Buyers looking for the benefits a detached home offers without the hassle of maintenance – or the exorbitant prices – are turning in increasing numbers to new townhouse developments.
Sales of townhomes currently account for 60 to 70 per cent of new real estate development transactions in the Fraser Valley. Townhouse sales in that region jumped nearly 21 per cent in May 2015 compared with the previous May. Those numbers would likely be mirrored in Metro Vancouver except for the limited supply of new townhomes in many of that region’s municipalities. Even so, there were 733 townhouse sales across Metro Vancouver in May 2015 – an increase of 34 per cent compared with sales in May 2014.
What’s Driving Sales?
“Townhomes appeal to a broad segment of the market... people who want to own a home but not an apartment,” said Scott Brown, president of Fifth Avenue Real Estate Marketing, a residential real estate sales and project marketing organization. “They want to build equity and have children, but they don’t want such a big financial burden that they can’t afford a vacation. A townhouse meets their needs and allows them to do more than just own a home.”
Michael Ferreira, managing principal at Urban Analytics, a real estate and urban planning consultant firm, says affordability is the primary driver of townhouse sales.
“Townhomes are fairly affordable, especially in the Fraser Valley,” he said. “It’s the next best thing to a single-family home: you have your own front door, outdoor space, a garage, multi-levels. When you look at the price point between a townhouse and a single family house, it’s a no brainer.”
Real estate consultant and urban planner Michael Geller notes townhouses are popular with buyers across various demographics.
“Many empty nesters aren’t ready for an apartment. For those people, a townhouse is an excellent transition. And for those moving up from an apartment, single-family houses are simply not affordable. They see townhouses as an attractive alternative.”
Townhouses have traditionally been skinny, three-storey buildings with tandem garages. But designs are changing and bringing more people to the market.
“Developers are constantly making notes on unfulfilled needs expressed by prospective buyers at their presentation centres,” said Brown. “Masters on the main floor have come about because of aging consumers telling developers they want that and that they don’t like three storeys with all the stairs.”
Rooftop amenities that accommodate outdoor living are also popular. One Langley site, Exchange, has enjoyed such strong sales the developer has accelerated construction to keep up with demand.
“Exchange’s rooftop decks replace the traditional patch of grass a townhouse offers,” said Ferreira. “The design means you’re locked in with three neighbours but you still have outdoor space.”
More than 50 per cent of Exchange’s buyers are single and come from communities across Metro Vancouver and the Fraser Valley. The two-bedroom units appeal to singles and couples without large families. Prices, starting in the low $300,000s, are less than the average Metro Vancouver apartment.
“These homes are targeted to those who would otherwise buy a two-bedroom apartment,” said Brown. “The Fraser Valley is more affordable and townhouse prices have been relatively flat.”
But it's not just the Fraser Valley that's seeing this trend. Marcon, a Vancouver developer, currently has two townhome projects in the design stages – one along Granville Street with 18 homes and one just off Cambie with 24 homes. To date, they've built hundreds of townhomes across the Lower Mainland, including the Century Signature and Westchester developments, both in Vancouver.
"In the past two years there has been a major shortage of townhomes in Vancouver, which has resulted in fast absorption rates and higher prices," said Nic Paolella, Marcon's development manager.
“Development activity for of this product type is not as well known as condominium developments. It's quietly happening, not like the big towers. And I think it's because the community doesn't perceive a negative impact of townhomes on a community, unlike larger developments, because they are smaller scale. But townhomes offer a lot of value in terms of diversity of housing, affordability over single-family homes as well as not-insignifcant community amenity contributions."
Strata Vs. Non-Strata
Most townhouses are strata-titled, with purchasers becoming members of a condominium association. But not all buyers want the associated strata maintenance fees and restrictions. While they are still the exception rather than the rule, there is an emerging demand for non-strata townhouse developments.
Parkside and Bedford Landing in Langley are fee-simple projects. And Aragon Homes built a non-strata row house development in New Westminster’s Port Royal community. These projects proved to be highly marketable and more are sure to follow.
Geller has written extensively on this topic. “Developers have been building condominium townhouses for so long and they tend not to embrace something new until demand is there,” he said.
The Townhouse Mindset
The demand for townhouses is not going to decrease any time soon. Fifth Avenue Real Estate Marketing cites a recent survey of more than 40 industry leaders. More than 96 per cent of them believe the townhouse sector will continue to advance to meet growing consumer demand.
“It’s going to be the standard mindset for the next 10 to 15 years,” said Brown. “We need to be greener and we need to squeeze more homes onto available land without compromising lifestyle. Townhouses are the alternative that best meets the needs of multiple partners.”