Opinion: Housing in Vancouver will get worse before it gets better Vancouver Courier December 4, 2017

Better use of land key to affordability in Vancouver
      The last two weeks have been a bonanza for affordable housing junkies.They started with the Housing Central Conference, organized by the B.C. Non-Profit Housing Association (BCNPHA), Co-op Housing Federation of B.C. and Aboriginal Housing Management Association. It brought together more than 1,300 participants from the non-profit and cooperative housing sectors, and I was invited to deliver a version of a recent SFU Affordable Housing Ideas presentation.
      Many of the sessions focused on the need for new partnerships between non-profit housing providers, developers and municipalities. This message was reinforced by Municipal Affairs Minister Selina Robinson and Mayor Gregor Robertson, who both addressed the delegates.
Kishone Roy, BCNPHA CEO, told reporters that while he was pleased to see senior levels of government increasing funds to support affordable housing, it is going to take years before new projects come on stream. He, therefore, expects the current housing situation to probably get worse before it gets better.
       I was pleased to hear him applaud temporary modular housing as an effective short-term solution. I did my 1971 university thesis on the concept of relocatable modular housing, and some Courier readers may recall that Peter Ladner and I first proposed this idea to house the homeless during the 2008 municipal election.
      In my conference presentation, I urged attendees to explore better use of land. One idea was to redevelop well-located single-family lots with small low-rise apartment buildings such as those built throughout Vancouver in the 1950s and 1960s.
       These simple buildings can be very cost-effective. They do not need underground parking, and while some fire code relaxations may be required, they can provide safe, decent and relatively affordable accommodation.
      Another idea was to consider other uses for back lanes. Now that laneway housing has become accepted in many parts of the province, perhaps it is time to also build townhouses and low-rise apartments along lanes. Anyone familiar with English mews housing will know what I mean. Moreover, the latest West End plan allows small infill apartments along lanes.
      A critical factor contributing to the high cost of housing is the price of land. I therefore urged attendees to seek out free land. For example, a 140-foot strip off the Langara Golf Course along Cambie Street could accommodate a substantial non-profit and market housing.
       The berm along West Sixth Avenue, built in the 1970s to shield False Creek residents from railway noise along the now-abandoned railway line, could offer another free land location, as might the top level of underutilized parkades.
       After the conference, the federal government announced its long-awaited Federal Housing Strategy at joint events in Toronto and Vancouver. (Toronto got Trudeau; we got Jean-Yves Duclos, the federal minister responsible for housing.)
      In a Nov. 22 Courier story, Mike Howell summarized the $40-billion, 10-year, 100,000 unit program, which promises to reduce homelessness by 50 per cent.
       While I'm pleased to see the federal government back in the housing game, I’m sure I’m not the only one a bit sceptical when it comes to any promises to end or reduce homelessness. But we can hope.
       Following the federal government’s announcement, the City of Vancouver released its 10-year housing strategy, which includes a broad array of initiatives, including approval for 72,000 new homes around the city. While I'm often critical of the city’s zoning, planning and housing initiatives, this comprehensive program has potential to offer many benefits.
      I was particularly pleased with the proposal to transform low-density, single-family neighbourhoods with 10,000 duplexes, triplexes, townhouses, stacked rowhouses and low-rise apartments — something many of us have been advocating for decades.
      The city is also committed to speeding up the approval process and eliminating community amenity contributions for rental housing — something which has deterred some developers from building rental projects.
      Following the city’s announcement, former mayor and premier Mike Harcourt noted that even in neighbourhoods such as Dunbar, West Point Grey and Kerrisdale, where residents have traditionally defended single-family zoning, there is now more openness to change than only a few years ago.
      I discovered this to be true last Thursday when Abundant Housing’s Brendan Dawe and I were invited to speak on Changing Dunbar at the Dunbar Residents’ Association annual general meeting. But that’s another story for another day.
@michaelgeller
geller@sfu.ca
Link to Howell’s story:
http://www.vancourier.com/news/40-billion-strategy-aims-to-reduce-homelessness-by-50-per-cent-1.23102458.

