Opinion: Vancouver Sun year-end outlook Looking Back, Moving Forward December 29, 2018

Since 2006, I have been flattered to be asked to write a year-end forecast for the Vancouver Sun. While I may have missed a couple of years, I do find it interesting to look back at past columns and see where I was right, and where I was wrong, and where I was very wrong!

I will do a follow up column on some past predictions, but for now, here's this year's piece. Happy New Year. (I was pleased to read that one commentator on Twitter suggested it was delightfully provocative!)  I welcome your comments.

     I must begin this year-end forecast with a confession. Many of the predictions set out in previous year-end columns were aspirational, rather than true expectations.

     For example, over the past two decades, I have consistently predicted developers would build individually owned, non-condominium, fee-simple rowhouses in the year ahead.

     Sadly, very few have been built due to restrictive zoning and subdivision bylaws, but also because most developers prefer the ‘tried and true’ to the innovative.

     Another failed prediction was the development of friendly ‘pocket-neighbourhoods’ clustering smaller detached houses around a communal garden. While popular in the US, sadly few have yet to be developed in B.C.

     Fortunately, some aspirational forecasts have come true. These included relocatable modular housing for the homeless, European-style mid-rise apartment buildings, and more interesting, creative highrise designs.

     Before we examine what might happen in 2019, let’s review last year’s predictions.

     Among other things, I expected that car-sharing would become more widespread; perfectly good housing would be razed to make way for higher-density homes, especially near transit; and new developments along arterials would include duplexes, triplexes, and row and stacked row homes.

I also anticipated that ‘inclusionary zoning’ policies would require condo developers to include affordable housing within projects around Metro.

    These came true.

    Sadly, my prediction about increased flooding due to climate change and global warming also came true. Hopefully, some readers heeded my advice to inspect and repair the drainage systems around their homes.

     In terms of housing prices, I predicted housing affordability would be no better at the end of 2018 than at the end of 2017.

     While single-family and condominium prices have dropped over the past year, Vancouver still has a housing affordability crisis.

     So, what can we expect in 2019?

     Firstly, we can expect a great deal of uncertainty in terms of sales and prices, but also housing policies and supply.

     Just look at the forecasts from the Real Estate Associations. While the provincial organization reports the downward trend in B.C. home sales is “largely behind us” and starting to trend upwards, the national body contradicts this by predicting a further decline in sales.

     Other expert forecasts also vary widely.

     While I do not even pretend to have a crystal ball, I tend to agree with those who predict new home prices will not collapse next year, nor will they surge again.

     Expect housing markets in 2019 to be influenced by two important factors: increased concern about climate change, and income inequality.

     As often reported in this newspaper, many low-income households, especially seniors, are rightly concerned about unaffordable rent increases and renovictions.

     However, there could be serious problems if the City of Vancouver and other municipalities follow through on proposed rent-control measures requiring landlords to offer renovated suites to displaced tenants at the same rent as before renovation.

     The situation will be exacerbated if the provincial government limits annual rent increases not only for tenants, but also vacant suites, as many are predicting.

     While these measures would seem like good news for tenants, they will not be. Based on my observations over the past five decades, they will inhibit the maintenance and renovation of older buildings and curtail supply of new rental housing and condominiums for rent.

     New, more stringent energy codes will significantly impact the design of all new buildings in 2019. Expect to see much less glass and more energy efficient walls and heating systems, especially electric heat pumps and electric baseboards. Hardly a day will go by without some mention of ‘passive design’.

     The need for improved energy performance, combined with a desire for greater affordability, will give new impetus to the burgeoning ‘small house movement’. Expect more municipalities to allow laneway and coach houses to be built in rear yards, both for rent, but also for sale.

     These smaller homes will respond to increased demand for intergenerational living as many seniors seek alternatives to traditional care facilities, and many millennials choose to live much longer ‘at home’ with their parents.

     Also expect some municipalities to agree to revise their minimum suite size regulations to permit smaller, well designed apartments, and approve European-styled retractable balcony facades to make balcony spaces more usable and weatherproof.

     In last year’s forecast, I noted that while many individuals were desperately seeking affordable homes, hundreds of thousands of bedrooms remained empty.  We should therefore expect innovative home-sharing concepts to match seniors with other seniors, or students who might help around the house.

