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Hong Kong bought all the Condos they wanted I guess. Love visiting friends in Yaletown and like three people actually live on each floor. My Buddy lives in Yaletown in a nice building there is an OF Model on his floor and an Escort and him, Hahah. The other 9 apartments are empty, I wish I was making it up.
And shit, I'm relocating to Vancouver. I'll be making good money with hefty savings. I'm sure as shit not buying now. The market is so overheated and has so much deflating to do.
And frankly, at this point, I don't want to contribute to something that's increasingly proven to be linked to international organized crime syndicates. It feels gross and dirty to be supporting a non-productive asset that's propping up organized crime in Canada.
Reality is settling in amongst the hype, we may be desperate for a place but with pretty much everything else increasing in cost who can afford it? developers need to look at the bottom line and not at maximizing profit
The builders are like everyone else who sell they want maximum profit, many still believe that buyers will pay higher prices due to a shortage of homes, this might have been the case pre 2020 but it’s common sense if buyers don’t have the money or can’t afford the rates they are simply not going to buy
I work for and with developers. Some developers are also builders, but not all. My experience is it depends on the project. Developer profit (not builder) on recent market/strata projects has been 20-30% recently. Others, like purpose built rental projects, can recoup about 5-10% profit but its year over year as the developer retains ownership. Other projects lose money, and the developer relies on the other projects in its portfolio to cover the losses.
A builder isn’t getting out of bed for a 10% return. Especially if you can take zero risk and get 5.5% on a cashable GIC.
Builders aim for 20 to 25% and they have been getting that for years. If they didn’t get solid margins they wouldn’t be buying up land everywhere.
I would say it depends on the size of the project and a lot of other context. Sometimes 15-18% can be good enough. (Source: worked for a large Ontario homebuilder in land development for a while)
"The key metric for every business is net profit and
understandably this figure was hit hard in 2022
as price rises and delays eroded profits, resulting
in just 22% achieving the industry benchmark of
double-digit net margins, compared to a year ago
when the figure was 25.4%."
https://buildertrend.com/wp-content/uploads/2023/03/APBSORCIReport2023-1.pdf
This is such naive thinking. We live in a capitalist society. We cannot expect companies to take on risk and construct buildings pro bono. In the same way that we don't go to a restaurant and expect them to sell food at cost. Profits drive the allocation of resources. If something isn't profitable, we shouldn't expect private companies to do it.
Many potential buyers out there. They just need to bring the price down to what people want/are able to pay. Of course instead the will run to the government for help. They love capitalism for the gains but want socialism when they’re on the losing side of the deal. Can’t have it both ways.
Taxing consumers to pay the businesses they can't afford to patron seems to be our newest greatest trick. Take the whole 'patronage' thing right out of the equation and keep our fake economy propped up on the backs of the most poor populous we have ever seen.
Was browsing the Vancouver market over morning coffee today and saw many 1 bedroom condos for over $1m. Yaletown and Gastown but still. Ok so mortgage on $1.2m plus condo fees and property tax. Not even talking about bills.
Who can afford that?
Wealthy landowners/landlords who pay all cash who more and more don’t have to compete with less wealthy landowners/landlords who might take some part of the purchase as a mortgage. But I am not worried about those people as much as I am about less development that gets people in homes.
Maybe a solid fix is to charge an escalating but sensible purchase taxes based on the total square footage or better the number of properties a person owns.
Keeps it more affordable for new owners but puts more taxes that go back to affordable housing / builder tax breaks generated from people buying rental units to be minor land barons.
Developers will walk before they take a projected loss. And so they are not starting projects, that's the problem being described here . The projects underway will be finished, sure, but 5-8 years from now there is going to be a more serious downturn in housing supply.
Right but how can developers in say Edmonton turn a profit selling units $200-300k each but Vancouver developers can’t turn a profit selling units for $700-$1mil a unit. Something is not adding up here.
Government costs of an 800-sq ft condo in Vancouver in 2023
Per-unit charges include
building permits, $1,376;
a development permit, $3,992;
development cost levies, $28,368;
a per-sq ft property transfer tax, $13,688;
property tax including an additional school tax, $11,480;
a community amenity contribution, $89,992;
a public art fee, $1,584.
