doesn’t exist anymore. Money is far more mobile than people. Many immigrants here, and certainly very wealthy ones, have two homes and two associations, namely to Canada and to the “old country”. They go back and forth, as does their money and that of their large network of kids, parents, uncles, grandmas, business associates, friends, friends of friends etc . That is one reason why Canada is so prosperous !
As such, they do the rational thing: buy the biggest home they can here as our residential property taxes are so ridiculously low, we pay nothing on capital gains tax on a principal residence (so the spouse, the husband and each kids gets one if they have the cash) and we do not even enforce flips or assignments well.
Also see complaints by small business owners that their taxes are far too high – implying that the property tax burden – like in most cities – ought to be shifted more to residential owners: http://vancouversun.com/news/local-news/fumano-vancouver-already-inhospitable-to-independent-businesses-bucks-national-trend-by-shifting-tax-burden
New Zealand just slammed the door shut on foreign buyers. There is no reason we can’t do the same:
https://www.theguardian.com/world/2017/oct/25/new-zealand-to-ban-foreign-buyers-existing-homes-jacinda-ardern
NZ is tiny, like BC and had major earthquakes where folks had to leave Christchurch area and move elsewhere .
The main issue is lack of properly set property taxes while holding and on disposition and a fixation on the 50+ year old income tax oriented model.
==> Time for a major re-think and learn from US states like WA or TX that have zero state income taxes but fairly high consumption and real estate taxes.
They can also deduct interest from incomes which only benefits locals. This dual advantage of local owners vs foreign owners does not exist in BC.
The Altus Group studied 10 cities in Canada and concluded that the cities of Vancouver, Toronto and Montreal continue to post the highest commercial-to-residential ratios. Of the municipalities surveyed in 2017, Vancouver is the only city to post a commercial-to-residential tax ratio in excess of 4:1. Vancouver saw the largest bump in its ratio, increasing to 4.87 in 2017 from 4.38 in 2016. Toronto’s ratio decreased very slightly, by less than 1%, to 3.81. Montreal remained above average but experienced a small reduction from its 2016 ratio due to dropping commercial rates while residential rates remained relatively flat. The average commercial-to-residential tax ratio for all municipalities surveyed was 2.85.
Halifax, Calgary and Ottawa sit just below the average with ratios of 2.77, 2.73 and 2.67, respectively. Edmonton posted a commercial-to-residential tax ratio of 2.44 and Winnipeg of 2.01. Winnipeg’s business tax, which commercial owners consider to be a subset of the property tax, would push the City’s ratio closer to the average. Between 2016 and 2017, Regina and Saskatoon continue to post the lowest overall commercial-to-residential ratios approximating 1.70 and are the only two cities with ratios below 2:1.
Major Point: Interesting read. Look up the full report here: http://www.altusgroup.com/wp-content/uploads/2017/10/Canadian-Property-Tax-Rate-Benchmark-Report.pdf