The housing affordability crisis in the Lower Mainland has everyone scurrying around looking to blame someone. This problem has a lot of moving parts. A proportion of the vocal blame has been targeted at foreign investors, rightly or wrongly so. But there is another side of the coin – a lack of housing supply. This may be attributed, as some would argue, to the plethora of municipal government regulations and actions.
In July 2016, the Fraser Institute published a 52-page report that suggested municipal regulation of residential development has restricted housing supply, encouraging property prices to increase and distort local economies.
The report looked at five factors that continue to slow down the supply of new housing in Canadian cities (notably Toronto, Vancouver and Calgary): approval timelines, timeline uncertainty, council and community impacts, costs and fees and the prevalence of rezoning.
Developers are aware of the housing shortages, and are fully committed to remedy this. While developers are well stocked with land, realizing the project remains tough. Often, a site with no rezoning or other approvals could require as much as 2-3 years to bring to completion. These municipal approval delays are exactly what is exacerbating the affordability issue, amongst other factors.
The study also found that developers will simply skip over a region if constructing housing becomes too costly or onerous – again, this doesn’t help the Lower Mainland’s housing problem.
Take Maple Ridge for example. Here, slow approval times mean that just one or two projects at a time are selling, creating a virtual monopoly lacking the competition that can yield pricing benefits.
Local municipal councils are known for the extra regulatory hurdles they impose on homebuilders and developers. They may engage in protracted and often arbitrary negotiations with homebuilders before approving new buildings.
In exchange for permission to exceed the zoning limits, municipalities often demand that home builders finance local amenities such as parks, playgrounds etc. The costs of these amenities can outrun the actual expense of the benefits.
The affordability crisis in Vancouver was a major issue during the recent Provincial elections and still remains one of the hottest topics on the Vancouver real estate scene. There are many points of view and we would welcome your comments and point of view.
In these market conditions, you need to work with a real estate company that has the experience and know how on getting you the right home. Contact us and let one of our real estate professionals obtain the best results for you.