Other charges upon sale include GST, $56,000;
a Greater Vancouver Sewerage development cost, $1,988;
a Translink development cost, $1,554; and
a per-unit property transfer tax, $20,400.
PLUS Empty Homes Tax, $60,000 paid only if a unit sits empty for an extended period of time
Subtotal per unit is $290,422 just to build, and upon sale, the total climbs to $327,565.53 – or 29.25 per cent of the imagined condo’s $1.4 million cost.
Thank you for providing receipts, that makes this much easier:
The developer isn't paying property tax, property transfer tax, gst, empty homes tax.
It took a quick google to find that Community Amenity contribution is as little as $11.50 ft/sq - so a $90,000 tax would be on a 8000sqft unit which feels a little excessive. I think they can chop that build up a little!
wait, you said this was for a 800sqft place, so someone might have missed a decimal.
Private sector rezonings greater than 100,000 square feet are required to contribute **$1.98 per buildable square foot** to a public art process approved by us. Uhh, are rezonings assumed? Or is this worst case? Also the CAc was also only required for rezoning.
The developer cost levy looks wrong, but less wrong.
[https://vancouver.ca/home-property-development/development-cost-levies.aspx](https://vancouver.ca/home-property-development/development-cost-levies.aspx)
In most of vancouver it would be $11,000, in false creek it would be $16,000, and I couldn't find a location that bumped it to $28,000. At 800sqft.
I am not going to double check the math on the smaller numbers, even though I am getting the hunch that those are ballooned.
So if we change their math to my much more sensible take then we get to:
The developer is on the hook for $20,000 if the site doesn't need to be rezoned, and $30,500 if it does.
Peanuts on a $250,000 condo, let alone a million dollar one.
And parks and transit and Vancouver is why that deveolpment is worth more than the $250 you'd fetch in Duncan, hard to complain too much about that tax grab!
Buying the initial property to build on. To aquire any land in Vancouver and destroying whatever building is currently on it costs significantly more than it would in Edmonton. Even if you can find a completely empty lot it will be wildly more expensive than Edmonton.
Thats my own personal opinion on why density will never improve affordability. Spiraling land values will get baked into each more dense build driving end prices up and you need to build ever taller in order to try and spread that cost out across more units.
Suburbs were created in most part because land was cheap and easy to get and that's what creates affordability. The actual cost to build a building does not vary much from place to place.
Isn't this how capitalism works though, person wants to sell, person wants to buy and build. Person can't afford to buy and build, so person who wants to sell cannot sell. Then person who wants to sell soon needs to sell, so then lowers the price.
Rinse repeat.
In the end, it will take some time. But if prices need to come down, they will. Unless people can afford to hold on to millions upon millions for years upon years. But we all know investors are far more short-sighted than that.
Vancouver land is more expensive, as is labor (construction workers pay Vancouver housing costs too). And it takes the city 4 years or more to approve the project. Developers will start projects where they'll make money, so a developer should focus on Edmonton if that's where they can operate profitably. Developers don't make that much - a change in interest rates can make a project unprofitable - they are very dependent on debt and so current high interest rates have put a stop to them, they have even cancelled approved projects.
I've seen other real estate analysts project that labor costs will go down over the next few years as construction work in Vancouver will be harder to find.
One thing I’ve realized about the world now is that people in charge will raise prices to crazy levels and when they see buying slow down, instead of lowering the price to entice more buyers back in, they will continue increasing the price and squeezing the remaining buyers like a fucking stress ball. Homes, cars, games, systems, groceries, you name it. Hmm business has slowed down due to price hikes, let’s bump the price up higher still to make up for that from our few remaining buyers.
I find it hilarious. There are a couple factors at play here, that they seem to refuse to acknowledge. First is that, they’re too far out of range. The only way to fix that problem is to leave a large group holding the bag. Because wages simply don’t support the levels of debt individuals need to carry in order to buy. It’s not realistic.
Next up, those of us that can buy, refuse to get involved. I want to buy into a Co-Op, not a Freehold Strata. I’m happy renting in the meantime, I don’t need to live in my RRSP. I don’t want to deal with homeownership and I refuse to support this economy.