Vancouver developers fear 'alarming' land prices hinder profit: by Frank O'Brien Western Investor November 30, 2017

Before you read the story below, some background might be helpful.

I first met Frank O'Brien in the 1980s when I was president of UDI Pacific Region. In 1988 I was elected president of UDI Canada and I was allowed to engage a speech writer to assist me in preparing some of the many talks I would be expected to make. (Some Toronto developers thought I should be required to engage a speech writer.)  I started to work with Frank and we have been in touch with one another ever since. Frank has often called me for background on stories and occasional fact checking, etc.

This story arose from a discussion Frank and I had a week or so ago when the federal housing strategy was being announced at the top of the Woodwards building. While there was much optimism about the fact the feds were back in the housing game, I did mention to Frank that I had recently been shocked at how much many developers, especially developers new to the city, were willing to pay for land. This was triggered in part by a potential new assignment for a property along the Cambie Corridor where I was being told $450 a foot buildable was a good price. Based on some proformas I prepared, I could not create a viable project at a sales price of $1400 a foot. 

Many people seem willing to pay these prices and more, in some cases much more. Others are buying assignments at even higher prices. When I remarked to a realtor active in the Burnaby market that I was surprised to see pre-sales at higher prices than what completed product was selling for, he told me not to be surprised, adding that in some cases, new condos are like new cars. They depreciate when they are taken off the lot. He had seen a number of units selling for less than the pre-sale prices.

As it happen,s he was referring to units at SFU's UniverCity, not Metrotown. However, Frank says I specifically mentioned Metrotown to him. At any rate, I stand by the belief that pre-sale marketers are selling dreams, which are often years off in the future, with payment not required until some time in the future....while the final product does not always live up to the dream. 

Pre-sale marketing really came into its own in the mid- 1980s. The concept of 'Priority Registration' and other finely tuned marketing techniques was created by Stan Kates, a brilliant marketing consultant. When I became president of UDI, I publicly expressed concern about how some very high pressure Toronto pre-sale programs were being orchestrated and suggested that if we weren't careful, pre-sales could become like high school chain letters. The people at the beginning might do well, but those buying in at the end could lose out.

So far, everyone who has been buying over the past few years has generally done well. However, as more and more Vancouver projects are starting with land costs over $450 a foot, which means they must sell at $1400 a foot or more in Vancouver, or land costs well in excess of $200 a foot  in Burnaby which means they must sell for over $1000, I do worry about how long the ride will continue. We certainly can't build affordable housing at these land prices.  

Here's Frank's story. I should add that while I was referring to price paid per square foot of buildable area, Frank sometimes refers to land prices per square foot of land area. Depending on the FSR permitted, this price will be reduced. I should also note that construction costs along the Cambie Corridor and elsewhere for concrete buildings is well in excess of the $350 a foot referenced in the article. In some cases, very high quality mid-rise buildings are approaching $440 a foot.

