Vancouver Fees & Policies Drive Up Cost of Housing

[whatnext]

Interesting article in the Sun showing how the City of Vancouver contributes to the affordability problem with all their fees and policies compared to other Metro municipalities. Who knew that Vision's LEED gold requirement added over $11,000 to every unit!

http://www.vancouversun.com/business...876/story.html

[dreambrother808]

I'm glad that the COV requires more of developers through CAC's, DCL's, etc. There was nothing in the article that bothered me, other than uncertainties and delays, which they said they are working on.

[Porfiry]

Originally Posted by whatnext

Interesting article in the Sun showing how the City of Vancouver contributes to the affordability problem with all their fees and policies compared to other Metro municipalities.

Developers will gladly take any savings as profit for themselves. No one should cry for them, especially when their profit per unit is substantially higher in Vancouver than anywhere else in the metro, even after added costs. From the article, developer profits: "in Vancouver $80,694 per unit, in Burnaby $54,652 and in Surrey $34,668".

[jlousa]

The DCL's CACs if not charged would need to be made up elsewhere so I don't have a major issue with them. The LEED costs on the other hand are a very real expense. There are numerous architects that hate LEED certification with a passion. They feel the city could've/should've just mandated the items as part of the building code instead of requiring them to go thru the certification process. One case that sticks out to me is a small 4 storey project, the developer stated that the money used towards certification would've paid for an upgrade from double-paned windows to triple paned and a full brick wall instead of the current veneer.
Now obviously the developer wouldn't have paid for those upgrades if they weren't required, but if they were required instead of certification the cost would end up the same but one would leave the future owners better served and with lower engery costs over the life of the building.

[wrenegade]

Originally Posted by Porfiry

Developers will gladly take any savings as profit for themselves. No one should cry for them, especially when their profit per unit is substantially higher in Vancouver than anywhere else in the metro, even after added costs. From the article, developer profits: "in Vancouver $80,694 per unit, in Burnaby $54,652 and in Surrey $34,668".

Those numbers don't necessarily mean anything. If a developer sells a unit for $450k (a number I pulled out of thin air) in Vancouver, $80k is 17.7%, not exactly a huge win, just a bit better than what the bank typically requires to advance financing (usually around 15%). In order to make actually sense of those numbers the value of the unit is important. Profit in dollar value will almost always be higher in Vancouver as a lot more money is requiring to begin with.

I completely agree with Jlousa on the LEED certification thing. A building code requirement makes a whole lot of sense then shelling out $60k to a consultant to certify a project. We are working on a project now and specifically designing to Built Green Gold standards (which has many similarities to LEED) to avoid the certification costs of LEED.

The time to get through the Public and bureaucratic review process is the biggest pain in my opinion. Sitting on underperforming land for 18-24 months while getting taxed based redeveloped land potential really takes a bite out of the proforma.

[s211]

Can you share more about "Built Green Gold"?

[Porfiry]

Originally Posted by wrenegade

In order to make actually sense of those numbers the value of the unit is important. Profit in dollar value will almost always be higher in Vancouver as a lot more money is requiring to begin with.

That's true, but if you do the math you'll find that profit margin is also higher in Vancouver.

The article includes a table with average sales price of new condos and townhomes in Vancouver and the "inner" and "outer" metro areas. I realize there's some imprecision here, especially since we don't know the mix of sales of the different unit types, but it's good enough for a quick and dirty calculation.

In the outer suburbs, average price is somewhere between $270,439 and $390,996. Assuming $34,668 profit, the average margin is somewhere between 8.9%-12.8%.

In the inner suburbs, average price is somewhere between $343,414 and $491,421. Assuming $54,652 profit, the average margin is somewhere between 11.1%-15.9%.

In Vancouver proper, average price is somewhere between $470,391 and $765,752. Assuming $80,694 profit, the average margin is somewhere between 10.5%-17.15%.

[Jebby]

Originally Posted by whatnext

Interesting article in the Sun showing how the City of Vancouver contributes to the affordability problem with all their fees and policies compared to other Metro municipalities. Who knew that Vision's LEED gold requirement added over $11,000 to every unit!

http://www.vancouversun.com/business...876/story.html

LEED certification is absurd and an extortion racket. As jlousa said, it should just be added to the code and certification shouldn't be necessary.

[cornholio]

Originally Posted by Porfiry

That's true, but if you do the math you'll find that profit margin is also higher in Vancouver.

The article includes a table with average sales price of new condos and townhomes in Vancouver and the "inner" and "outer" metro areas. I realize there's some imprecision here, especially since we don't know the mix of sales of the different unit types, but it's good enough for a quick and dirty calculation.