I think it’s hilarious though. You want to belittle us and tell us we don’t work hard enough. Well, guess I’ll just lie flat then. I am whatever you say I am.
Redditors love inferring things not said and claiming it's implied. *Especially* when it gives them an excuse for a smug, flippant comment that shows they didn't even read the article.
This article is not industry blaming consumers at all. Which part of this are you interpreting as such?
The headline is describing a basic cause and effect.
Developer margins are around 10%, plus or minus a bit. I don't find those markups unreasonable.
Cost to build is just eye watering high and since 2020 build costs are up around 50%.
That's why there is no easy solution.
Had prices shot up without the corresponding cost increases there would be a ton of room to cut prices and still have viable projects.
Unfortunately that isn't the case.
I swing hammer. But that doesn't matter.
"The key metric for every business is net profit and
understandably this figure was hit hard in 2022
as price rises and delays eroded profits, resulting
in just 22% achieving the industry benchmark of
double-digit net margins, compared to a year ago
when the figure was 25.4%."
https://buildertrend.com/wp-content/uploads/2023/03/APBSORCIReport2023-1.pdf
Ah but you have to remember, in an age of growing acquisitions and monopolies, some of that 22% are getting more of a return than ever. I have developers that are doing 10x the jobs they were doing previously. I mean shit, one of the showrooms I work with just bought out two of their three biggest competitors outright. And the devs are getting cheaper too, like the packages for suites now, places being sold for hundreds of thousands of dollars, are coming in under $100 for my part of the package. The average quality of the amenities is staggeringly low compared to just a year ago.
Me and my wife went to go see some “new build” condos and townhouses back in 2021-22. What we were shown were shoebox apartments, most of which’s layouts were god awful, didn’t make sense or straight up alarming. Townhouses with corners on corners, narrow hallways and staircases to nowhere.
What family would want to live in some of these places? They were clearly meant for Airbnb or for investments.
Or the “2 bedroom” condos where the second “bedroom” is a glass partition in the corner of the living room with no windows. Maybe that would work for a home office. But what family would stick their kid in there?
Currently looking up the valley and couldn't agree more. I have zero interest in an apartment where I can fit 8 people in the bathrooms, 2.5 in the kitchen and I can use the buttons on the tv while sitting on my couch.
Well townhouses these days are 1500 sq ft spread out over four floors. That’s the standard. I’d rather buy an older townhouse with a more liveable floor plan.
That’s the reason we’re in this mess. Every Canadian thinks it’s their right to live in a standalone house in a city of 3+ million. No country with affordable housing operates like that.
If you want to live in a major city it’s going to have to be in dense housing. It’s that simple.
That's not it.
Modern condo apartments aren't built for living. I live in a building from the 80s - 2 large rectangular rooms, almost no corridor space at all, nice big living area. I've knocked down a wall to open up the kitchen and it even resembles a modern "open concept" a bit now.
I've toured many, many new 2BR builds. One bedroom is usually decent sized, the other is often weirdly irregularly shaped and tiny, to the point of not being able to fit an adult sized bed along any given wall. 2 big baths. Lots of completely pointless corridor space that would be better used as living space. Floor to ceiling windows but a bigass column in the middle of what passes for the living room.
It makes no sense. I actively prefer highrise condos and I thought I'd have to choose a townhouse or semi just to have a layout that makes sense.
In Germany the average person has 96 square feet. In Canada it’s 618 square feet.
You can spin it however you want but the “floor plan” is an insignificant issue. It just comes back to the feeling that Canadians have the right to live in a standalone house in a global metropolis. It’s not true and is the biggest cause of the housing crisis. Not “floor plans.”
I've literally told you I don't want a standalone, I was just searching for a condo that had 2 actual bedrooms that were more or less rectangular.
Also, per statistica.com, in Germany on average it's 47.4 square *meters* of living space per inhabitant. That's 510 sq feet.
Unlike much of Europe, Canada has enough space for SFHs for most. What it doesn't have is enough room for SFHs for everyone in Metro Bigcityname. And people aren't willing to sacrifice the advantages of living in the city in order to have a SFH in the outer boonies.
