Michael Geller: A look at past and future predictions for B.C. Real Estate

 

This Metro Vancouver housing project shows how four homes can be built on one former single-family lot. PHOTO BY MICHAEL GELLER

When The Vancouver Sun invited me to write another year-end outlook column, I immediately wondered whether any of my 2022 predictions had come true. After all, while it is easy to make predictions, the past few years have taught us how difficult it is to get them right.

Last year, some of my predictions turned out to be correct, but many were incredibly wrong.

For instance, I observed there was a desire for more housing choices within established single-family neighbourhoods. I noted that many municipalities in B.C. had new mayors and councils, and the province had an energetic new premier. Housing affordability was and would remain top of mind.

While I did not expect expanded speculation and vacancy taxes, there was a growing acceptance that streamlining provincial and municipal approval procedures would reduce housing costs. I even created a holiday greeting card offering ideas for the Twelve Days of Christmas, describing how governments could improve development approval procedures.

Although I was wrong about the speculation and vacancy tax — which was, surprisingly, expanded to 13 more communities, including Parksville and Qualicum Beach — the provincial government appeared to have adopted many of the suggestions in my humble holiday greeting card.

It overhauled municipal planning and approval procedures by eliminating the need for many rezonings and public hearings. It even put an end to “let’s make a deal” community amenity contributions — negotiated and charged to developers for things such as community centres, daycares and parks, but passed on to homebuyers and renters.

More significantly, the province passed legislation allowing “missing middle” small-scale, multi-housing on most single-family lots throughout the province. I did not expect legislation of this scope, nor do I expect to see many multi-family homes on single-family lots in the coming year either in Vancouver or around the province.

For one thing, too many details still need to be worked out, including reconciling the province’s latest policy directives and existing municipal zoning regulations. There is also a need to determine how best to fund the required upgrades to municipal services and community amenities.

While many municipal politicians and planners are worried the province is taking over their historic planning functions, I expect municipalities will continue to play the major role in regulating new developments. After all, if the municipal engineer determines there is insufficient sewer capacity in an area, multi-housing projects will not proceed.

Last year, I predicted that in 2023, we could expect to see greater interest in “mass timber” construction and offsite manufactured housing. This turned out to be correct.

Many are discovering that manufactured housing is faster, quality-controlled, less wasteful, and more energy efficient. Factory construction can also help address the province’s severe shortage of skilled construction labour. Since the federal government is dreaming of building 3.5 million new homes across Canada by 2030, expect even more applications of factory construction in the years to come.

In previous year-end forecasts, I often wrote about the need to reduce excessive minimum parking regulations. After all, most cars cause pollution, traffic congestion and climate change, and are expensive to operate. However, this past year, I was shocked by decisions by Vancouver City Council and the province that, in certain instances, there would not be a requirement for any off-street parking.

While I am pleased to see minimum parking requirements eliminated, I do not expect many projects to proceed without parking. Although car-sharing opportunities are increasing, and public transit is improving, many of us cannot get by without our cars. As people start bickering over limited on-street parking, developers and homebuilders will still need to provide off-street parking if they want to attract buyers to new homes.

In several year-end forecasts, I have promoted home-sharing as a partial solution to our housing crisis. After all, it is estimated that 18 per cent of all Metro Vancouver bedrooms are empty at a time when there is a severe shortage of affordable rental accommodation.

Last year, I wrote about home-share websites that matched seniors with other seniors or students, or other household pairings. So, I was pleased to read Vancouver Sun reporter Lori Culbert’s recent story describing how home-sharing can benefit both tenants and homeowners struggling with a high mortgage.

The article reported that listings for shared accommodation increased 42 per cent year-over-year. Where past listings featured people looking for a roommate, now more listings are homeowners looking to fill spare rooms. And some landlords are even posting ads for people to share an apartment.

I am currently working on an affordable North Shore housing project in which most apartments feature a flexible design so they can be shared by unrelated people. Many living rooms are designed to become bedrooms at night, as is customary in many homes worldwide.

So, what about future home prices and rents?

Last year, I observed that notwithstanding ambitious federal immigration targets, most analysts expected home prices to decline in 2023 but not crash. However, rents would continue to rise since many approved projects would not proceed — due to higher construction costs and interest rates — and would be put on the back burner.

Rents did rise significantly in part because new projects could not be financed. However, analysts were wrong about house prices. While they varied by location and product type, overall prices increased by an average of 4.3 per cent.

As we approach 2024, many British Columbians, especially the hundreds of thousands of homeowners facing mortgage renewals, are worried about future interest rates, house prices and rental costs.

During the past month, I have been studying economists’ predictions for the coming year. Other than agreeing that interest rates are not likely to increase, there appears to be little consensus.

