To cool the red-hot housing market, address the housing crisis and reintroduce the “missing” middle market, a Metro Vancouver housing research firm is suggesting B.C.’s incoming premier put a focus on expediting the development process for multi-family complexes.
“We keep trying to address the demand issue,” Michael Ferreira of Urban Analytics told Peace Arch News Tuesday. “There continues to be little to no conversation – and in some cases, a lot of denial – about the fact that supply is an issue we should be looking at.
“I’m suggesting, from a health of the market perspective, if we really want to have a productive conversation about affordability in the region, then we need to include supply in that conversation.”
Urban Analytics monitors the new multi-family home sector of Metro Vancouver. They are funded in part by a subscription- based model used by developers, construction companies, marketing companies, appraisers, lenders and banks.
Results from the first quarter of 2017 show that new multi-family home sales fell 11 per cent compared to the previous quarter, and were 38 per cent lower than the same quarter in 2016.
Ferreira says that’s attributed to a lack of options, not a lack of potential buyers.
In the first quarter, two townhome projects, with a total of 76 units, were launched in South Surrey (16321 15 Ave. and 2286 164 St.); not a single new condominium or townhome project was launched in Burnaby or New Westminster; and no townhome projects were launched in Langley “where there is seemingly endless demand for this product.”
The findings show that there were only 15 completed and unsold new condominiums and 16 completed and unsold townhome units across Metro Vancouver at the end of the first quarter.
“We’re seeing lineups for new townhome projects opening up in Langley. That’s a function of pent-up demand that gets built up when we don’t see enough projects coming to market,” Ferreira told PAN.
He says a burst of development – four to five approvals in a matter of six to eight weeks – in Metro Vancouver leaves an immediate impact on the market.
“You see the buyer urgency dropping out of the market… They feel like they have more time to make a buying decision and you don’t have this frenzy in the market where prices continue to go up because of that fear of missing out,” he said.
“What we’re seeing is prices are rising so dramatically in such a short period of time, people are getting priced out of the missing middle market because there is not enough of that supply to keep prices from increasing as rapidly as they have been.”
Ferreira agreed that the term “affordable housing” can have a variation of meanings, but he’s confident affordable housing is “not what we see in the market today, that’s for sure.”
“It’s a very difficult issue. The way I look at it is more from the perspective of how quickly prices have gone up in a relatively short period of time. That’s obviously a big shock to the market when you’re seeing prices increase 30-40 per cent within 12-18 months in some areas and market types.”
As for predictions on the Metro Vancouver housing market, Ferreira said “it’s difficult to say,” and history has shown that when there’s significant increase to home values in a short period of time, “things typically haven’t ended well.”
“But at the same time, we have a unique situation where we don’t have an over-supply of product in the market. There’s very little to no standing inventory of completed and unsold units throughout the market. We don’t have a lot of even unsold pre-sale inventory in the market.”
Ferreira said municipalities have shown they are not willing or prepared to make the choices necessary to increase the amount of competition and supply in the housing market. This is a responsibility he would like to see dealt with by the next premier.
“I think we need some leadership from the provincial leadership level to take some of the onus off municipalities and put some guidelines in place to speed up the process of approvals and such,” he said.
A final count for the May 9 Election is scheduled for next week.