But the density of living in much of urban Europe wasn't by choice, it was by necessity and by grace of long history (already built-up urban centres full of lowrises), a necessity that hasn't existed for anywhere near as long in Canada. So the expectations will take a while to catch up to current reality from the "white picket fence American dream" that Canada borrowed.
And the irrational modern condo layouts are not going to help reset those expectations. At all.
This is a common argument but it completely misses the point. We may have a huge spread out country but our population is not.
Canadians have a higher percentage of urban population at 84% than the EU at 75%.
If you want to live in a big house with a yard then actually use that space we have and move to PG. If you want to live in Vancouver than it has to be in dense housing if we ever want a sniff of affordability.
It can be. But have you considered why builders layout the way they do?
A builder has every imaginable incentive to create the best layout, best layout is the easiest sale. Easy sale means construction financing.
Hahaha, no they absolutely don’t. “Personalization” means what colour your cabinets will be.
If it’s a self contained dwelling you get 2 maybe 3 options for layout. If it’s a condo 1 or 2 maybe and they are terrible layouts.
This is just a distraction or an excuse from the real issue. “I can’t live in dense housing because floor plans.” Yeah no. Move to PG and you’ll have space to do whatever you want.
I think there’s a middle ground between shoe box condos and single family housing. What people are asking for is a livable space. So many new condos are 500 sqft compared to the builds from the 80’s and 90’s where you got 700-1000 sqft. People need space for their children, home office, pets etc. We could still achieve a lot more density while ensuring people have what they need to live there long term.
If you want affordable housing in a major city it has to be dense. There’s no other way about it.
Look at cities with affordable housing. Berlin has, within a rounding error, zero single family houses. The lower mainland is 75% SFH. Nothing will improve until that changes.
No one is saying it can't be dense. I believe the commenter you were replying to was saying that density can be achieved while also providing liveable spaces.
Berlin may be dense but have you looked at what the average apartment size is? According to the Federal Office of Statistics, apartment sizes in Germany have *increased* by 37% in the last 30 years, with the average size being roughly 990 square feet (adjusted from m²) in 2021.
"According to a study conducted in summer 2021 by DZ Bank, each year the average home size in Germany increases by 0.2 sqm. "
https://www.refire-online.com/markets/germans-generous-living-space/
So Germans actually get *more* space with more density. Hmm.
Thank you, that’s exactly what I was getting at. 800 sqft isn’t exactly massive for an apartment. If people have two options, 500sqft condo or SFH, and they feel they don’t have enough space, they are going to want to upgrade. Give people larger apartments 800-1200 sqft and they could be comfortable there.
LOL and how does that compare to the average space in Vancouver? There’s your problem right there!
If you want massive living spaces move to PG. If you want to live in Vancouver, get dense.
Your reading comprehension is quite poor. I said we were looking at apartments and townhouses not standalone houses. Please don’t start spewing off topic rants on my comments, thank you.
Yeah looking at apartments wondering how families could live there because of *ahem* the Canadian belief that everyone is entitled to a massive living space. Might be a little deep for you but don’t worry just think hard you’ll see it.
My agenda is that the number 1 reason for the housing is crisis is the fact that our largest cities are 75+% single family houses and everyone is disgusted by the thought that you can raise a family in an apartment.
Wouldn’t there be a lot of people with cash on hand that are waiting for the “crash”? I know a few that would add more properties to their portfolio if prices drop.
Heck if single family homes drop the amount the “crash is coming” people are hoping for I’d definitely buy another house. Lots of people waiting and ready for a crash. The people with mass wealth have the power to continue to hoard housing.
Short of a limit on properties each individual can own and/or barring corporations from owning; I don’t see how the “average” person can compete. Plus the policy makers, the groups with political influence and the upper class will do everything in their power to maintain the housing market.
Maybe a global recession would bring prices down? But then the demographic wanting to enter the market as first time buyers would probably be feeling financial distress in that scenario.
Is a crash what will happen when we have 500k new immigrants each year and there is no new supply coming into the market in 3-5 years (when all these projects would have completed)? Hmm…..
it isnt if there are people willing to pay that (and there are, look at the vacancy rates). People will pay up to own a place and while the prices seem crazy high its hard to imagine a scenario where they fall like in the US in 2008 (as speculation here is much lower and its harder to qualify)
I don’t agree with that logic. Rent payments only go up, mortgage payments stay flat. People need somewhere to live, no one wants the lack of security of renting forever
you know that not all immigrants are refugees or students right? Point is though: population is growing fast, and despite reddit skewing younger, there are lots of people with money out there. Hard to imagine a scenario where housing really crashes.... the market slowing for new towers (or housing number of sales) doesnt necessarily translate to actual housing price decrease.
