Plan to open up more of city to medium density creates storm

Dan Fumano
The Province

As next month’s municipal elections draw closer, debates around development are a common theme throughout Metro Vancouver.

But the nature of the debate varies by municipality, as each faces its own unique challenges. On the North Shore, the focus is the effect of growth on traffic. South of the Fraser, municipalities are struggling to develop without sprawling into rural lands. In Vancouver proper, there are fears of densification leading to the mass bulldozing of residential neighbourhoods.

It’s been seven years — and two mayoral terms — since all 21 Metro Vancouver municipalities unanimously adopted a regional growth strategy calling for 500,000 new homes by 2040 to accommodate the one million additional people expected to arrive in the region.

It took almost four years of work to build a common vision among all the municipalities, said Heather McNell, Metro Vancouver’s director of regional planning.

“It’s a very high bar when it comes to a shared vision,” McNell said.

While Metro Vancouver works to accommodate tens of thousands of added residents every year, the challenge isn’t unique. According to the United Nations, virtually every country in the world is becoming increasingly urbanized, and “these trends are changing the landscape of human settlement.”

Many goals of Metro’s 2040 plan are on track: By the end of 2016, the region had added 70,000 housing units, an increase of about eight per cent since 2011. And 98 per cent of that development was inside the “urban containment boundary,” meaning not on rural or agricultural land.

“That’s a great coup,” McNell said. About 80 per cent of Metro’s growth in the period was through redevelopment and densification of existing properties. About 20 per cent was construction on previously undeveloped lands, but still mostly within that urban containment boundary, she said.

That compares with the Greater Toronto Area, where it’s a roughly 50-50 split, McNell said, or Calgary, where only 25 per cent of growth is through densification and redevelopment and 75 per cent is on undeveloped lands.

While it’s natural for residents to push back against development, urbanists generally agree that fighting sprawl is necessary.

Andy Yan, director of SFU’s City Program, said the Vancouver region has, generally, done an admirable job of “keeping that serpent of sprawl in check.”

“By containing yourself, you’re able to maximize your infrastructure spend,” Yan said. Containing sprawl not only “improves your ecological footprint,” he said, but also “keeps a good fiscal house in order.”

 

Vancouver

“‘Vancouverism’ is an internationally known term that describes a new kind of city living,” the city’s website proclaims. “Vancouverism means tall slim towers for density, widely separated by low-rise buildings.”

But while that describes the glass towers for which the downtown core is famous, most of Vancouver’s residential land has, for decades, been zoned exclusively for suburban-style single-family houses.

Now that could be changing. And depending on who you ask, it’s either a radical measure that will ruin the city or a long overdue attempt to make it more equitable.

In June, Vancouver council launched a housing policy called Making Room, seeking to provide more housing options in residential land zoned for so-called “single-family houses.”

It will mean exploring changing zoning across most of Vancouver’s residential land to allow medium-density options, including fourplexes and four-storey apartment buildings, housing types urban planners sometime call the “missing middle” between single-family homes and highrises.

Citywide zoning changes resulting from the policy will be decided by those who are elected next month — June’s council vote directed city staff to report back with “specific recommendations for change by June 2019.”

But Vancouver’s current mayor and council are considering “quick-start actions,” most notably opening nearly all of the city’s single-family zones to duplexes. Council is expected to vote on that shortly.

The plan has already drawn debate, as illustrated by a pair of recent Vancouver Sun commentary pieces. In July, a private sector project manager, Elizabeth Murphy, likened the proposed zoning changes to a “Chainsaw Massacre,” writing: “Demolition of our character neighbourhoods will escalate with proposed policies to rezone the entire city.” Days earlier, housing activist Reilly Wood wrote: “For Vancouverites already comfortably housed, preventing neighbourhood change is often more important than making room for newcomers. But for the rest of us, Making Room is essential and not remotely radical.”

This tension is likely to be reflected in election debates. By Wood’s estimation, “Making Room is about to become the biggest issue in Vancouver’s October election.”

The large field of candidates for Vancouver mayor this year have a range of opinions on Making Room. While some support the plan’s direction, none of the candidates newly seeking office said they’d support it next week if they were on council.