Vancouver developer and architect Michael Geller warns that land has been selling at such high prices that some condo developers – and new condo buyers – fear they won’t be able to profit on the final product.
      “I am seeing land sales now in excess of $500 a [square] foot buildable in the city of Vancouver and these are not in any way special sites,” Geller said.
      “This is alarming. For a new 800-square-foot condo you are approaching $480,000, just for land.”
      City land values are now worth more than the construction costs of a residential tower, which Altus Group pegged at from $315 to $350 per square foot in a 2017 survey.
      When all soft costs, such as design and landscaping, city fees, community amenity contributions, legal fees, marketing and commissions are piled on, Geller said a developer would need to sell new condos at well above $1,400 per square just to achieve bank financing, let alone a profit.
      There are now 30,000 strata units under construction and a total of 120,000 in various stages of the pipeline across Metro Vancouver, according to industry estimates.
      Yet prices for residential land – much of which already has a building on it – continue to soar.
For example, a Vancouver land assembly of four housing lots near Langara Golf Course was sold a year ago for $12 million and then quickly flipped for $13.2 million for a townhouse project.
That now looks like a bargain.
      This month, HQ Commercial sold a 5,400 square foot residential lot in Vancouver’s Marpole area for $3.8 million, or $704 per square foot.
      A 30,000-square foot strip mall on East Hastings, with just the potential of residential development, was recently bought for $712 per square foot.
      “Currently the strongest multi-family market in the country, Vancouver is witnessing an unwavering insatiable investor appetite,” said James Blair, vice-president, multi-family for JLL Canada. But Blair suggests there could be a limit, something that we have heard before.
      “We foresee that costs per door in certain regions will continue to go up, but not dramatically. We are already at very aggressive door costs.”
      The question is whether the land costs that developers are willing to pay will match what future condo buyers are capable of buying.
      Some buyers of newly completed condos are already re-selling their units for less than they paid at pre-sale during construction, Geller said, citing a new concrete tower in Burnaby’s Metrotown area as an example.
      Meanwhile, the City of Vancouver is trying to put the brakes on runaway land speculation in an effort to lower prices. Its Housing Vancouver strategy, outlined November 28 and which may come into force in 2018, is meant to “reduce over-inflated values for future development.”
      “The effects of speculation have caused significant consequences for housing in Vancouver, and has hindered many of our attempts to build affordable rental housing as the high cost of land make projects unviable,” said Gil Kelley, Vancouver’s general manager, planning, urban design and sustainability.
      Among its proposals, the city policy is considering making some neighbourhoods “rental-only zones” to calm residential land speculation, and said it is working with senior government in “implementing a speculation or flipping tax” on residential land sales.

 

Looking Back; Looking Forward: Presentation to Mortgage Investment Association of BC July 2017

This past summer, I was invited to speak at the MIABC AGM and barbq on the topic of Vancouver's last 100 years and the future of affordable housing. The presentation reviewed the history of CMHC housing programs and set out some housing affordability predictions for the future.

I just discovered my presentation online and you can find a link below. But caution: if you are going to watch, pour yourself a long drink. While you don't have to listen to me, there are 153 slides! http://www.miabc.com/resources/Pictures/Headshots/2017-07-11%20Presentation%20to%20MIABC.pdf

West Vancouver saves historic Rush House: North Shore News November 26th, 2017

A week after losing one heritage home to demolition, West Vancouver council has saved one of the oldest houses in Ambleside and given it permanent protection.
      Council voted unanimously Monday night to approve a heritage revitalization agreement for the 1923 Rush House at 1195 12th St. in exchange for allowing developer Michael Geller to move the historic home 30 feet to the east and build two new “cottages” of just under 2,000 square feet on the lot.
      The home was built by Maj. Frederick Rush, a First World War veteran who developed the lot into a 0.73-hectare farm following the war.
      The project has the endorsement of the North Shore Heritage Preservation Society.
“It is a very attractive Craftsman-style house with many of the classic architectural features of this architectural design,” society president Peter Miller wrote in his letter to council on the matter. “Its retention will serve to remind today’s residents of the rural character of the West Vancouver community when it was built and stood amongst field from which hay was harvested.”
      Some neighbours, however, had some concerns. Particularly Holly Kemp whose backyard could wind up in eyeshot of her new neighbours’ windows.
      “Now we all want the Rush house to be saved. That’s not the question. But it should not be at the expense and hardship of long-term West Vancouver residents and neighbours like myself and my family. Developers should not be allowed to infringe on my property rights, devaluing my property and destroying my little piece of heaven,” Kemp said at a public hearing Monday night.
      Council’s reasons for supporting the project ranged from a love of the home itself to a desire for the smaller infill units the project would provide.
      “I love the design. I think it replicates the neighbourhood form and character,” said Coun. Nora Gambioli, adding that she has faith in Geller to address neighbours’ concerns. “Our job is do what’s best for the community as a whole and what’s best for the community as a whole is to save this heritage property.”
      Coun. Mary-Ann Booth threw her vote behind the project largely because of the two cottages being added to the lot.
      “I’ve said it before. I’m not interested in supporting any more single-family subdivisions because that’s not what 80 to 90 per cent of the community wants,” she said. “No locals can afford $5 million to $6 million houses here anymore.”
      Coun. Christine Cassidy said she shared some of the neighbours concerns but supported the project for the home’s sake.“It is a house which grabs your heart and I definitely do want to see it preserved. I do think it will be a lovely project when it has finished,” she said. Mayor Michael Smith also voted in favour but not before sharing his concern that Geller’s new units were perhaps too big and that there wasn’t any rental accommodation in the plan.