In the outer suburbs, average price is somewhere between $270,439 and $390,996. Assuming $34,668 profit, the average margin is somewhere between 8.9%-12.8%.

In the inner suburbs, average price is somewhere between $343,414 and $491,421. Assuming $54,652 profit, the average margin is somewhere between 11.1%-15.9%.

In Vancouver proper, average price is somewhere between $470,391 and $765,752. Assuming $80,694 profit, the average margin is somewhere between 10.5%-17.15%.

I would be curious to see how these numbers are obtained.I would assume developers would be keeping these numbers private, or at the very least misleadingly as low as possible. When I got the chance to see some documents for the twisting tower it looked like the projected profit margin was around 50% for the developer.

I would just love to see something more in depth explaining how these numbers were arrived at, etc..... genuinely curious.

[Pinion]

Originally Posted by Jebby

LEED certification is absurd and an extortion racket. As jlousa said, it should just be added to the code and certification shouldn't be necessary.

Last I heard, the certification process was so backlogged that developers are just saying "built to LEED standard" or something similar and not worrying about it.

[whatnext]

Does Vancouver require SFH newbuilds and renos to be LEED?

[biketrouble]

This is probably the best summary I've seen of the differences between LEED and Built Green: http://thetyee.ca/News/2011/01/11/GreenCertification/

I looked into this because a local project in North Van was touting Built Green as a benefit. One thing that does strike me is that Built Green is a project of an association of home builders, whereas LEED is administered by a non-profit whose roots are not purely in construction. Worth bearing that difference in mind when you see people associated with the development industry praising Built Green and disparaging LEED. I'm in no position to judge the standards produced by either or how they are applied, but I will say that Built Green has a strong whiff of marketing to it.

[Porfiry]

Originally Posted by whatnext

Does Vancouver require SFH newbuilds and renos to be LEED?

I don't think so. Only rezonings. This requirement was put in place during Sam Sullivan's mayoralty. It started as LEED Silver and then changed to Gold or equivalent later.

[jlousa]

Under Sam Sullivan the requirement was built to LEED Silver and it was scheduled to require built to LEED Gold, when Vision came in they delayed the requirement to LEED Gold but put in that certification was required. The certification is what's causing the concerns among builders.

[officedweller]

Interesting (long) article on San Fransisco housing.

http://techcrunch.com/2014/04/14/sf-housing/

[quobobo]

^ Agreed, it's an absolutely fantastic article.

The Bay Area's housing policies are such a depressing failure. I've considered moving there a few times (would probably involve a $40-$50k pay raise in my line of work) but it would require paying twice as much for housing then 1) a long commute to the Valley or 2) actually living in the ultra-suburban Valley. No thanks.

It makes you wonder: if Greater Vancouver had an economic boom on the scale of Silicon Valley's, would we allow enough housing to be built?

[spm2013]

Originally Posted by quobobo

^ Agreed, it's an absolutely fantastic article.

The Bay Area's housing policies are such a depressing failure. I've considered moving there a few times (would probably involve a $40-$50k pay raise in my line of work) but it would require paying twice as much for housing then 1) a long commute to the Valley or 2) actually living in the ultra-suburban Valley. No thanks.

It makes you wonder: if Greater Vancouver had an economic boom on the scale of Silicon Valley's, would we allow enough housing to be built?

I'm sure somewhere like Surrey/Burnaby would bend over backwards in that case. So maybe not in the city proper but I'm sure there would be enough land mass to support more housing (though not sure of the infrastructure costs to support that increase in population.)

[dreambrother808]

#7 in the article has some really good points and the info to back them up for those believe there is no correlation between supply and demand. Here's a few general points:

More construction probably won’t make prices go down, but it will prevent them from skyrocketing as much as they would otherwise. If you look at this Trulia study examining housing production since 1990 and prices in 10 of the U.S.’s biggest tech hubs, you’ll see that San Francisco had the highest median prices per square foot and had the lowest number of new construction permits per 1,000 units between 1990 and 2013.

Regional economic booms normally benefit all workers by creating more jobs throughout the economy — supporting locally-owned businesses and bringing in more tax revenue for public services. Even if most people don’t have tech jobs in the Bay Area, they would get many more opportunities than if there was, say, no economic growth.

The point is that if the entire Bay Area had a more elastic housing supply, it would not only make living affordable for most people, it would allow a far larger portion of the population to find jobs and do things like save or spend money instead of moving somewhere distant and spending their money on driving, or even being unemployed.

[whatnext]

Now it seems that there is a huge backlog of permits as everyone rushes to beat the (delayed) implementation of Vision's new, green, building bylaw. This is the infamous set of bylaws that bans doorknobs, and horrors like powder rooms on the main floor of houses (seriously, WTF?)

http://www.biv.com/article/20140721/...69e5-209375701