     During 2018, one social services agency did begin to investigate this concept on the North Shore and a HomeShare Pilot program got underway in Toronto. Other home-sharing arrangements, including ‘Golden Girls’ type living, increasingly attracted media attention.

     Expect the concepts of home sharing and co-living to gain further momentum in the coming year. We may even see proposals for residential versions of the ‘WeWork’ model offering small private living spaces in a communal setting.

     Think of them as modern-day equivalents of a boarding house, offering not only shelter, but also services and companionship.

     This could appeal to an increasing number of people who will start commuting to Metro weekly, rather than daily, like they do in London and other international cities.

     Finally, expect more Metro Vancouver municipal councils to respond to concerns about traffic congestion and changing neighbourhood character by rejecting projects and implementing go-slow approaches to new development.

     This is already happening in District of North Vancouver where a most worthwhile non-profit, rental housing and senior’s respite centre was recently rejected, and White Rock where the new council at its first meeting voted to reduce the height of two previously approved residential towers from twelve to six storeys.

     While these decisions may seem appropriate to many, especially those stuck in traffic, until there is greater certainty regarding project approvals, developers will sit on the sidelines or go elsewhere.

The result will be an ongoing imbalance between supply and demand, and continued unaffordability, especially at the lower end of the market.

     But don’t despair. As the review of my previous year-end columns revealed, real estate forecasts are at best hit and miss. However, one thing is certain. In two days, we will say goodbye to 2018 and welcome a new year.

     On that note, my best wishes for a happy, healthy and prosperous 2019.

 

Christmas greetings from Oak Bay, Victoria

You know you're getting older when instead of spending Christmas at your home, you start spending Christmases at your children's homes! That's what's happening this year as we spend Christmas with Georgia and Patrick and other relatives in Victoria. But rather than stay at their houses, we have returned to the Oak Bay Beach Hotel where we celebrated another family event in mid-November.

If you've never stayed here, or never stayed here since they demolished the old Oak Bay Beach Hotel, I can highly recommend it. It has the charm of The Empress but without the overwhelming size. It feels much more intimate. The Snug is the local bar, established in 1954, and there is a very good dining room and common areas.

But I particularly like the spa, outdoor pool and hot tubs. A great way to start each day....even a somewhat cloudy, drizzling Christmas Eve.

One of the reasons I am staying here is to get ideas for the resort hotel that will soon be developed as part of the new Furry Creek Community. It too will hopefully have the same intimate scale, very high standard of finishes, and personal service.

So to all my friends, colleagues and blog readers, best wishes for a Merry Christmas, and who knows, maybe four years from now, I'll be writing a Christmas post from Furry Creek where I'll be spending Christmas with my family. :-)

Opinion: Bigger isn’t always better when it comes to rental housing in Vancouver Vancouver Courier December 17th, 2018

Developer of 1296 Broadway wants significant increases in height and number of unitsGiven the urgent need for more rental housing, can a proposed purpose-built rental housing development at Broadway and Birch be too large?

This question was fervently debated on Twitter last week following my posting of a website created by some nearby residents — 28floors.com.

article continues below

Before offering my answer, I should note that over four decades, I have sought many rezonings for larger buildings. I even contemplated buying the vanity license plate “REZONE” but thought better of it when I realized my car would be constantly vandalized.
Many of my rezonings were what planners call “spot rezonings” since they were not in accordance with an approved community plan.

In 1985, I upset Point Grey residents by rezoning three blocks between West Seventh and Ninth Avenues and Alma and Highbury Streets from single-family to multi-family for low-rise apartments.
A few years later, I angered many Cambie corridor residents by proposing a fourth 18-storey rental tower at Langara Gardens. While it was approved, a subsequent application for three more rental towers was rejected due to community opposition. Today there are plans for buildings up to 28 storeys on the site.

In 1995, many Oak Street area residents opposed my proposal for a four-storey seniors’ apartment at 42^nd and Oak. It was eventually approved at three-storeys.

Two years later, a Kerrisdale neighbourhood opposed a three-and-a-half storey apartment at West 41^st and Balaclava. Despite then-Alderman George Puil’s claim in the Courier that the building would be as obscene as Eaton’s large blank wall, today The Lanesborough sits comfortably in its surroundings.
Most recently, I rezoned a property at Capilano and Marine in North Vancouver, next to a Denny’s restaurant. Although the Community Plan called for an 18-storey limit, I requested approval for 23 and 19 storey buildings. They are underway.