Independent candidate Kennedy Stewart said he favoured deferring a decision until after the election.

“We shouldn’t be afraid of things like duplexes in single-family neighbourhoods,” Stewart said. “But the public needs to have confidence that this plan will boost affordability and not fuel speculation. That’s why I think changes this big should be left to the next mayor and council.”

The Non-Partisan Association candidate, Ken Sim, said he wouldn’t support the amendments before council next week because he believes “the process is flawed,” although he said: “More density is crucial as our population grows, but we can do that in a way that strengthens our city instead of dividing our neighbourhoods against each other.”

Independent candidate Shauna Sylvester also said she couldn’t support Making Room as it is, adding: “This policy will only increase supply and wealth for landowners but does not actually help those in need of housing without those affordability mechanisms, which I have included and addressed in my housing platform.”

The only sitting councillor running for mayor, Coun. Hector Bremner, won’t comment on how he plans to vote on the matter before Tuesday’s public hearing. But he voted to move forward with Making Room in June, and its direction is largely consistent with his message about increasing housing supply, including, in his words, “a plan to take the lid off Vancouver’s exclusionary zoning.”

Asked recently if he supports the Making Room plan approved by the Vision-majority council, he replied: “Given that it’s what I ran on in (last year’s byelection), yes. I’m glad Vision sought to adopt this approach, even though they opposed it initially. However, I fear that this is more of an attempt at politics than actual policy making.”

Other mayoral candidates oppose Making Room. ProVancouver’s David Chen said his party opposes the plan, “as it creates an open season for developers and in the absence of a city wide community plan, it unleashes uncoordinated development.”

Coalition Vancouver’s Wai Young called Making Room “a reckless plan,” saying it “will drastically and forever change the character of the vast majority of Vancouver’s neighbourhoods.”

Such criticisms of liberalizing zoning in single-family neighbourhoods sound “very familiar” to Dan Bertolet, a Seattle-based researcher with the Sightline Institute, a public policy think-tank.

“To characterize it as a developer giveaway, it’s discounting the fact the city needs more homes,” said Bertolet. Some U.S. cities have toyed with the idea of unlocking single-family zoning, he said, and “in general, urbanists see that as a really important piece of helping to create more equitable cities over the long term, sort of undoing the mistakes of the past when cities locked down huge chunks of their land for single-family houses only, thereby making sure the only kind of housing is relatively expensive.”

In a recent article for Sightline, Bertolet wrote: “If Vancouver’s elected officials can weather the inevitable political storm and put an end to restrictive single-family zoning, their city will set an example for cities throughout North America.”

Plan to open up more of city to medium density creates storm

Dan Fumano
The Province

IN FOCUS: How to choose which brokerage to work with

REP

Toronto has become one of the most dynamic luxury real estate markets in the world. With tens of thousands of people moving to the GTA each year, Toronto is consistently ranked by numerous sources as one of the top ten best cities in the world to live.  It is also a huge financial centre and has been at the forefront of the surge in condominium development, with no end in sight. The thriving market is testament to the strength and viability of the city’s real estate economy for the long-term.

A 30% rise in residential housing has put Toronto on the front page of newspapers for the past year.  Ontario’s new Fair Housing regulations have currently slowed down this unsustainable rise in prices. Despite this cool down period, analysts and forecasters are confident that Toronto’s luxury market is as vibrant as always.

“Toronto offers a cultural and financial centre and an energetic commercial and residential market”, explains David Fingold Forest Hill Real Estate’s President and CEO.

“New immigrants, students and professionals flock to Toronto’s luxury condominiums, homes and new builds.  Our market is one that ranks with New York, Boston, London and Paris,” Fingold says. “All of these factors make the luxury market a desirable one for new and seasoned Realtors. Realtors are attracted to the excitement, high property prices and beautiful condominiums and homes which give Toronto its unique luxury cache.”

To create a successful business within the luxury space, Ronni Fingold, the company founder, advises Realtors to work hard, admit when they don’t know something and seek expertise from affiliated experts at every turn. When combined with market knowledge and the right attitude, these elements will serve any Realtor well.