From my perspective as someone involved in residential development, given the shortage of skilled labour and higher construction costs, combined with ever-increasing municipal fees and charges, I expect new housing will be more expensive to build.

Sadly, not only will this result in higher prices and rents for new homes, but it will also inflate existing home prices and rents since, as we have witnessed over recent years, a rising tide lifts all boats.

On this depressing note, let me wish you a happy holiday season and a more peaceful and affordable 2024.

Michael Geller is an urban planner, real estate consultant and property developer. He serves on the adjunct faculty of SFU’s Centre for Sustainable Development and School of Resource and Environmental Management. His blog can be found at gellersworldtravel.blogspot.ca.

 

Many of Vancouver’s present housing concerns – the price of accommodation, the availability of houses and the role of foreign investment – have been vexing the city since the 1970s, says Vancouver developer and retired architect Michael Geller.

“Although housing cost less in absolute terms at that time, the affordability problem was much the same as today,” Geller says. “The issue received a lot of attention, including newspaper and magazine articles and even books.”

The problem today is more severe than it was 50 years ago, however.

“Affordable housing is more out of reach now in the Lower Mainland than it has ever been,” he says.

Geller discussed the region’s affordability problem and related ups and downs in a recent presentation at Simon Fraser University Continuing Studies called Looking Backward and Forward: Vancouver’s Changing Urban Development Landscape.

Vancouver is not the only Canadian city with a housing affordability problem, says Geller.

“Vancouver and Toronto have had similar experiences,” he says. “What differentiates Vancouver is its limited land supply. The region is hemmed in by the Pacific Ocean, the north and south branches of the Fraser River, the Coast Mountains and the U.S. border.

“And Vancouver has a relatively moderate climate. It’s still green here in January and lots of natural beauty that attracts people from all over the world.”

Beginning in the 1970s, governments recognized there was a housing problem, so they put in place programs, such as the Multiple Unit Residential Building Program, to mitigate the situation.

“In the 1980s, Vancouver began to encourage people to live downtown, not just the West End (between downtown and Stanley Park), where highrise apartment buildings had been popping up since the1950s and 1960s,” says Geller. “And there were government programs then to support the purchase of housing downtown.”

In the early 1990s, however, most of the federal government programs ended.

“Because there was still a need for housing, the provincial government and municipal governments in the Lower Mainland created their own programs,” says Geller. “Much industrial land was rezoned for residential development in Vancouver, North Vancouver and New Westminster.”

At the time there was little concern about the loss of industrial land close to the centre of the region.

“There was plenty of rental housing and condos created close to downtown, but by then many of the jobs had moved to the suburbs,” says Geller.  “Now Vancouver has a serious shortage of industrial land.”

According to a recent study commissioned by the Greater Vancouver Board of Trade and NAIOP Vancouver, a commercial real estate advocacy group, the city’s industrial land vacancy is about one per cent, among the lowest in North America.

Vancouver needs more multiple-family housing, says Geller, and it should be located along main streets, such as Broadway and Cambie, and close to schools and community centres.

“There will still be plenty of single-family housing,” he says. “What’s needed are more ‘missing middle gentle-density’ initiatives of the kind there are in Washington State and Oregon, small-scale townhouses in single-family neighbourhoods.”

Geller says creative solutions need to be found to make housing in the region more affordable.

“For example, some residential development should be allowed on light industrial properties,” says Geller. “Today’s industry is different from industry in the mid-20th century. It’s not as big, dirty or intrusive.

“And 50 years ago, nobody would have thought of building condos over commercial properties. But there’s different thinking today. Supermarkets, for example, make very attractive anchors for residential condominium developments.”

Another outside-the-box idea for tackling the housing situation is home-sharing.

“It’s similar to car-sharing, and it’s coming,” says Geller. “According to the Canadian Centre for Economic Analysis, there are an estimated 800,000 empty bedrooms in Vancouver.”

Finally, he says, we should replicate the network of efficient interurban trains that used to connect the regional municipalities.

“There should be lines east as far as Chilliwack and northward to Squamish.”

Geller, who has lived in Vancouver since the mid-‘70s, says the city and the region are in danger of losing their quality of life.

“What made Vancouver attractive and what brought me and others here – the natural beauty, the openness, the greenery, the unobstructed views of the mountains and the ocean, little traffic, no congestion – is gradually being lost,” he says.

Geller’s presentation was followed by responses from Ray Spaxman, a retired architect, urban designer and planner; Michael Epp, Metro Vancouver director of housing planning and development; and Zoe Brook, development manager at Brook Development Management.

“My idea in selecting the responders was that Spaxman represented the past, Epp the present and Brook the future,” says Geller.