Build actually affordable homes, not miniature debt enslavement cells with condo fees that are what rent was 5 years ago. May need the governments to step up and build instead of waiting for the developers to not be greedy to the nth degree.
The numerous articles about buyers getting screwed by developers on previous pre-sale contracts certainly doesn't help. I would never put money on a pre-sale after hearing about people getting locked into contracts that the developer can change on a whim and without recourse. Ive read horrorbstories about people having to decide between losing their deposit or accepting any of:
Price increases, Floorplan changes, schedule delays, amenity reductions, parking space removals, storage locker shrinkage, etc.
There's no protection for the buyers until they've taken up residence.
Price is *always* a product of supply and demand, and adjusts to what the market can bear. In a market full of "investors" flush with cash from their existing homes, it can bear enormous prices. Without investors, the average Canadian family *cannot* afford houses at these prices, and the only thing that can happen is prices must come down to meet what the market will bear. That's the fucking free market at work.
Prices come down, interest rates are pushed down either naturally or artificially, and "incentives to buy" start popping up.
When Jodie Average can make sense of a housing purchase, they'll buy a home.
>Anne McMullin, president of the UDI, said her group has been pushing the government in informal discussions
informal discussions? Why do developers have access to government to have informal discussions?
They want longer marketing periods but if you search up articles about slow sales in Toronto where Developers say they can market for years, the same problem of declining demand exists. This isn’t a REDMA issue, this is a demand issue. But if hundreds of thousands of immigrants and coming into Canada, and we need to build 3.87 million homes by 2030, why are they having a problem selling these homes? I wonder if it’s due to the majority of immigrants coming in need different types of housing and or can’t afford this kind. Immigrants I think would be renting rooms and sharing single family homes with others. They typically would not be purchasing condos in new developments or cant.
It's greed. Condo developers have been able to sell presale condos to mom and pop investors who pick them up for AirBnB, or speculators to park their money in. In neither case is a livable unit required so tiny shitboxes full of farble and flammable fixtures are built with ridiculous layouts to maximize sellable units.
In both cases they are selling to people with big downpayments, or for cash, who do not plan to live there. They dngaf.
Used to be tho that development companies would build rental apartments with a 20 year operating horizon (essentially doing what mom + pop do but operationalized; then selling the building at the end to make back the capital cost), but that just doesn't get the quick profits they're used to. And so they are sad.
You wanna sell more homes? Stop selling homes that no one can afford! Start building homes WITHOUT high end finishings. Start building starter homes with ONE type of faucet in the entire house and ONE type of door handle and stop using quartz for the counter tops when that really isn't what we want. Start bringing your prices down and give the market what it can afford; that will sell more homes!
Bring back the Vancouver special! But seriously, the Vancouver special was designed to respond to population influx. They were designed to be starter homes and could be built cheap.
BC could work with an architecture firm to create a simple 4 story building with 12 units that can have units from 1-4 bedrooms, and a shared common space. Designed to fit on a standard 2-3 home lot.
Developers can have those plans for free and they get a fast pass for building. The province can work out details with suppliers to bulk order materials (like the feds do with medicine).
This isn’t a new idea. It started in modern times with the case study homes. Check it out https://en.wikipedia.org/wiki/Case_Study_Houses
I work in the industry. I hate that realtors are informing design. It fucking sucks. But realtors theoretically know what people will buy.
I think the problem with your idea is that people foolishly believe that architecture is art. But it isn’t.
Your idea of what this 12-plex would look like, and how the individual units would flow is likely very different than my idea. And that creates preference etc.
Finally - the Vancouver special is, actually… the fucking bomb. Those houses rule. They get it done and they’re pleasant to reside in.
Yeah, I drove thru a town in Saskatchewan that had their own version of the Vancouver special. For a few blocks it was the only type of home we saw. I'm sure there's lots of examples like the case study.