“We always tell our Forest Hill Real Estate team to treat selling real estate as a career, not a hobby and they will excel at it,” Ronni says. “The luxury residential market is quite simply on fire. With nearly 46,000 registered realtors in the GTA, Realtors need to exude reliability, professionalism, market expertise and exemplary service to become distinctive and successful.”

“There is nothing “regular” about our residential market and we predict that it will stay that way for many years.”

Copyright © 2018 Key Media Pty Ltd

Housing market dangers are a threat to economic activity

Michael Heath
Mortgage Broker News

Housing market dangers are “especially acute” in Australia, Hong Kong, Canada and Sweden, Oxford Economics said, noting this has historically posed a threat to economic activity.

“In all four, valuations are very elevated, there has been a lengthy housing boom, debt levels are high and there is a significant share of floating rate debt,” Adam Slater, lead economist at Oxford, said in a research note.

On the positive side, it notes risks are relatively limited in key markets like the U.S., Germany, France, China and Japan. In addition, across most economies there has been no significant recent rise in mortgage rates, which have even fallen in some cases.

“So, the classic ‘trigger’ for house price declines is largely absent,” Slater said. “However, rising rates are not strictly necessary for prices to start falling.”

House prices are falling in Australia, down almost 3 percent in the year through August in major cities, and 5.6 percent in the Sydney market. Meanwhile, three of the nation’s four major banks raised mortgage rates in recent weeks, blaming higher funding costs. The increases came even as the central bank leaves official rates at a record low.

Oxford said it compared markets across OECD countries from 1970 to 2013 and found a clear negative relationship. Where valuations had risen 35 percent or more above the long-term average over that period, real house prices fell 75 percent of the time over the following five years, it said.

“This points to many OECD countries seeing stagnant or negative real house price growth in the next few years: the scope for a further house price ‘melt-up’ in highly valued markets looks extremely limited,” Slater said.

Stretched valuations also matter because house price changes can have a significant impact on economic activity, Oxford said, citing a sample of 83 house price booms. It also found house prices tended to fall after booms, and often substantially.

“For the G7 countries, we find a positive relationship between consumer spending and real house prices from 1997, albeit possibly weakening in recent years,” Slater said. 

Copyright Bloomberg News

Copyright © 2018 Key Media

Ownership costs less than renting

Steve Randall
Canadian Real Estate Wealth

Rising rents is making homeownership the affordable alternative according to a new report.

In a comparison of expected costs by those intending to rent and those who chose to own, Mortgage Professionals Canada’s chief economist Will Dunning concludes that ownership costs less than renting today and is even more cost effective over time.

“The report demonstrates that the money Canadians are spending on monthly rent, if used instead to finance a home, would be a very beneficial investment over time,” explained Dunning. “The costs of owning and renting continue to rise across Canada. However, rents continue to rise over time whereas the largest cost of homeownership – the mortgage payment – typically maintains a fixed amount over a set period of time – usually for the first five years. The result is that the cost of renting will increase more rapidly than the cost of homeownership.”

How much could buyers save?
By looking at the comparative costs, the report shows that, if mortgage rates remain at 3.25%, in 10 years the cost of ownership (on the net basis that takes out principal repayment) will be lower than the cost of renting for almost 98% of cases. The saving for owners vs renters would be $1,295.

If rates were to rise to 4.25% after 10 years, the cost of ownership is less than the cost of renting in 92% of case studies, with an average saving of $1,014 per month.

A rate of 5.25% would still make homebuying a lower cost option in 82% of case studies with a monthly saving of $726.

“Using conservative expectations for rental increases over time, there is a clear financial benefit of owning versus renting,” commented Paul Taylor, President and CEO of Mortgage Professionals Canada. “While recent changes to mortgage qualifying have made the barrier to entry higher, those who can qualify will be much better off in the long term. Given the economic advantages of homeownership, Mortgage Professionals Canada would recommend the government consider ways to enable more middle-class Canadians to achieve homeownership. Our collective long-term economic success may be compromised without that support.”