Maj. Frederick Rush is pictured in a photo taken during or slightly before the First World War. photo SUPPLIED Ian Macdonald

   “Going forward I would like to see staff be a little bit more targeting to the kind of housing that we need, which is the entry-level, ground-level, two-bedroom-and-den accommodation for a young family or for someone that’s selling,” he said.

 

Last week, the district confirmed they were unable to strike a heritage revitalization agreement to save the 1919 McClelland House in Altamont.The owners said the district approached them too late in the process and they were already committed to building a new home on the land.

 

NOTE: Following the Council approval I met with Holly Kemp and her family and while I could not agree to all their demands, I was able to address most of them, including removal of balconies overlooking the lane, removal of some windows, and adding stain glass to others, and increasing the setback to add a row of trees along the lane.

'POOR DOORS': How a non-story can become a national story! Global TV, CKNW, City TV

 Over the past two weeks I have done three media interviews on whether it is appropriate to have separate entrances for market and non-market housing units being built on one site. While to my mind it is not only appropriate and logical, but also necessary to have separate entrances since the two completed buildings will ultimately be owned by two different entities, some housing activists want to draw parallels between what is happening in Vancouver, and what was happening in New York.

There, the term 'poor doors' was invented to describe a situation where some developers were reluctantly required to build developments combining market condominiums and non-market housing for blacks and other disadvantaged groups. The condominiums had their entrance off the street, while the social housing had its entrance off the back lane.

Vancouver has a longstanding history of successfully mixing market and non-market units dating back to 1970s when the south shore False Creek development got underway. Since then market and non-market housing has been juxtaposed in Coal Harbour, elsewhere around False Creek, and most famously in the Woodwards development.

In some developments, affordable housing units are sprinkled through a market development. However, the owner/manager of the social housing units must pay the strata fees as condo residents, which may exceed the rents being charged.

Elsewhere, the residents so have separate doors. However, not only is this preferred by the condo owners, in most instances it is preferred by the operators and residents in the non-market units. You can watch the story here, or read it below: https://globalnews.ca/news/3884276/poor-doors-and-poor-playgrounds-vancouver-development-criticized-for-divisions-between-condos-social-housing/

WATCH: A proposed condo development for Vancouver’s West End is creating controversy with divisions between the social housing component and everyone else. Grace Ke has the story.

     A proposed condo building in Vancouver’s West End has drawn criticism for the division it appears to be creating between the social housing component of the building and other residents.
     The proposed 30-storey building on the corner of Burnaby and Thurlow Streets would have 82 market residential units and 39 social housing units. It would also have an entrance for condo owners and an entrance for social housing, which have been referred to as “poor doors.”
     In addition to separate entrances, it will also have separate playgrounds.
Another West End project faced similar criticism back in 2015. The 19-storey highrise planned to have condo owners access the building from Jervis St. while social housing residents would use a Davie St. entrance.
WATCH: Condo developer under fire for so-called ‘poor doors’
 

     “We’re creating in the infrastructure a separation between the upper class and lower class, so to speak,” community activist Randy Helten said at the time. “It parallels other stuff that’s going on in society, like with health care and the education system and so on.”     The city says from a legal and management perspective the separation at the Thurlow Street development makes sense.
     Vancouver architect and developer Michael Geller agrees.
“What we have here is a situation where a developer is agreeing to build some affordable housing units in return for approval to build the condominium units,” Geller said.
     “So at the end of day, one portion of the building will be condominiums, owned, managed and, in some instances, the strata fees may even be higher than the rents in the other side of the building that likely will be managed by a non-profit or perhaps even B.C. Housing.”
     Geller notes such developments are not new to Vancouver. The Woodwards building has one market and two social housing components each with its own entrances and amenities.
     “What we’re creating are really two separate buildings with separate ownership and separate management,” he said. “At the end of the day, it’s no different than any two buildings that are side by side.”
– With files from Grace Ke

© 2017 Global News, a division of Corus Entertainment Inc.