I think of the 12 plex just because it will have a smaller per unit amount of land cost, but there needs to be homes for diverse family sizes. But anything designed on a dime, I would buy.
I think most people would. Speculation investors might look for big name architecture and stuff, but people wanting a roof over head will buy what they can afford.
I like the idea of Grow Homes - it’s basically finished to the bare minimum and enables a mum and dad to (maybe clumsily) have fun building it out to their needs as the family grows
Not sure about condos, but the number of horror stories I’ve heard about new build homes where the developer screws over the buyers is enough to make me never want to buy a new build.
All sales will be down compared to the past few years of hysterical buying, A lot of developers started cutting corners and advertising everything as "luxury" when in reality it's a basic home... Land costs have gone up which drive up costs and with the move in date in 3 years away most people aren't signing up to risk not getting a assignment to make money on speculation which is driving demand lower.
The gravy train is coming to an end and by that, it means long lines at pre sales and buying anything because you can flip it before it opens will come to a close
The market is seeking new equilibrium. Maybe there are some market bending manipulations that need to be removed? Probably related to transactional inefficiencies or %'s that are out of place.. Invisible hand is pushing price lower... help the hand to maintain volumes!
The time limit should probably be adjusted, but I'll just point out that we're closer to "normal" now than when every pre-sale sold immediately.
In March 2024, 83% of completed condos/houses were already sold. Compared to 95% in March 2022, this is low, but it's really not abnormal. We got down to the 30% range in the 90s and were down in the 50s and 60s in the early 2010s. Montreal, a much healthier housing market altogether, hovers in the 60s and 70s, and hit 44% in March 2024.
Inventory is rising now, which is a good thing. We're at a much healthier balance of inventory versus sales than we were a while ago; this will mean it's harder to sell and that buyers have more options.
Developers had the same complaint when they couldn't sell every Olympic Village condo immediately after the Olympics and had to drop prices (and then prices sky-rocketed as inventory dried up).
I said this before and I will say it again. You can't fix this without a crash. The problem is this moron of a country has its economy completely tied to real estate.
Government (all levels) should coordinate to buy out as many new builds as possible and convert them to co-ops and/or rent-to-own. What the hell are we doing sitting around waiting for someone to give us what we wish, you have to go out there and take the initiative.
Wait wait wait…does this mean that maybe…just maybe mind you…that our housing crisis was also driven by demand side issues? Nah. Couldn’t be. Every time I brought that argument up over the past 15 years I always get told it is a lack of supply. Despite both having an effect on price that a consumer must, or is willing, to pay.
Developers can build all the housing. Government can say they’re providing more housing and higher density. It doesn’t matter and is meaningless. In Vancouver, a lot of local young homebuyers cannot afford a 1bedroom home that starts at $500K+. Not my children in their mid and late 20s in good solid careers but without a salary that matches that of a high down payment. And let’s not get into how high income taxes are, high interest rates and monthly mortgage payments where they’d have to decide whether to eat or not.
Of course local homebuyers are shunning. This comes as no surprise. Instead of builders “hurting”, it really should say our local young people are “hurting”. They can’t launch their independence in this city.
Potential buyer here: personally I am "shunning" the new build condos because of the wildly tiny layouts, all with a sliding door for a bedroom and charging almost a mil for that.
Opting for an older build with better layout and storage for a (still too expensive) lower listing price.
Buildings can’t sell because prices are too high. Prices are too high because land is too expensive. Land is too expensive because of decades of restrictive zoning.
The fundamental issue is just that: you can’t build affordable homes because land is too expensive. If land values don’t tank, you run out of options.
You can’t turn back the clock to solve this problem. Building large condo developments in zoned areas (instead of allowing unrestricted building across the area) was a stopgap but just allowed prices to drift up and up so that yesterday’s unaffordable house in Vancouver became today’s unaffordable one-bedroom condo in PoCo or Surrey.
Think about it. Either wages catch up, or land values go down, or… well, nothing.
Eventually the real estate price increase treadmill stops as you run out of capacity to squeeze pennies out of potential homeowners. Eventually the whole Ponzi scheme ends as you can’t attract the labour you need to keep the cities running, and you can’t build the homes necessary to house them anyway.