 

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New Zoning Rules will Transform BC Neighbourhoods- Michael Geller - Vancouver Sun - Nov 21, 2023

 

There’s a revolution about to take place in British Columbia that will transform single-family neighbourhoods throughout B.C.’s cities and towns.

Given current zoning bylaws, single-family neighbourhoods often occupy 70 per cent of the land area, while housing less than 20 per cent of the population.

In Vancouver, these single-family neighbourhoods have been transforming over the past 20 years. While houses have often included basement suites, it was not until 2004 that the city amended its bylaws to legalize them. Other municipalities soon followed.

In 2009, Vancouver again amended its single-family zoning bylaws to allow laneway homes to be built on many lots. Since then, it is estimated that approximately 5,400 have been built. Again, other municipalities have followed Vancouver’s lead.

Consequently, it has been possible to build three dwellings on a single-family lot: the main house, a basement suite, and a laneway house. However, basement suites and laneway houses could not be sold separately from the main house. They had to be rentals, although lawyers and financial institutions discovered a way to allow some laneway houses to be sold through Tenancy in Common agreements.

All this is about to change. In September, Vancouver City Council approved new zoning bylaw changes to allow ‘multiplexes’ on single-family lots. It also simplified regulations for all RS, or single-family zones.

A multiplex is a single residential structure comprising multiple units. Depending on the lot size, up to six dwellings can be built on a single lot. If all the homes are rental, up to eight dwellings will be permitted.

These multiplexes can take different forms. They might be designed as a side-by-side duplex with a suite below each half and a laneway house in the rear. Or they could be a small cluster of townhomes.

This West Vancouver development locates four homes on what was once a single-family lot, with one parking space for each unit. 

To encourage the construction of multiple homes on single-family lots, the city is allowing an increased floor space ratio (FSR). This is the ratio of the total building area to the area of the lot.

Under the previous zoning, a lot with a principal dwelling, basement suite and laneway house could not exceed a 0.86 FSR. In other words, on a 5,000-square-foot lot, the area of the three dwellings could not exceed 4,300 square feet. Under the new multiplex zoning, the FSR increases to 1.0. Therefore, the total area of the dwellings can increase to 5,000 square feet.

The maximum allowable height remains at 36 feet. However, previously, houses could not be more than 2.5 storeys, with the top floor smaller than the floor below. Now three-storey buildings are permitted.

Under Vancouver’s new multiplex zoning, both ownership and rental housing may be developed. In some instances, all the dwellings could be strata-titled and sold. Alternatively, one or more units could remain affordable ownership or rental. In lieu of creating an affordable unit, the builder can make a financial contribution to the city. The amount of this contribution will depend on the size of the lot and where it is located in the city.

More specifically, for the purposes of calculating the contribution, the city is being divided into three sub-areas: east side, central, and west side. For typical 33-foot lots, the builder will pay $3 for every square foot above a 0.7 floor space ratio, up to 1.0. However, on larger lots, the payment will range from $70 to $140 per additional square foot depending on the location. Other rates will apply to mid-size lots in each sub-area.

One significant change relates to parking. Previously, the city required a minimum of one space for a single-family dwelling, regardless of whether there was a laneway house and basement suite. Under the new multiplex zoning, there is no off-street parking requirement. None whatsoever. In practice, I expect builders will want to provide some parking, especially for more expensive homes.

This brings me to a key question: How much will these new homes cost? In a staff presentation to Vancouver City Council, it was suggested that a new house on a standard east side lot might sell for $2.8 million; a duplex might sell for $1.5 million; and a fourplex unit might sell for $1.1 million.

If six homes were built and sold, I would estimate that the average price might come down to $800,000.

In terms of price per square foot, estimates range from $1,100 to $1,450 per square foot, depending on location. The average sale price could be in the order of $1,200 per square foot.

While this is still expensive, it is comparable to a similarly sized suite in a larger apartment building, and many will prefer having their own front door at street level.

While Vancouver’s multiplex zoning is significant, it is not as significant as the provincial government’s recent Small Scale Multi-Unit Housing announcement.

This proposed legislation will permit one secondary suite or one laneway home on every lot in smaller communities throughout B.C. In municipalities of more than 5,000 people, new zoning regulations will allow three to four units on lots currently zoned for single-family or duplex use, depending on lot size, and six units on larger lots close to transit stops with frequent service.

Michael Geller FCIP, RPP, MLAI, Ret. Architect AIBC is an urban planner, real estate consultant and property developer with five decades experience in the public, private and institutional sectors. He serves on the Adjunct Faculty of SFU’s Centre for Sustainable Development and School of Resource and Environmental Management. His blog can be found at gellersworldtravel.blogspot.ca.

