On March 4th, Stu McNish of Conversations Live organized a housing panel discussion on what has been happening in Metro Vancouver housing markets over the past year, and what might happen in the year to come. The panel included Metro Chair Mike Hurley, mayor of Burnaby, Bob Rennie, Beau Jarvis, Neil Chrystal and me. The Vancouver Sun was one of the key sponsors.The event has attracted considerable publicity, in part thanks to a shout out by Mark Goodman of The Goodman Report, one of the program sponsors.
While I suspect you have little time to watch podcasts, I would urge you to watch this one since you will hear that we are in the midst of a growing housing crisis. However, as Beau Jarvis pointed out, the crisis is the cost of creating new ownership and rental housing as much as affording what is built.
Both Bob Rennie and Neil Chrystal discussed the challenges of pre-selling and financing new developments when the investor market has dried up; first time buyers can't arrange the required down payments; and empty nesters do not want to wait three or four years for their new home to be completed.
It was also reported that rental projects are becoming increasingly difficult to finance since rents are finally dropping due to increased supply coming onstream, combined with reduced immigration and people moving away or into their parents' basements. It was on this that Bob Rennie and I were again in total agreement.
We are building more rental housing so that rents will come down. But now that rents have come down, rental projects may no longer be feasible. It's a Catch-22!
During the course of the evening, I shared two concerns related to Vancouver projects with which I am involved. I have asked city officials, including the capable people in the mayor's office, to follow up.
Financing municipal fees. The first is the challenge trying to finance projects like a new 61-unit Cambie Corridor condominium project approved at public hearing in 2023, when the municipal charges and permit fees total $9.3 million. That's more than $150,000 per unit.
Unreasonable Off-site Engineering fees.This amount includes the entire cost of a new traffic signal even though three other developers are required to share the cost. Unfortunately, it is city policy that the first developer must pay, and then hopefully recover from the others through a Latecomers' Agreement. Given the financing crisis facing developers, this will no longer work.
Now is not the time to expect a developer to not only arrange financing for his own project but also finance other developers' obligations. This city policy needs to change right away.
Although not publicly discussed by the panel, the need to defer timing of certain municipal fees until occupancy was also discussed amongst those in attendance. Hopefully, the city will soon announce that it is willing to implement this change. (I understand Council may be considering a motion by Cllr Rebecca Bligh to consider this on March 12).
Application of Empty Home Tax to Unsold Inventory. The other issue I raised relates to the application of the Empty Home Tax to unsold inventory.
As a result of successful lobbying by UDI, developers of projects with five units or more do not have to pay EHT on unsold inventory.
(As an aside, I was president of UDI from 1984 to 1985 and in the subsequent years, under the direction of Maureen Enser, and Anne McMullin, it has become a most effective voice for the development industry.)
However, EHT does apply to unsold inventory in a four-unit multiplex project, or any housing development comprising less than five units if units remain unsold for six months or more in a year. I hope you agree this seems most unreasonable.
As soon as this becomes more widely known, and it will, few small developers will want to risk developing much-needed multiplex projects, or duplexes for that matter.
Given the housing funding crisis facing us in the coming years, I urge the city to now implement changes the EHT Bylaw so that unsold inventory is not subject to EHT regardless of whether it is in a project with more than five units, or less than five units. Especially since for tax reasons, it is not reasonable to expect these units to be rented out.
You can watch the entire panel discussion here. Given the thoughtful voices sitting beside me on the panel, I hope you will watch this discussion. I have also asked senior city staff to follow up on my concerns. I'll keep you posted. https://www.conversationslive.ca/archive/030425-real-estate-update
1 comment:
Yes I watched the podcast & listened intently to all commenting! Not one of you nailed the elephant in the room ! Government interjection in real estate speculation for instance the DTES real estate values for an SRO building in 2002 were about $120 per foot for land or 20 to 30$ per build able square feet! An SRO unit valued at $10,000. To $15,000. Per door! Then government stepped in& started buying buildings & city started demanding owners to renovate their buildings up to then current standards! Without providing dollar for dollar incentives ! Therefore everyone started selling to the province ! Not money laundering Chinese drug lords buying SRO buildings now up to $350,000 to $400,000. Per room check property assessment today compared to 2005? Bob bought in DTES, I bought 20 buildings , property owners were cashing in like winning a lottery! That’s all because of BC Housing etal buying up tear down properties ! No Chinese drug lord money laundering here? A private investor or property owner could not get mortgage financing in 2002 from any chartered bank in Canada nor can they get financing today ! That’s government intervention in the BC real estate Market easy to research Mr. Rennie &!Geller if your not worried to poke the elephant in the room ? None of you have solutions how to fix it? Well first no taxes on buildings being developed ! No grand CAC s , no charges of DCC, not gst to buyers, no PST incentives by federal & provincial for using BC , Timber , Canadian made products etc! Tax credits up to 50% for all man hours paid on a project ! Every first time homebuyer gets a ten year tax income tax holiday! You get it 6 guys can sit in a room and come up with 100 ways to make development less expensive for the end user! Trudeau in eight years tripled the national debt not one ent of the one trillion dollars went into Canadian taxpayer hands go to Yaletown take a picture of the streetscape from 1999 compare to today 2025 Mainland street where nothing has changed still hydro poles pot holed streets shody sidewalks garbage all over ? Yet property taxes in 1999 were about $1.00 per square foot of your building & today $ 20. Per foot where is the city spending that money? Crime & drug trade is running wild on the streets inncicent taxpayers getting stabbed in broad daylight tell me what’s wrong with our city?
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