LOOKING HOMEWARD IN 2018
A Metro Vancouver residential lookahead sees Michael Geller touch on everything from modular housing to car-sharing.
It is with a combination of satisfaction and embarrassment that I offer my 2018 Metro Vancouver housing outlook.
Satisfaction, since predictions made over the past 11 years came true in 2017. Most notable was the proposal to provide temporary housing for the homeless using relocatable modular housing. In Vancouver, a demonstration project was completed at Terminal and Main streets; thousands of units are now being planned throughout Metro and the province with financial support from the federal and provincial governments.
Three other 2016 predictions were also realized in November when Mayor Gregor Robertson released the city’s 10-year housing strategy.
They included much needed single-family zoning changes to allow a broader range of “missing middle” housing choices; incentives to retain character houses, including permission to build coach houses or subdivide dwellings into smaller suites; and various proposals to increase the supply of purpose-built rental housing, including the creation of rental-only zones.
Also as forecast, Vancouver city council approved 1,400 rental housing units alongside or above light-industrial buildings in False Creek flats. Hopefully, other municipalities will realize that today’s industry is not your grandfather’s industry and allow similar mixeduse neighbourhoods in the future.
Sadly, my prediction that rental rates would continue to rise well beyond the provincial government’s approved rate of 3.7 per cent also turned out to be correct.
However, the accuracy of these forecasts was not matched by my 2017 housing price prediction. While I was prudent not to side with the B.C. Real Estate Association, which forecast the average MLS residential price would decline 6.4 per cent, my prediction that prices would remain relatively flat was also wrong.
Due to continued strong market demand from homebuyers and investors, and constrained supply due to a lack of suitably zoned land and approval logjams throughout the region, at the end of November, detached house prices had increased six per cent year over year, and condominium prices had increased an astounding 24 per cent, resulting in an overall 14-per-cent price increase.
So, what can we expect in 2018? I offer the following forecasts:
Housing demolitions: As land values start to exceed construction costs on a square-foot basis, expect to see more perfectly good housing demolished to make way for higher-density homes, especially near transit stations. New development will include duplexes, triplexes, row and stacked row houses, and hopefully, small 10 or 16-suite apartment buildings, like those built in the 1950s and ’60s.
Since many households would move into a row house if it was not part of a condominium, expect more individually owned feesimple or freehold row houses to be built.
Cars and parking: Parking spaces are expensive to build, especially on urban sites. As transit slowly improves, expect car-sharing to become more widespread, and reduced individual car ownership. Municipalities will lower longestablished parking requirements.
However, as automakers offer a greater choice of electric models, expect strata councils in older condominium developments to struggle with the need to provide plug-in facilities for an increasing number of electric-car owners. Eventually, every new parking space will include plug-in facilities.
Inclusionary zoning: While the current federal and provincial governments have promised funding for thousands of affordable homes, expect more municipalities to require condominium developers to include affordable housing within their projects.
Hopefully the decision to create separate buildings with individual entrances (or “poor doors” as some housing activists like to call them) will stop being news.
Condominium windups: As predicted, 2017 witnessed an increased number of condominium windups as owners of older projects offered them for sale. In 2018, expect greater certainty regarding windup procedures, and more high-profile battles between those wanting to sell, and those wanting to remain in their homes.
Modular housing: While governments are committed to building temporary modular housing developments for the homeless, expect to see temporary, relocatable modular projects accommodating a much broader range of households seeking affordable housing, located on both public and privately owned lands. Many new developments will be designed specifically for millennials who might otherwise leave the region.
Increased flooding: Due to climate change and global warming, expect increased risks of flooding throughout Metro Vancouver. Homeowners would be well advised to inspect and repair the drainage systems around their homes, and keep emergency preparedness kits on hand. January will be a good time to review homeinsurance policies and check for adequate flooding coverage.
Property tax: As official community and local-area plans include more locations for higher-density housing, some homeowners should expect significant increases in land values and property taxes. While this may please those ready to sell and move on, it will upset those wanting to stay in their homes, and small neighbourhood retailers unable to afford higher taxes.
To respond to unintended consequences of the property-tax system, expect provincial and municipal governments to finally undertake a comprehensive review to explore whether taxes should be calculated on current, rather than future, land use. The study will also consider new residential classifications; one for single-family, and another for multi-family properties, to improve tax fairness.
Shared housing: Today, while many desperately seek affordable homes, hundreds of thousands of bedrooms remain empty throughout Metro. As restrictions are placed on Airbnb, expect innovative home-sharing concepts, such as seniors’ roommate registries to match seniors with other seniors. Something akin to an affordable housing Airbnb will match younger people with older adults seeking help around the house.
So, what will happen to prices in 2018?
Thanks to recent B.C. government changes in tenancy regulations, rental-rate increases for tenants in existing buildings will be around four per cent in 2018. However, rental rates for new buildings will shock many.
As for sale prices, although municipalities are promising to speed up approval procedures and reduce development charges, with municipal elections scheduled for Oct. 20, 2018, I do not expect this to happen.
Consequently, given the severe imbalance between supply and demand, housing affordability throughout the region will be no better a year from now than it is today. (Let’s hope I’m wrong again!)
Gazing into the real estate crystal ball is an inexact science, of course, and only time will tell whether my predictions will come to pass.
One thing, however, is certain: Sunday night, we’ll be bidding adieu to the old year and welcoming 2018. On that note, Happy New Year, everyone. Michael Geller is a Vancouver-based architect, planner, real estate consultant and property developer. He also serves on the Adjunct Faculty of SFU’s Centre for Sustainable Development and School of Resource and Environmental Management. He can be reached at geller@sfu.ca