 

My 2023 Holiday Greeting 'Card' - 12 new ideas to make housing more affordable and livable

Since first establishing my company in 1983, I have created annual holiday greeting cards since they are a wonderful way to keep in touch with people with whom you have been out of touch. Since 2011, the cards have often featured 12 ideas for the 12 days of Christmas. Last year's card offered 12 ways to improve the approval process, and I'm pleased to note that several were in fact adopted by the government. https://gellersworldtravel.blogspot.com/2022/12/

My 2021 Card offered 12 Gentle Density 'Missing Middle' housing ideas, some of which were adopted by both Vancouver and the province this past year. https://gellersworldtravel.blogspot.com/2021/12/gellers-2021-holiday-greeting-card.html

I know that my cards weren't the primary impetus for the changes in government policies, but I like to think that every little bit helps.

This year's card is no different. It offers 12 new ideas including a new approach to property assessments; allowing housing to be integrated with light industrial uses; a greater emphasis on home sharing and flex housing; wider application of retractable balcony glass without impacting FSR calculations; a request to stop selling density; a request for a new approach to financing growth; a call for greater application of modular housing; and individually owned fee-simple rowhouses; new incentives to retain heritage buildings; a nexus lane for prequalified applicants at city hall; and a revised local area plan for the Downtown Eastside to allow it to become a more 'normal' community with a broader mix of housing types, tenures and households. Hopefully this will stop it from remaining a crime-ridden ghetto. 

While electronic cards are not as friendly as hard copies that can be personalized, I still get a lot of enjoyment from reviewing mailing lists and sending them out. In addition, the cards sometimes help promote my projects and provoke discussions about new planning and housing ideas. 

Since many of the ideas set out in my 2021 and 2022 cards were adopted by the provincial government, I am hoping some of the ideas in this year's card will also come to fruition. 

 

A week in Arizona - Culdesac and Mountain Shadows Resort

Earlier this month I took a week to get some sun and explore new housing developments in Arizona. I was particularly interested in seeing Cul-de-Sac, https://culdesac.com/ which was presented as America's first car-free community. I thought this was quite remarkable since Arizona is very much a car-oriented state, and Phoenix is a particularly car oriented city. What I found was more of a rental housing development, rather than a new community or neighbourhood. But it's a start. Here's some information based on a Wikipedia post and my own observations.. 

Culdesac Tempe is a car-free neighborhood in the U.S. consisting of 1000 residents at full build-out and zero cars or parking spaces for residents.

It is located in Tempe, Arizona about 2 miles (3.2 km) from the center of downtown Tempe.^[5] Culdesac Tempe is the first project for the startup Culdesac originally based out of San Francisco, California and now relocated to Tempe, Arizona.

Ryan Johnson is the founder and chief executive of Culdesac. His primary motivation for starting up the company was that he believed the future of American cities would be walkable in the way that San Francisco and New York are.

 for Culdesac Tempe began in 2019.The project was estimated to cost US$140 million, span 16 acres (6.5 ha), and include 636 apartment units and 24,000 square feet (2,200 m²) of restaurant and retail space.^[7]

The Phoenix metro area is commonly known as the capital of urban sprawl due to its status as the second-worst big city in America for walkers according to the website Walk Score. In most areas of Phoenix, residents rely heavily on personal vehicles for transportation. Culdesac eliminates the need for cars by providing most necessary services within the neighborhood and mobility benefits via partnerships with rideshare companies and public transit agencies. 

Moreover, there is a tram outside the door which connects into other parts of Tempe and Phoenix.https://www.valleymetro.org/project/tempe-streetcar

Cocina Chiwas restaurant, Street Corner Urban Market, and Archer's Bikes are open, and plans are in place for a coffee shop, co-working space, and additional shops on site at Culdesac Tempe. Another result of a ban on parking spaces is that there are more opportunities for green space including courtyards, gardens, and places to gather in community within the Culdesac Tempe neighborhood.

Dan Parolek is the architect working on the design plans for the community. He coined the term "missing middle housing" to describe the type of walkable, sustainable housing that Culdesac is intended to exemplify. However, I would not define the community as 'missing middle'. It's simply all lowrise apartments.

The company plans to expand to other locations with the goal of building on the success of "the first-ever car-free neighborhood built from scratch in the United States".

While I was disappointed with Culdesac, I was not disappointed with the Mountain Shadows resort where we stayed. www.mountainshadows.com. Located in Paradise Valley, the resort occupies the site of an earlier 1959 motel that was demolished. Everything about the resort is new, except for the archival photos around the property. In addition to the hotel rooms, there is a condominium as part of the complex offering larger suites that can also be rented out. 

There is also a challenging par-3 golf course on the premises around which are some very nice privately owned homes. There are a few restaurants, a lively bar, and a vibe that made the stay most enjoyable. I can highly recommend it, and I will be back.