A Business in Vancouver story about my concerns over rising land prices November 30, 2017

Alarming’ land prices spook city – and condo developers  

By Frank O'Brien | Nov. 30, 2017, 9:11 a.m.

This 10-unit Marpole apartment building is on a 5,400 square foot lot that sold in October for $3.08 million, or $704 per square foot | HQ Commercial

During last week's City of Vancouver announcement of its 10-year housing strategy I spoke with BIV editor Frank O'Brien about my concerns over rising land prices and how they impact housing affordability.  It wasn't that long ago that land prices in Vancouver were under $200 a buildable square foot. 

 

Today, Westside values are exceeding $500 psf. When you factor in the fact that the saleable area of an apartment building is about 85% of the total size, and municipal Development Cost Charges and Community Amenity Contributions, this rises to about $600 a buildable square foot, just for land. 

How can we create affordable housing when paying land costs like this, noting that construction costs are generally between $300 and $400 psf; and you must add soft costs (consulting fees, marketing, financing, etc.) and developers' profit. As Frank notes the story below (no, I didn't choose the headline) a very small 800 sq.ft. condominium apartment now has to sell for at least $1,120,000.

     Vancouver developer and architect Michael Geller warns that land has been selling at such high prices that some condo developers – and new condo buyers – fear they won’t be able to profit on the final product.

     “I am seeing land sales now in excess of $500 a [square] foot buildable in the City Vancouver and these are not in any way special sites,” Geller said.
     “This is alarming. For a new 800-square-foot condo you are approaching $480,000, just for land.”
City land values are now worth more than the construction costs of a residential tower, which Altus Group pegged at from $315 to $350 per square foot in a 2017 survey.
     When all soft costs, such as design and landscaping, city fees, community amenity contributions, legal fees, marketing and commissions are piled on, Geller said a developer would need to sell new condos at well above $1,400 per square just to achieve bank financing, let alone a profit.
     There are now 30,000 strata units under construction and a total of 120,000 in various stages of the pipeline across Metro Vancouver, according to industry estimates.Yet prices for residential land – much of which already has a building on it – continue to soar.
     For example, a Vancouver land assembly of four housing lots near Langara Golf Course was sold a year ago for $12 million and then quickly flipped for $13.2 million for a townhouse project.
That now looks like a bargain.
     This month, HQ Commercial sold a 5,400 square foot residential lot in Vancouver’s Marpole area for $3.8 million, or $704 per square foot. A 30,000-square foot strip mall on East Hastings, with just the potential of residential development, was recently bought for $712 per square foot.
     “Currently the strongest multi-family market in the country, Vancouver is witnessing an unwavering insatiable investor appetite,” said James Blair, vice-president, multi-family for JLL Canada. But Blair suggests there could be a limit, something that we have heard before.
“We foresee that costs per door in certain regions will continue to go up, but not dramatically. We are already at very aggressive door costs.”
     The question is whether the land costs that developers are willing to pay will match what future condo buyers are capable of buying.
Some buyers of newly completed condos are already re-selling their units for less than they paid at pre-sale during construction, Geller said, citing a new concrete tower in Burnaby’s Metrotown area as an example.
     Meanwhile, the City of Vancouver is trying to put the brakes on runaway land speculation in an effort to lower prices. Its Housing Vancouver strategy, outlined November 28 and which may come into force in 2018, is meant to “reduce over-inflated values for future development.”
     “The effects of speculation have caused significant consequences for housing in Vancouver, and has hindered many of our attempts to build affordable rental housing as the high cost of land make projects unviable,” said Gil Kelley, Vancouver’s general manager, planning, urban design and sustainability.
     Among its proposals, the city policy is considering making some neighbourhoods “rental-only zones” to calm residential land speculation, and said it is working with senior government in “implementing a speculation or flipping tax” on residential land sales.