Which brings us back to the Broadway Denny’s, where the purpose-built rental housing development has been proposed.
For decades, building designs along West Broadway have been controlled by the Central Broadway C3-A zoning and guidelines establishing a maximum height of approximately 12 floors and 3.0 FSR limit.
In early 2018, Jameson Development received rezoning approval for a 16-floor Secured Market Rental building containing 158 residential units. An increased 7.07 FSR was allowed.

The proposed massing of 1296 Broadway will dramatically change the neighbourhood character and views along the street, says columnist Michael Geller.

However, given the Millennium Line Broadway extension, the developer now wants rezoning approval for an even higher 28-storey, 10.7 FSR building containing 262 market rental units under a new Moderate-Income Rental Housing Pilot Program that will come into effect in 2019.
On Twitter, I opined that notwithstanding the need for more rental housing, this building proposal appeared too big for its site context and should not be approved, especially in the absence of a new community plan.
I was immediately attacked — OK, challenged — by an organization called Abundant Housing and UBC professor Tom Davidoff and others, who questioned how I could possibly think any purpose-built rental building could be too big given today’s rental housing crisis and the coming subway. Why was I so afraid of tall buildings?
As this column’s introduction hopefully demonstrates, I am not afraid of tall buildings. However, I am concerned that too many very tall and dense buildings are being approved in the name of sustainability and affordability.
I wrote about this six years ago, which led to an SFU City Conversations debate “Where is big TOO big?”
Rezonings for larger buildings are often justifiable. One higher density building in a lower density neighbourhood might be fine. However, we need to think about the cumulative effect of 20 similar buildings. Or 40.
What will be the impact on views? Shadowing? Will the buildings be neighbourly? Are new parks planned? Will there be adequate school and community centre spaces? This is what a good, overall plan will address.
Too often I see politicians allowing large Community Amenity Contributions, or developer claims to be responding to the housing crisis, to trump good planning and design.
Architects and planners have a responsibility to speak out.
The city has already approved a purpose-built rental project at Broadway and Birch at more than twice the previously zoned density. That’s fine. But any further density and height increases should only be considered within the context of a new approved Broadway Corridor Plan.
@michaelgeller
geller@sfu.ca
 

2018 Holiday Greeting 'Card'...with apologies.

With apologies to those who would have preferred something a bit more amusing and less 'promotional', I hope this year's 'card' highlights some of the things that interested and concerned me in 2018.

Hopefully it will somehow help make Vancouver a better place in 2019.

To all my friends and colleagues, thank you for your advice and support, and yes, criticism when you thought I was completely off-base, over the past year, and best wishes for a happy, healthy and prosperous 2019.
ps. If you can't read this, email me at geller@sfu.ca and I'll send a better quality version.

Very old West Van home comes with a new lease on life. North Shore News December 8th, 2018

1

1913 Vinson House restored and protected in perpetuity

 

Ben Bengtson

/ North Shore News

December 8, 2018 09:42 AM

     She may not own the house anymore but she still wants it to be a home.

     When Carol Howie and her family thought about selling their 1913 craftsmen home in West Vancouver, also known as Vinson House, they feared that if they handed the keys over to the wrong people the house might end up as a mere historical footnote, rather than an enduring symbol from a bygone era.
     “We wanted to downsize, but we didn’t want the house to be bulldozed, which was exactly what was going to happen,” Howie tells the North Shore News during a recent tour of the house, adding that some Realtors viewed the place but seemed more interested in what they could do with the land rather than appreciate the house that had been standing tall at 1425 Gordon Ave. for more than 100 years.
     “Some of them didn’t even want to come inside because they just viewed it as a lot,” she says.
Howie connected with planner and architect Michael Geller, who describes himself as a “glutton for punishment” when it comes to the arduous task of restoring a character home.
     “We would like to encourage more people to save houses,” says Geller. “I’m a developer, but I’m also an architect. As an architect, I’ve always had an interest in old buildings, but I’m actually more interested in how old buildings and new buildings go together.”
     Howie ended up selling the property to Geller, who promised that if he was the one to sell it he’d do right by Vinson House. Planner and architect Michael Geller chats with Carol Howie, the former owner of the Vinson House, at left, at the property site at 1425 Gordon Ave. in West Vancouver - photo Paul McGrath, North Shore News