Copyright © 2018 Key Media Pty Ltd

North Van’s Moodyville to be home to The Trails

Kathleen Freimond
The Province

The Trails

Where: 603 East 2nd Street, City of North Vancouver

What: Over 300 townhomes (First phase: 62 townhomes)

Residence sizes and prices: 1,266 to 2,183 square feet;

from $1,159,000

Developer: Wall Group of Companies

Sales centre: 603 East 2nd Street, North Vancouver

Hours: Noon to 5 p.m. Sat — Thurs, or by appointment; 604-929-9333

The first phase of The Trails, the Wall Group of Companies’ redevelopment of an eight-acre site in the City of North Vancouver’s emerging Moodyville neighbourhood, brings contemporary Craftsman-style architecture to the area, along with interiors inspired by the location’s natural surroundings.

Moodyville, one of North Vancouver’s oldest neighbourhoods, is undergoing a transformation following the rezoning of the area east of St. Patricks Avenue to Queensbury Avenue and south of East 4th Street. Once complete, it will comprise approximately 1,500 homes, about 300 of these in The Trails.

The rezoning of the area allows for increased density and buildings up to four storeys, says IBI Group’s Martin Bruckner, lead architect for The Trails development on the corner of East 2nd Street and St. Patricks Avenue.

The first phase of The Trails comprises 62 three-storey townhomes and two-storey stacked townhomes on a 68,000-square-foot site.

“The contemporary Craftsman-style [buildings] have durable material on the exterior – including brick and composite panels – to create an interesting and varied architectural appearance,” Bruckner says.

In a nod to putting their own stamp on their homes, homebuyers can choose the colour of their front door, with options including white, black, green, teal, blue or red.

Homebuyers also have choices to make on the interior colour schemes.

“There are two palettes, North Shore Beach with grey and white tones, and North Shore Natural with its warm woods,” says Ada Bonini principal at BYU Design, the firm responsible for phase one’s interior design.

Sample boards showing the colours and materials in each palette are on view at the sales centre at 603 East 2nd Street.

The kitchen Shaker-style cabinets and island in the North Shore Beach option are a soft grey that complements the white quartz countertop and grey and white tones of the herringbone-patterned mosaic marble backsplash. In the North Shore Natural option, the cabinetry is a wood-laminate finish and the creamy colours of the marble mosaic backsplash and nickel hardware support a softer colour scheme, Bonini says.

The sample boards at the sales centre also present the choices for the bathrooms.

“We wanted a fabulous master ensuite; there’s a free-standing tub and a large shower with a tiled shower pan,” she says. The ‘floating’ vanity will allow the floor to extend under the cabinetry, giving the room a spacious ambience.

The 12-by-24-inch porcelain wall and floor tiles in both colour schemes will also contribute to the ensuites’ airy feel, while three wall sconces mounted to illuminate the two mirrors above the double sinks will make the spaces feel special, Bonini adds.

Phase one’s planned amenities include landscaped areas with seating where neighbours can socialize or host get-togethers.

The Trails will also feature a greenway that will connect East 2nd Street to the section of the North Shore Spirit Trail that runs along the southern boundary of the site.

“This is going to be a great neighbourhood for families; it will be pedestrian and bicycle friendly and there will be a vibrant community living here when it is completed,” Bruckner says.

© 2018 Postmedia Network Inc.

The site is suspected of having contaminated soil from previous industrial activity

Sean Eckford
Western Investor

An Environmental Appeal Board (EAB) hearing on whether the province should have endorsed a remediation plan for the site of the George Hotel and Residences in Gibsons has been adjourned until next year.

The request for adjournment came from the developer’s lawyers. 

Klaus Fuerniss and The George Gibsons Development Ltd. are a third party in the appeal, which was launched by the Gibsons Alliance of Business and Community (GABC) against a decision by a Ministry of Environment official. 

The central issue is whether the ministry should have granted a “statement of support” for the plan to remediate the construction site, which is suspected of having contaminated soil from previous industrial activity.

In a letter to the EAB, the company’s lawyers say, “The adjournment is sought in order to accommodate further investigations and testing at 377, 385, 397 and 407 Gower Point Road and 689 Winn Road and Winn Road right-of-way … and the adjacent impacted foreshore water lot leases.”

