Despite last year seeing record housing starts, Vancouver's condo market will remain strong in 2017 because there is still simply not enough supply to meet the “huge pent-up demand,” according to leading developers speaking at a Urban Development Institute panel forecast event January 19.
Brian McCauley, president of Concert Properties, said that the development industry was facing demand that they are “unable to supply product to fast enough” and pointed to the “velocity of sales” from the new developments launched in 2016. He said that his company has some more land it can build on but continues to look for new land acquisition opportunities in a tight market with limited land available, and at very high prices.
Andrew Grant, president of PCI Developments, which developed Marine Gateway mixed-use project on the Cambie line, said that while some developments were able to make the most of transit to deliver sustainable communities, other transit hubs in the city were woefully underdeveloped in terms of residential density. He included Renfrew and VCC-Clark SkyTrain stations as examples of this.
“In some of these [transit hubs] you can see the unfulfilled opportunity. These should be neighbourhood centres that have a diversity of uses but they fail to reach their potential, either with little density or by excluding residential, which is bad policy that undermines the huge public investment required in transit.”
He added that he was awaiting the fate of the False Creek Flats near VCC-Clark station with interest, saying that it has huge potential as a hot new neighbourhood with new companies, the Emily Carr campus, St Paul’s Hospital and the Broadway transit line all moving into the area.
Eric Carlson of Anthem Properties told delegates that he expected home prices to rise in 2017, despite the recent slowdown in the market. He pointed to population growth, a strong local economy and the continued need for investors to find a safe harbour for their money as being key factors in the robustness of the housing market, along with the likelihood of continued low interest rates.
Carlson added that it was irrelevant to use house prices versus local incomes as a measure of affordability, because of the enormous amounts of personal wealth behind the scenes. “A lot of people buying homes here have something that journalists and economists often ignore: wealth. If you buy a $5 million house, and you have a $2.5 million mortgage, and your income is zero, then your income-to-debt ratio is really not good. But if you have $150 million stashed away, it’s not a problem. This doesn’t get picked up in the doomsday analyses about the unsustainability of prices.”
McCauley picked up on Carlson’s comment, adding that much of that wealth was now trickling down to young buyers in the form of the “Bank of Mom and Dad.”
McCauley added that there was a “crisis in rental housing” that the government, developers and investors needed to address, but said that Vancouver was falling behind other cities in terms of how many new rental units are being built. He said that Vancouver approved 1,800 new units in 2016 but that was a “far cry from the demand and a far cry from what other cities are doing,” citing Seattle’s recent approval of 14,000 new rental units.