The topic of affordability in the Metro Vancouver market has been active for some time now. However, it seems to be making an even greater surge with the City of Vancouver even appointing a taskforce to have a look at what can be done. In fact, there is currently a contest happening with the City of Vancouver for new ideas as to how to tackle this issue.
As someone who markets real estate in the city, this topic is especially dear to me. Although I may be somewhat biased, I do believe that many developers get a “bad rap” for pushing up prices or making too much money. In regards to pushing up prices, the market sets the price so just as we have tried to get the best deal for our old sofa on craig’s list, so too does a developer try to cover his costs and get a good deal when selling a home. Additionally, most people do not understand the huge amount of risk a developer takes when developing a project. They often spend millions of dollars and years of their time before they can even think about breaking ground for construction or signing their first contract. It is a risk that likely most of us would not be capable of taking.
In recent discussions with colleagues, one of the major points of our discussion was “what does affordable mean?” I think there is a different definition for everyone. However, for the sake of argument, rather than putting a number to it, let’s define it as being able to buy a home (whether condo, townhome or single-family) in the same area as where you contribute taxes to. Many people are focused on the idea that overseas buyers are pushing our prices up. While there is some of this in the marketplace, the reality is that people are coming from everywhere including other parts of Canada. Vancouver has been and continues to be one of the best places to live on the planet and with this distinction comes people who want to live here. In fact, I know several cases of national firms paying their employees less here in Metro Vancouver then in other places such as Toronto for the simple fact that people want to stay and live here.
While it is clear that there is no easy solution, several have come to light. Some suggest the process for developing a project needs to become a bit faster and easier in getting it through the city thereby taking less time and reducing holding costs for developers. Another suggestion has been to eliminate Developer Cost Charges (DCC’s) or Community Amenity Contributions (CAC’s) or at least standardize them so developers have a better understanding of costs. Unfortunately, neither of these options necessarily guarantees that housing will be more affordable if adjusted.
Rather than reducing DCC or CAC costs, I propose a Resident Purchaser Rebate offering an equivalent reduction (or part reduction) to a purchaser. The developer can still pay the fees but the city would offer a rebate to a purchaser who can show that they have lived in the areas for a set amount of time, participate in the community (paying taxes for example), and continue to reside in the community after the purchase for another set of time (1 year for example). This allows non-residents to still purchase a home but helps the long-term resident who lives in the community, contributes to it, pays taxes and is a part of the everyday fabric of that community a greater opportunity to own. Although a different scale, I once played golf in San Francisco and paid $75 for the round yet the “local” I played with only paid $25 because he was a resident of the community and contributes to the public amenity through his taxes.
As mentioned, the issue is complicated, will likely require several methods to combat it and will always be difficult because basic supply and demand tells us that when many people want to live here yet we only have so many housing options available, affordability will change.
Dan Thomson