The request for an adjournment goes on to say, “The proposed additional testing and investigations relates to tributyltin (TBT) and to the protection of the Gibsons aquifer” and that the additional work is needed, in part, to ensure the so-called “site profile” and application for a certificate of compliance are in line with “amendments to the Contaminated Sites Regulation (CSR), which came into force on November 1, 2017. The amendments revised soil and sediment standards for many substances and introduced new parameters for substances not previously regulated.”

There will also be additional geotechnical work, which is being described as “necessary to provide sufficient information to finalize the design of the ground improvement for the proposed onshore buildings and the foundation system for the offshore proposed developments at the project site, with respect to the protection of the Gibsons aquifer.”

Both GABC and the ministry have agreed to the adjournment, and Suzanne Senger, who was until last week president of GABC, said the group considers the request for an adjournment confirmation that “GABC was right from day one.”

“We found that there were issues, the issues are real and The George is now acknowledging that their remedial plan does not comply with the contaminated sites regulations,” Senger said. “They still have to look at the issue of tributyltin in the sediments, which they have not adequately done, and there are serious risks to Gibsons aquifer because they haven’t addressed the geotechnical issues.”

She claims the result was the Town issuing permits for a plan that was flawed and based on incorrect information and that did not comply with provincial environmental regulations.

Senger also said she remains cautiously hopeful that the new studies will lead to a site remediation plan that GABC could support.

“The ideal is that we force the developer to finally come up with a remedial plan and a project plan that pose no risk to the environment and the aquifer and we can avoid the EAB hearing altogether.”

Senger said GABC has also succeeded, through the EAB appeal and an earlier, unsuccessful, court challenge, in getting the government to look at reviewing the rules that allow municipalities to opt out of the contaminated sites remediation process, turning it over to developers and the Ministry of Environment.

“The B.C. government now sees that what we’re saying is true and the process is broken and they need to resolve it,” she said. “They’re looking at removing the opt-out provision for the site profile. That would have forced the Town’s hand at the beginning of this process and made them be involved.”

Fuerniss told Coast Reporter via email that his company’s environmental plan for the site is “a living document” that calls for ongoing testing and remediation in cooperation with the Ministry of Environment and the Department of Fisheries and Oceans to meet the requirements of the Town-issued Environmentally Sensitive Areas Development Permit (ESA-DP).

He said it makes sense to delay the hearing so the EAB can have the most up-to-date information.

“Right now, we are in the window where remediation and testing will have least impact on the environment,” Fuerniss said. “We have just begun site preparation, revealing areas where we could not previously conduct tests. Throughout this process we will be regularly submitting reports and plans on the process. This is a condition of the ESA-DP which we must, and will, adhere to.”

Fuerniss also remains critical of GABC for “multiple legal challenges attempting to delay the project.”

“Each of the challenges has been dismissed after costing the Town and my company hundreds of thousands of dollars in legal fees,” Fuerniss said.

The additional studies will be done by Keystone Environmental and Horizon Engineering, consultants that have been working on the project since its early stages.

According to the documents submitted to the EAB, Keystone’s additional work could be done as early as December and the geotechnical work, to be done by Horizon, will take up to 24 weeks.

Fuerniss said the work being recommended by Keystone and Horizon was already factored into the timeline for construction. “It certainly won’t delay it. Absolutely not,” he said.

The new date for the EAB hearing, which will be held in Sechelt, is Oct. 21, 2019.

Copyright © 2018 Western Investor

Real estate investors in Toronto and Vancouver should sell now

Neil Sharma
Canadian Real Estate Wealth

According to Calum Ross, a leverage wealth expert and VERICO broker with Mortgage Management Group, real estate investors in Toronto and Vancouver should sell now.

“What I can say with absolute certainty is, as we know from a real estate and investment philosophy, people should buy at high cap rate and sell at low cap rate,” said Ross. “When looking at comparative asset classes and at risk-adjusted rates of return, rates on Toronto real estate are running as low as 2-3%, and if there’s inherent risk of the principal and there’s a lot of extra work, I know that the vast majority of high-yield money market instruments or low-yield bonds have much less market risk. As much as I love real estate as an investment, first and foremost I’m a wealth advisor.”