     In 2016, the District of West Vancouver guaranteed heritage protection for Vinson House through a heritage revitalization agreement that would allow Geller to add additional development to the property site in exchange for restoring the main house and protecting it in perpetuity.
     Today, the redeveloped site includes two infill houses, a separate suite that has been added below Vinson House and, of course, the restored house itself.
     While the suite has already been sold, Geller and Howie eagerly show off Vinson House in a bid to demonstrate it’s near seamless blending of old meets new.
     “This was the smoking room way back when, and this was one little room where the maid slept,” says Howie during the tour, aptly demonstrating that if these walls could talk there would be much to say.
     “This is the butler’s pantry, where they would have just passed stuff through.”
     Valient Vivian Vinson built the house in 1913, one year after the municipality of West Vancouver was incorporated.
     Vinson, a former reeve of West Vancouver who was elected to council numerous times, was also a renowned photographer, explains Howie.
     “He took a lot of photos of dignitaries,” she says. “There’s this whole cool backstory which makes this house even more special.”
     The house maintains its original wooden structure, and while Geller strove to keep the home’s charming character while restoring it, a discerning eye might notice modern flourishes.
     The house has been rewired and the plumbing is new, says Geller. They’ve also made the old house a little brighter with the installation of a few ceiling lights here and there. There’s now sprinklers in the living room, but they don’t infringe on the space’s authentic look, in fact you’d never notice they’re there.
    “We’ve insulated this house, there’s sprinklers in this room. Can you see them?” says Geller. “I think it’s very livable now.”
     Howie, who is a collections assistant at the West Vancouver Art Museum and passionate archivist, recognizes that Vinson House is now out of her hands. But her love of history keeps her invested in its future.
     “I was just so passionate about saving it that I’m really interested in its next life and what happens to it and trying to encourage people to come live here because it’s a piece of West Van history. It’s one of the oldest intact arts and crafts houses,” says Howie.

Opinion: All those taxes and possible rental restrictions won’t help Vancouver renters Vancouver Courier December 3, 2018

   

      Last week, many Vancouver residents were delighted to hear on the radio and read in their newspapers that the Empty Home Tax had generated a windfall of $38 million — $8 million more than expected.

     I was not one of them.
     For one thing, only $21 million has actually been collected. While this is not an insignificant sum, it is less than $38 million.

     Secondly, buried in the city report were the one-time implementation costs of $7.5 million and first-year operating costs of $2.5 million. I expect these costs to increase.
     However, my main concerns are that this tax doesn’t just apply to empty homes; it also applies to second homes regularly occupied up to six months a year.
      As a result, it is forcing B.C. and out-of-province residents to sell the homes where they live while visiting relatives and friends, or volunteering at a local hospital, as is the case with one Sunshine Coast doctor.
      Furthermore, there is no evidence the program is achieving its initially stated goal of “bringing up to 25,000 empty and under-utilized properties to the market as long-term rental homes for people who live and work in Vancouver.”
     I am not blind to what many consider the injustice of homes being kept empty while others have nowhere to live. I understand that.
     However, this tax seems designed to appeal to those like Graham P. who recently wrote on Twitter that “second home owners (unless perhaps renting out a property) are among the most selfish people. Every purchase of a second home deprives someone of a first one.”
      To add insult to injury, the province copied the Empty Home Tax when it created its so-called Speculation Tax. It too is a form of wealth or inheritance tax (when it’s deferred) that impacts not only empty dwellings but also second homes.

