Lack of supply blamed for housing price rise
Demand for single-family dwellings still strong
The benchmark price of a single-family detached home in Greater Vancouver jumped 17.5 per cent over the past year, partly because the supply has failed to keep pace with a growing population.
The City of Vancouver says the number of detached homes has remained stable at about 75,000 lots over the past two decades, yet the proportion has dropped in comparison to the growth during that time in townhouses and condominiums.
In 2011, single-family detached homes made up 18 per cent of the city’s housing stock, according to a city report, while apartments made up 60 per cent of the supply.
Other municipalities, including Surrey and North Vancouver, have experienced similar trends, as the region moves toward higher density in its transit corridors to provide affordable housing in a region hemmed in by mountains, the Pacific Ocean and the border with the United States.
The growth in housing in the future is definitely in multi-family. The growth in singlefamily is not going to be significant.
“The proportion (of single-family detached homes) is dropping because more and more housing is in mid-rise and highrise development,” Vancouver chief city planner Brian Jackson said. “The growth in housing in the future is definitely in multi-family. The growth in single-family is not going to be significant.”
Homebuyers continued to snap up properties over the summer, as sales reached up to 30 per cent above the 10-year sales average, says the Real Estate Board of Greater Vancouver. The region, which also includes Squamish, Whistler, Bowen Island and the Sunshine Coast, does not include Surrey, North Delta or Langley, which fall under the Fraser Valley Real Estate Board.
In August, there were 3,362 property sales in Greater Vancouver, a 21.3 per cent increase over the same month the year previous. In July, the number was even higher at 3,978 sales.
Board president Darcy McLeod said buyers are competing for a smaller supply of homes for sale than is typical at this time of year. New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,281 in August, up 8.7 per cent over August 2014. The benchmark price for all residential properties in Greater Vancouver is $708,500, while a detached home reached $1.2 million, a 17.5 per cent increase over last year.
Vancouver East and Vancouver West saw detached home price increases of 21.4 per cent and 17.9 per cent respectively, pushing prices in those areas to $1.1 million and $2.7 million, while Burnaby North and Burnaby East saw benchmark prices rise by just over 21 per cent to $1.2 million and $940,900 respectively.
The sleepy communities of Ladner and Tsawwassen also sported among the highest increases, jumping 20 per cent and 22.8 per cent respectively, with the benchmark prices rising to $765,000 and $913,500.
Delta Mayor Lois Jackson said she was troubled by the huge prices, noting some areas of Ladner have transitioned from single-family to higher density, but even those multi-family units, which were supposed to be more affordable, are “way up there.”
“That is not a good thing for any community, unless you want to have an elitist community,” she said.
David Ley, a geographer and a professor at the University of British Columbia, said the low Canadian dollar has contributed to the higher benchmark price because it has drawn more foreign buyers, while some locals may see this as the last chance to get into the market before mortgage prices go up.
He noted as people in West Vancouver or Vancouver’s west side sell their homes and move to other parts of the region, this creates a domino effect, pushing prices even higher.
“It’s the high-priced demand that’s driving the market here. The single-family market is not a priority for policy-makers in Vancouver,” Ley said. “With a growing demand and a shrinking supply, obviously the prices are going to go up. The fact remains that most people still want a single-family detached home. Any policy diminishing the supply is making the city less attractive for a significant number of people.”
Vancouver’s Jackson acknowledged the Cambie corridor has resulted in a loss of single-family homes, and more are likely to be lost as the city transforms the area near arterial roadways. He argues the city has replaced those lost units with smaller subdivisions elsewhere in the city and has the advantage of a policy that allows single-family detached homes to have both a basement suite and a laneway house. This has likely contributed to the demand, he said, as the additional suites are seen as mortgage helpers.
“It’s really important that people understand we’re not trying to densify the entire city,” Jackson added. “We’d like our single-family neighbourhoods to remain single-family, for the most part.”
But officials say it comes down to what the market will bear.
North Vancouver City has built only 60 new single-family detached homes between 2006 and 2011, planner Michael Epp said, a result of large lots being subdivided. With little land left, he said, the city has been focusing on building higher density in the city centre, which has meant a decline in the proportion in the single-family housing supply. In 1991, 12 per cent of the city’s housing was in apartment buildings over five stories, compared with 26 per cent in single-family homes. Those figures were reversed in 2011, with 20 per cent in apartments and with 17 per cent in single-family homes.
While a substantial portion of the city is earmarked to remain single-family, Epp said, the city always assesses where changes can be made to address housing gaps. Moodyville, a singlefamily neighbourhood on East Third Street, for example, has been designated for townhouses in the future.
Meanwhile, Delta took steps years ago to cut its single-family lots in North Delta in half to allow two homes per lot, but Mayor Jackson said some developers have skirted the regulations and built the homes too large, making them more expensive than anticipated.
“We’ve gone as small as we can, yet people are coming in and spending millions of dollars on these places,” she said. “It’s troubling to me. How many people do we want to be living in the Lower Mainland? Maybe there should be a cap on that.”
North Delta saw a 14.6 per cent increase in the benchmark price for single-family detached to $636,900, according to the Fraser Valley Real Estate Board, followed by South Surrey-White Rock (13.5 per cent), North Surrey (12.6 per cent), Cloverdale (10 per cent) and the rest of Surrey (8.7 per cent).
Surrey planner Nicholas Lai noted his city has also reduced the size of its lots to allow for more single detached homes to make them more affordable. However, the city has seen a huge drop in these units while townhouses are on the rise.
“In order to be viable you have to densify,” Lai said. “It reflects on the market that’s out there. If people cannot afford it, what’s the point of building it?