Bob Ransford
Sun
Vancouver’s current housing boom may be facing its first minor market correction as rising construction costs push selling prices to income-limit levels.
As I mentioned in my year-end analysis, construction costs are soaring as a result of the province’s major infrastructure projects and Olympic construction. There is no immediate relief in sight. As a result selling prices for new homes are being pushed to new levels that are approaching a ceiling dictated by incomes.
An international study released earlier this week pegged Vancouver as Canada’s most unaffordable city when it comes to housing, ranking us 15th worst in the world.
The simple fact is that increases in local average incomes are not keeping pace with housing price increases. The pool of eligible buyers gets smaller as construction costs push selling prices further.
Some signature downtown condominium projects at the highest end of the market will likely be immune from any impact, as their pool of buyers is international in scope.
Experienced developers are beginning to shy away from securing new development sites with land costs that add to, rather than temper, future end-product selling price.
This may all end up rebalancing the market somewhat, with a slight slowing in future residential construction, which should see land prices adjust accordingly. The correction may not be enough to provide any relief in construction costs, as we still face a local labour shortage with the volume of construction projects in the public sector.
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The new Harper Conservative government will likely be looking for ways to demonstrate a concern for urban issues, given their lack of electoral success in Canada’s three biggest cities.
It will be interesting to see if Harper gives any consideration to a decades-old Conservative idea — mortgage interest deductibility — a policy idea that helped elect Joe Clark’s minority government.
Close behind addressing housing issues will likely be a concern for quality of life issues that are unique to the urban lexicon. The Party’s roots are conservatively fertilized with a rural perspective, but to make gains next time, Harper will need to portray an understanding of quality of life issues that concern urban Canadians.
Premier Gordon Campbell may have handed Harper a unique opportunity to address urban issues when Campbell revealed details this week of his $3-billion Gateway Lower Mainland transportation program. The premier is counting on major federal funding to assist with this ambitious program.
One of the biggest ticket items will be the twinning of the Port Mann bridge, a controversial project that has regional growth implications. That’s where Harper may have an opportunity.
He could insist on guarantees that the twinned Port Mann bridge won’t simply open the Fraser valley to more residential sprawl, adding to further congestion and all of the consequential negative environmental impacts that concern urban voters.
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An art gallery is not the first place I would think of visiting to get a few budget conscious ideas on modern architectural style and home design. But an upcoming exhibit at the Vancouver Art Gallery will feature the latest in avant garde housing in the form of economical prefabricated homes.
I have written in the past about the appeal of modular or factory-built housing yet the perception still lingers that a factory-built home is little more than a glorified trailer. This upcoming exhibit will challenge that myth.
Today’s prefab movement has captured the spirit and imagination of a new generation of architects and home buyers, who together have championed a variety of modern modular dwellings — from houses owners can build from a kit of parts to those that arrive fully assembled and are habitable within a week or two.
Model homes will be on display at Some Assembly Required: Contemporary Prefabricated Houses, a travelling exhibit that will open in late April at the Vancouver Art Gallery.
Bob Ransford is a public affairs consultant with COUNTERPOINT Communications Inc. He is a former real estate developer who specializes in urban land use issues. Email: [email protected]
© The Vancouver Sun 2006