Opinion: What the B.C. Government should do about the housing crisis Vancouver Courier November 20, 2017

Columnist Michael Geller says Premier John Horgan should do what Liberal leadership candidate Mike DeJong said he'd do if elected — legislate faster municipal permitting times for those seeking to build new homes, while offering more funding to planning departments to fix a "logjam" of 120,000 existing housing applications in and around Vancouver. Photo Dan Toulgoet


      Two weeks ago, I wrote about the audible gasps and expressions of shock heard throughout a packed downtown hotel ballroom during an Urban Development Institute (UDI) luncheon http://www.vancourier.com/opinion/vancouver-development-community-shocked-by-new-normal-in-real-estate-prices-1.23074903 around the region.
      Last week, I returned to another packed downtown hotel ballroom for another UDI luncheon talk. However, this time, there were no audible gasps or expressions of shock.
      The guest speakers were two very important people in the lives of the developers, bankers and real estate professionals gathered in the room: Minister Selina Robinson, responsible for housing, municipal affairs and TransLink, and Premier John Horgan.
      While I am a UDI member and even served as president 30 years ago, I decided to forgo the glazed salmon and dessert to join the many journalists and reporters at a media table where we were served water. Prior to the speeches, there was considerable speculation as to what might be announced, especially since Premier Horgan had earlier met with Prime Minister Justin Trudeau.
      Given the development community’s increasing exasperation with excessive delays in obtaining municipal approvals, I whispered to Postmedia’s Joanne Lee-Young that if there was going to be any announcement, it would likely be a provincial strategy to reduce approval times. I was wrong.
      As Lee-Young subsequently wrote in the Vancouver Sun, Horgan described the luncheon as the development industry’s first chance to “kick the tires” and “see his government as being willing to work together with municipalities and developers.” As to how Ottawa and B.C. might get involved with addressing the housing crisis in Metro Vancouver, “there were more questions than answers.”
That was it.
      As we left the room disappointed with the speeches, I announced I would devote this column to outlining what Robinson and the Premier should have told the audience.
      Since both acknowledged the province’s need to help developers and municipalities streamline project approval processes, they could have echoed a recent announcement by Liberal leadership candidate Mike DeJong. If elected, he promises to legislate faster municipal permitting times for those seeking to build new homes, while offering more funding to planning departments to fix a "logjam" of 120,000 existing housing applications in and around Vancouver.
      Alternatively, since the Premier told the crowd he did not want to be too heavy-handed with municipalities, he could have stolen a page from Todd Stone’s campaign book. Stone recently announced he would help with housing affordability by giving municipalities funding to clear planning delays.
      If there isn’t enough space to accommodate more planners and plan checkers, one of my colleagues suggested they could be set up in temporary modular offices on parking lots.
In fact, city hall may not need to hire more planners. Instead, they could allow qualified “certified professionals” knowledgeable about zoning and building bylaws to sort through the backlog of projects and determine which are worthy of proceeding.
      Another major UDI concern is the uncertainty and excessive costs related to “voluntary” community amenity contributions. I say voluntary since it is not entirely clear whether municipalities have the legal authority to demand cash and other benefits from developers seeking rezonings.
Initially, these payments were extracted whenever a developer wanted to rezone for new condos. However, now they are being requested for purpose-built rental projects, too, thus inhibiting supply.
I have a solution.
      In March 2014, the B.C. government completed a report titled Community Amenity Contributions: Balancing Community Planning, Public Benefits and Housing Affordability. It contains many excellent recommendations, but now sits on a shelf gathering dust.
I urge Premier Horgan and Robinson to read it, and agree to make the necessary administrative and legislative changes to end what has become a most uncertain and oftentimes unsavoury approach to financing growth.
      Finally, Horgan should terminate the province’s universal homeowner grant program that gives money to wealthy homeowners in Castlegar or Prince George living in luxurious $1.6 million houses. He should also end the universal property tax deferral program, which offers extremely low-interest loans to people like me, regardless of income or assets. Keep the program, but target it to those in need.
Money saved from these two programs could be redirected to non-profit organizations desperately seeking funds to build affordable homes for low-income households.
geller@sfu.ca