      To date, we have received little information on how this program will be administered, nor how much it will cost.
      Mayor Kennedy Stewart and other city councillors are now musing about tripling the Empty Home Tax. While I question the effectiveness of the tax other than as a cash grab, I might accept this increase provided the program is altered to exclude legitimate second homeowners who regularly occupy their properties, say, up to 60 days a year.
      Two weeks ago, I was invited to speak at a CMHC National Housing Conference in Ottawa on how to increase the supply of affordable rental housing. I reviewed Vancouver’s practice of inclusionary zoning, which encourages private developers to build affordable housing in return for extra density. I also discussed the city’s somewhat positive experiences encouraging purpose-built rental housing construction under STIR and Rental 100.
      While I was in Ottawa, CMHC issued a report revealing the number of Metro Vancouver condos in long-term rental had declined by 1,081 units as investors sold or repurposed their properties. The biggest declines were within the city boundaries.
      At the same time, some city councillors were suggesting new restrictions on landlords undertaking renovations of older buildings. They propose tenants be allowed to remain in their suites during renovations. Alternatively, those forced to move should be allowed to return at the same rent.
      That’s not all. The province is about to release its long-awaited Rental Housing Task Force report. Many landlords fear it will tie rent increases not only to tenants but also to units. As a result, the incentive to renovate a suite after a tenant moves out will disappear.
      I understand and sympathize with the plight of renters who can’t afford rental increases or may be forced out of their homes due to renovations. But after five decades of working in affordable housing with CMHC, the private and institutional sectors, I worry that the cumulative effect and unintended consequences of the so-called Empty Home and Speculation Taxes and potential new rental restrictions will not help renters.
      Rather, they will inhibit the supply, renovation and maintenance of purpose-built and long-term condo rentals and do little to address the rental housing crisis.
@michaelgeller

So why are developers so keen to build unaffordable condos along the Broadway Corridor? I hope this helps explain why.

Today Patrick Condon (a friend and colleague whose passion I admire) wrote a column in the Tyee. A media outlet I admire. He writes about a book by John Gray, a local writer I also admire.

In his column, Patrick criticizes the expensive condos that are going to be built along the Broadway Corridor.

"The one thing we know with certainty is that these potential 15 million square feet of new condos will not sell for less than $1,200 a square foot.
You can just barely get a tiny two-bedroom unit into 700 square feet. That means it will cost you $840,000 to get into that baby"

Why does new housing so often cost $1200 psf. Or more?  Let's analyze what it costs to build a condominium.

What do you think is the current construction cost for a new concrete building meeting Vancouver's Building code? (Yes, Vancouver has its own Building Code which makes it more expensive to build here than say Burnaby or Richmond).
Is it $200 a foot? $250? $300? $350?

Based on my recent experience, it costs more than $400 a foot for a fairly standard product. Rental or condo. The estimated cost for a 6-storey concrete building on the West Side of Vancouver with which I am familiar is closer to $500 psf.

Now, what do you think the 'soft costs' are? These include consultant fees (on most projects there will be 15 different consultants), permits, DCLs, Metro DCLs, other municipal fees, taxes, Homeowner Protection Office fees, legal, insurance, development management. Guess! Did you say 10% of the construction costs? You're low.

Now let's talk marketing. The bank requires most developers to pre-sell at least 50% of the value of the project. In addition to sales commissions (3-4%), marketing costs are usually another 2-5% depending on size, location, etc.

Now there's financing. In addition to interest costs, how much do you think you must pay mortgage brokers and lenders to arrange a $50 million loan? $100,000? $250,000? $350,000? Guess again.
Now you must remember that although you buy land and pay construction and soft costs to build 100,000 sq ft, you can probably only sell 85,000 sq. ft. Why, you can't sell the corridors, stairwells, elevator, lobby, etc.

Meanwhile, we haven't even considered land cost or municipal Community Amenity Contributions. On June 20, 2018, Council approved new Broadway Corridor CACs of $330 to $425 psf. Really. I'm not making this up!

Now, let's turn to developer's profit. Most financial institutions want to see an estimated profit equal to at least 15% of the costs, recognizing that projects may well take 4 to 5 years from conception to completion. 17.5% is probably an industry norm these days.

So what's my point? Developers don't set out to build luxury projects. But when you add up the costs, you're at luxury prices. Those who recently purchased sites in Vancouver at $450 a foot or more need at least $1500 a foot to make a project viable. And right now, it looks to me like many won't get it.

Yes, you could replace the granite countertops and frameless shower stalls and stainless steel appliances with something a bit more modest, but the savings are bubkes. (https://www.thefreedictionary.com/bubkes)

So to Patrick and others, before criticising developers who only seem to want to build luxury housing, I suggest you study in detail a 2018 real estate proforma. Then you might better understand why those Broadway condos will cost $1200 a foot or more.

To see how we might reduce some of these costs, check out my 2017 SFU Affordable Housing Lecture. https://www.youtube.com/watch?v=mRexc_XABqw

I hope this is helpful. Comments?