Last year in Toronto, investors enjoyed about as obvious an aberration as they’ll ever find in a real estate market: Appreciation climbing north of 30% in a single year. However, to ignore that anomaly is to have what Ross calls “delusions of grandeur.”

He isn’t merely talking about individual, unsophisticated investors looking to make a few extra bucks as a landlord. Ross believes the market is charging towards a calamity of some kind, the severity of which remains to be seen.

“If you start to look at high-end real estate and the vast majority of real estate investments, you can see that the actual yields on these—looking at average rent based on underlying value of the underlying security, the gross cap—are so low that the vast majority of people, if they considered maintenance fees, property taxes, default, the incremental risk of mortgage debt, are engaged in speculative-grade real estate,” said Ross.

Buttressing his stance, Ross points to the yield curve.

“The yield curve flattening out has predicted seven of the last nine recessions. Based on the way the yield curve is flattening out, it’s likely we’ll see some form of recession as early as May 2019.”

Ross is not all doom and gloom, though. He is a staunch believer in real estate as a sound investment, but he cautions that investors need to conceive robust strategies if they intend to spending their money on Toronto and Vancouver real estate.

“If people did their leverage wealth investing in any way a real wealth advisor suggests, as long as someone has good cash flow, a balance sheet and a long-term investment horizon, real estate is still a very sound asset class,” said Ross. “However, based on the way values have gone up, almost every single real estate investment client I have is overweighted in real estate holdings.”

Copyright © 2018 Key Media Pty Ltd

Greater Toronto single-family detached market declining

Neil Sharma
Canadian Real Estate Wealth

That the Greater Toronto Area’s single-family detached market is in steep decline is no secret, but according to the president of the Residential Construction Council of Ontario, it’s worse than originally thought.

“We’ve got a serious problem in the marketplace, where if you go back to 2003-04, we were putting up 35,000 units of housing,” said Richard Lyall. “We’ll be lucky to hit 5,000 units in 2019, and that’s a real problem for obvious reasons. The city hasn’t gotten smaller, it’s continuing to grow and when you have that kind of discontinuity in the marketplace, there’s nothing replacing it. So the question is: What does that mean for millennials and the next generation coming along?”

While not everybody can realistically expect to live in single-detached homes with a backyards, Lyall says townhouses and larger condo apartments are not out of the question. However, the current system is both inefficient and devoid of accountability.

“The development and building approvals process is so gummed up; there’s a serious lack of accountability and transparency, and it’s remained unexamined to this date,” said Lyall. “The Planning Act says site plan approvals are supposed to take one month, but site plan approvals take, on average, 18 months.  Who pays for that delay? We need 10,000 more units a year than we’re building for housing, across all housing types. There’s already a housing deficit because we haven’t been doing that for a number of years.”

Lyall’s point appears valid. The Canada Mortgage and Housing Corporation yesterday released its housing start numbers for the month of August and, unsurprisingly, single-family detached homes are a languid segment of the overall market. In Toronto, housing starts are in decline, a direct result of fewer condos and single-family detached homes coming to market. Moreover, escalating price points and land constraints have established a downward trend in the single-family market going back a few years.

“The demand is still there but the two main things being reflected in the numbers are, one, price point: It will cost over a million dollars to buy a single detached home and that’s keeping more buyers away,” said Dana Senagama, CMHC’s manager of market analysis in Toronto. “Secondly, there’s just not enough land or space out there to build these big subdivisions and we’re not seeing much activity. Both of those, and the B-20 rules that came into effect on January 1, have also made it less affordable for many homebuyers who previously might have been able to qualify. There isn’t one reason; it’s a combination of reasons.”

Senagama wouldn’t say the single-family detached market is in completely in the doldrums, though.

“But I wouldn’t say it’s dead; it’s always been robust. If you look at the resale market, single detached homes account for roughly 50% of sales.”

Copyright © 2018 Key Media Pty Ltd