Housing Bubble II: The Quest To Build Enough Homes Where People Actually Need Them

[Innsertnamehere]

Originally Posted by whatnext

You've neatly encapsulated how programs like zoning for duplexes and fourplexes drive up the cost of housing and help ensure that regular folks will never be able to afford their own house in Vancouver. It isn't uncommon to find these new duplexes each cost more than the single family house that was purchased by a developer to build them. So I guess if ever shrinking living space for more money is a win.....

well yes, because you are comparing a 60-year old dwelling with a brand new one.

How much does a brand new detached home in Vancouver cost compared to a duplex? I guarantee you it's less.

[goodgrowth]

Going from a single detached to a duplex or even a fourplex in some of these markets is just way too incremental. Like in Vancouver's case anything short of multi storey buildings is never going to drive the unit volume necessary relative to land costs.

[GenWhy?]

Originally Posted by Innsertnamehere

well yes, because you are comparing a 60-year old dwelling with a brand new one.

How much does a brand new detached home in Vancouver cost compared to a duplex? I guarantee you it's less.

I think the previous home that was there sold in 2005 for $980,000 (in 2024 dollars). It was zoned only for a detached home. The home was I think a 1920s-built home at 1.5 stories, and quite small.

This 2019-built detached home:

"over 2,800 sq.ft living area with 4 bedms & 6 bathms and 420 sq.ft of rooftop deck that offers you panoramic views of city, mountain & water. Excellent open concept layout&design on the main level with elegant high-end kitchen cabinetries and WOLF & GAGGENAU stainless steel appliances, marble countertops, wok kitchen & patio. 3 generous ensuite bedrooms on upper floor are perfect laid-out. Lower level offers huge recreation room with wet bar, home theater, powder room & ensuite nanny room. Also features smart home system, HVAC, hardwood floor thru-out, radiant floor heating, 2 car garage & carport, private yard."

Is selling for $4.48 million.

[whatnext]

Originally Posted by GenWhy?

I think the previous home that was there sold in 2005 for $980,000 (in 2024 dollars). It was zoned only for a detached home. The home was I think a 1920s-built home at 1.5 stories, and quite small.

This 2019-built detached home:

"over 2,800 sq.ft living area with 4 bedms & 6 bathms and 420 sq.ft of rooftop deck that offers you panoramic views of city, mountain & water. Excellent open concept layout&design on the main level with elegant high-end kitchen cabinetries and WOLF & GAGGENAU stainless steel appliances, marble countertops, wok kitchen & patio. 3 generous ensuite bedrooms on upper floor are perfect laid-out. Lower level offers huge recreation room with wet bar, home theater, powder room & ensuite nanny room. Also features smart home system, HVAC, hardwood floor thru-out, radiant floor heating, 2 car garage & carport, private yard."

Is selling for $4.48 million.

Oh look, it has a wok kitchen. Point made.

[Truenorth00]

Originally Posted by Changing City

So do you have some other suggestion for how to make housing more affordable in the City of Vancouver?

I too would like to hear some suggestions.

Towers are too ugly. Duplexes raised land value too much.

Okay, short of deporting people from the Lower Mainland, what's the solution?

[ssiguy]

Originally Posted by Truenorth00

I too would like to hear some suggestions.

Towers are too ugly. Duplexes raised land value too much.

Okay, short of deporting people from the Lower Mainland, what's the solution?

Fixing Vancouver's affordability crisis will be difficult as the city has gone out of its way thru decades of bad zoning and housing policy to make the city as unaffordable as humanely possible but there are options.

1} Ban the destruction of all SFH unless they are required to build at least 3 homes in its place and alley homes don't count as housing units.
2} Greatly increase Vancouver's ridiculously low property tax rates on SFH while decreasing them on condos/TH.
3} Free up all city owned land exclusively for affordable housing both rental & real estate.
4} All rental and rent-to-own applications to the city should be completely within 3 months.
5} Wave all fee applications on rental or rent-to own buildings paid for by owners of SFH making their construction much more palatable to developers
6} No application of SFH, TH, condos {ie no more than 5X average income for the respectively municipality} be approved unless a high percentage include affordable housing ie 40%
5} Increase the agricultural tax rate in the ALR to urban rates unless it is producing very large {at least $3 million} of agricultural produce per year and when these tax avoiders are forced to sell than can only do so to the city at agricultural assessments and then can only be developed as affordable homes.
6} 50% of all buildings over 5 stories to be built as either rentals or rent to own where, for example, 5 years of rent equates to your 10% down keeping asking prices down.
7} 20% of all homes built in Metro must meet CMHC mortgage qualifications which automatically means only for Canadian citizens and those who do not already own a home which gets rid of flippers, speculators, and money launders. 100% of all housing built on former city owned land and ALR have housing built for first time CMHC qualifiers,
8) Require 50% of all housing under 5 stories in each municipality be modular housing which is much faster and cheaper to build.
9} Liquidate public golf course {100% in Vancouver itself} and the land to be used exclusively for affordable rental, real estate, and rent-to-own with, again CMHC mortgage qualifications. No more than 3 golf courses in all the Metro. Double the property tax rates on private ones.

These are all options that would make a HUGE dent in Vancouver's affordability crisis and ones the cities can legally employ. The fact that no city in Metro does any of them speaks volumes about how serious the city is about housing affordability and how corrupt our politicians are.

[GenWhy?]

Originally Posted by Truenorth00

I too would like to hear some suggestions.

Towers are too ugly. Duplexes raised land value too much.

Okay, short of deporting people from the Lower Mainland, what's the solution?

Come on The Big One! Waiting on that tsunami to crash the housing market.

[theman23]

Apparently Trudeau now thinks young people have been kept out of the housing market because they haven't had a chance to build up their credit score:

https://www.msn.com/en-ca/news/canad...26da2385&ei=15

Oof. How could a guy who came to power on the backs of the young adult vote be this out of touch with the demographic? And for the record, you can already build your credit score with your rent payment history. It's just optional.

[MonkeyRonin]

Originally Posted by big T

Yeah, especially in your neck of the woods, the long standing narrative of foreign money sucking up RE seems vastly overplayed. Is that still a thing (sure was back when I lived in Van), or have people come to accept that maybe we're the baddies?

We're in a crisis of our own doing, fuelled by a toxic mix of greed and low ambition / risk appetite. We've successfully bred and rewarded the average Canadian's worst instincts.

The "foreign investor" trope was no doubt played up as a bit of a singular boogeyman in some circles - after all, the vast majority of investment has always come from domestic sources - but there have still been enough of them (particularly in Vancouver and Toronto) to throw the market out of whack. The exact stats are inconsistent & unreliable, but it doesn't take a huge number to distort the relationship between the local economy & market values. And in Vancouver's case, apparently as many as a third of all purchases in some years have been made by foreign investors, which certainly is significant.

Rather than trying to pin it all on one thing though (or on the other hand, exonerate another), it's important to remember that our current housing mess is the cumulative result of many layers of bad policy from all levels of government that have been made over many years.

Someone here (I think it was hipster duck) once said that Canada has basically made every wrong decision on the housing file, and that's absolutely correct: it's been everything from restrictive zoning policy that's limited supply; to strict building codes driving up costs; to favourable tax policy that rewards speculation; to lax money laundering controls that make it easy to wash money through real estate; to easy foreign investment; to a lack of investment in social housing; to unsustainable immigration policy; to demand-inducing incentives like the FHSA; to high development fees and long permitting processes; among many others that have all conspired to create both a shortage of housing and an asset bubble. And it'll take addressing all of them now to get us out of this.

[Truenorth00]

Originally Posted by theman23

Apparently Trudeau now thinks young people have been kept out of the housing market because they haven't had a chance to build up their credit score:

https://www.msn.com/en-ca/news/canad...26da2385&ei=15

Oof. How could a guy who came to power on the backs of the young adult vote be this out of touch with the demographic? And for the record, you can already build your credit score with your rent payment history. It's just optional.

I don't think he actually believes credit score is keeping young people from buying or renting homes. I thinks it's a sign of desperation that they are talking about credit score as an accomplishment. It means that don't have anything more substantial. They need some quick policies they can point to at the next election. This is one of them.

[Acajack]

Originally Posted by Truenorth00

I don't think he actually believes credit score is keeping young people from buying or renting homes. I thinks it's a sign of desperation that they are talking about credit score as an accomplishment. It means that don't have anything more substantial. They need some quick policies they can point to at the next election. This is one of them.

A priori, this isn't a bad policy decision. Even if as you say it's insufficient given the scale of the problem.

[Innsertnamehere]

There are a lot of limits to what the feds can do as well - ultimately they weren't wrong when they said that housing is primarily a provincial issue.

[P'tit Renard]

Originally Posted by Innsertnamehere

There are a lot of limits to what the feds can do as well - ultimately they weren't wrong when they said that housing is primarily a provincial issue.

Their primary job is to control demand for housing. It is strange to watch them go through all sorts of mental gymnastics while screwing up their core competency via immigration and border control. For a country in crisis mode, why is Team Trudeau wasting valuable time and resources harping about matters of provincial jurisdiction.

[MonkeyRonin]

Originally Posted by Innsertnamehere

There are a lot of limits to what the feds can do as well - ultimately they weren't wrong when they said that housing is primarily a provincial issue.

The likely biggest single stressor on housing right now - population growth - is primarily a federal issue.

Also disagree that the federal government can't do more to get housing built: federal programs in the 70s led directly to the creation of hundreds of thousands of rental & affordable units. Either way, if the Fed's plan was to ramp up population growth, it should also have been their responsibility to coordinate with provinces to ensure that they were actually able to build enough housing to accommodate the added strain.

[thewave46]

Originally Posted by MonkeyRonin

Rather than trying to pin it all on one thing though (or on the other hand, exonerate another), it's important to remember that our current housing mess is the cumulative result of many layers of bad policy from all levels of government that have been made over many years.

Someone here (I think it was hipster duck) once said that Canada has basically made every wrong decision on the housing file, and that's absolutely correct: it's been everything from restrictive zoning policy that's limited supply; to strict building codes driving up costs; to favourable tax policy that rewards speculation; to lax money laundering controls that make it easy to wash money through real estate; to easy foreign investment; to a lack of investment in social housing; to unsustainable immigration policy; to demand-inducing incentives like the FHSA; to high development fees and long permitting processes; among many others that have all conspired to create both a shortage of housing and an asset bubble. And it'll take addressing all of them now to get us out of this.

Indeed, and I'm reposting this for emphasis.

We are dealing with the fallout of a debt binge and contradictions necessary to keep that propped up.

My posting from another thread:

Using a time machine and going back to 2015, perhaps crimping the ability of Canadians to take on debt would have been better. It would have been painful at the time, but it would have prevented this whole run-up from happening. Had CHMC required 10% downpayments on any amount up to $400,000 (average price of 2015) and simply not insured mortgages beyond that point (banks would require 20% for each additional dollar of mortgage obtained), a strong disincentive to high leverage would be in place.

Retrospectively, it seems much easier from the 2015 vantage point. Unwinding from a 2024 vantage point seems fraught and we (not just government) seem to be disinclined to do this. Until it happens through some event beyond our control.

[suburbanite]

Originally Posted by Innsertnamehere

There are a lot of limits to what the feds can do as well - ultimately they weren't wrong when they said that housing is primarily a provincial issue.

I think the Feds have a responsibility to work within the constraints that are established at lower levels of government, or use their powers to help loosen said constraints. It doesn't take an expert to figure out that housing supply in our system is relatively inelastic. If the Feds decide that accepting record-breaking numbers of newcomers is an absolute necessity, you would hope that they would also use what levers they have to push for record-breaking expansion of the housing supply. They've done it before under a different PM with the last name Trudeau, so simply throwing up their hands and saying the provinces aren't helping them is a cop-out in my eyes.

[lio45]

Originally Posted by MonkeyRonin

It can be both true that there are a lot of properties listed for sale (that aren't selling), while at the same time demand for housing exceeds supply and vacancy rates remain low.

After all, all of those homes for sale likely still have someone living in them - they're just stuck there until they can sell the property. The houses just aren't moving on the market because there aren't enough prospective buyers who can afford them at those prices (hence why prices are slowly coming down, even while overall affordability continues to deteriorate). This is also why the rental market in particular is experiencing so much stress right now - there are a whole lot of prospective buyers sitting on the sidelines.

Either way, there's definitely enough evidence of a housing shortage also being true. Eg:

-Canada has by far the lowest number of housing units per capita in the G7.
-1.5% national rental vacancy rate.
-The population grew by nearly 1.3 million in 2023 (or conservatively, meaning at least 550,000 new households), while there were only 223,000 housing unit starts (and a similar number of completions).

Etc.

Exactly.

Imagine if three-quarters of residential-property-owning Montrealers decided they wanted a change of scenery, so they all put their places for sale. There would be a ton of listings BUT nothing else would change -- rents, the vacancy rate, the supply-demand mismatch, the number of people living in tents, etc. would ALL be exactly identical, the one and only difference would be that there's now officially a ton of real estate that's technically for sale.

"Some real estate is for sale at the moment" doesn't tell us anything, it's basically true at all times in all markets ever.

[jonny24]

Originally Posted by thewave46

Retrospectively, it seems much easier from the 2015 vantage point. Unwinding from a 2024 vantage point seems fraught and we (not just government) seem to be disinclined to do this. Until it happens through some event beyond our control.

And it 8 more years, it will seem much easier to have done something back in 2024....

[lio45]

Originally Posted by P'tit Renard

Their primary job is to control demand for housing. It is strange to watch them go through all sorts of mental gymnastics while screwing up their core competency via immigration and border control. For a country in crisis mode, why is Team Trudeau wasting valuable time and resources harping about matters of provincial jurisdiction.

Originally Posted by MonkeyRonin

The likely biggest single stressor on housing right now - population growth - is primarily a federal issue.

Also disagree that the federal government can't do more to get housing built: federal programs in the 70s led directly to the creation of hundreds of thousands of rental & affordable units. Either way, if the Fed's plan was to ramp up population growth, it should also have been their responsibility to coordinate with provinces to ensure that they were actually able to build enough housing to accommodate the added strain.

Originally Posted by suburbanite

I think the Feds have a responsibility to work within the constraints that are established at lower levels of government, or use their powers to help loosen said constraints. It doesn't take an expert to figure out that housing supply in our system is relatively inelastic. If the Feds decide that accepting record-breaking numbers of newcomers is an absolute necessity, you would hope that they would also use what levers they have to push for record-breaking expansion of the housing supply. They've done it before under a different PM with the last name Trudeau, so simply throwing up their hands and saying the provinces aren't helping them is a cop-out in my eyes.

Correct, correct, correct.

[Acajack]

Nobody's buying that it's all the fault of the provinces and municipalities and that there is not much Ottawa could have done or could do.