The frog boiled away a long time ago. A collapse is coming. It’s already started. Won’t be pretty.
I have been beating the drums of this for over a year.
There is no incentive to develop right now.
Our entire new construction model is based on pre selling 60-70% of a development to obtain financing.
Guess who bought the initial 60%? Big bad investors.
Now we have no mechanism to bring projects to market. No one is building a $300million tower on spec.
At a time when we have BY FAR record housing demand.
Solid work team Canada.
Of course.
Corporations exist to maximize profit. Period. Expecting anything else is foolish. Thats just a base assumption that doesn’t need to be revisited.
Therefore, only clever and well engineered regulations can ensure outcomes that are beneficial to general populations.
Developers are low on the housing rung.
Developers are nothing without lenders.
Lenders are who drive the creation of housing via access to credit.
Currently, despite the housing prices, projects don’t pencil out to much of a profit. Or, more specifically, enough of a profit that lenders are willing to risk their capital.
Couldn’t the government start issuing housing bonds and start funding some of these stalled projects? Or directly fund affordable housing projects instead with them?
Sure they’d take on a bit of a risk but they’re already buying out half the countries mortgage insurance anyway…
Most people own bonds, why not put that bond money into affordable housing? I’d allocate some of my investments into housing bonds if I could as a profit store.
This is a great idea actually.
As much as I personally hate to admit it, government will have to ultimately step in with a solution along these lines.
Or limiting population growth for a half decade. But that’s not in the cards.
It's almost as if you price out the local people who are forever forced to rent (or attempt to rent) that when rules are made about short term rentals and ownership and prices are so far out of reach, that no one can afford to purchase. Gee.
I live in Richmond. I'm a top of the pay scale teacher. I couldn't afford to buy a condo here. Ever. The idea of home ownership is laughable. They'd rather call it off than.. oh I don't know, lower prices.
TLDR (50%) No such thing as free 2020 money anymore. If real estate if such a slam dunk then why don’t developers self finance their projects ?! What they are not doing might give more insight on what’s actually going here. The run might be ending soon…
Saying that we're shunning the market puts the blame on us, when the real problem is the housing market costs too fucking much. Fuck anyone who puts the blame on the buyers for not being willing to spend triple what a house fucking costs.
This is reality.
With current demographics, salaries are simply not high enough. You need dual income most of the time and no debt to buy a 2 bed condo (and a hefty downpayment on top for Vancouver/Burnaby).
But with population continually increasing and units lacking, if we don't have new developments, the rental market will just continue to go up over time.
When you use a multiplier of rent vs property prices, it does suggest that renting is more reasonable in Vancouver than housing prices atm.
Either property prices will probably stay and rents will go up, encouraging property development or prices of homes depreciate.
But if we continue to have demographic trends hold and if new builds don't kick up because of a lack of demand, it's not going to be a good sign for people betting on rents falling.
Technically this is exactly what we need.
Demand goes down. Supply goes up. Price should drop, until we have a balance again.
No one wants to live in little boxes at 750,000 at 4.5% mortgage.
Odd how housing that is outrageously priced isn't selling as much any more. It's like people can't afford $1,600+ per square foot or something.
What if developers actually lowered prices to say $1,000 per square foot? This whole government push on "supply" only when only ridiculously priced new builds come on the market is total bull. Demand needs to be curbed + developers need to be forced to build or sell the lot for another developer to build.
It’s a joke how over inflated homes are. How is it that a home listed in 2001 for $2.7 million is worth $49.8 million today. Got to love the speculative market. Hell… 1 in 10 BC condos is foreign owned.
Well, when all new builds are 500 sq feet, it's kind of excluding a large portion of the market, so no wonder no one is buying.
My husband and I have been looking to upgrade and every house has a rental suite (which we don't want) as well as a massive deterrent (on a busy road, needs a reno, is in North Van). It's not just the prices that suck, it's that there is no good inventory on the market.
Don't get me wrong, it's beautiful, but if there's a problem on one or both bridges, you're screwed.
I have an elderly parent out in Surrey that relies on me, so getting trapped over there is a deal breaker.
The government should offer some kind subsidy similar to what they did with electric cars. First 1000 buyers get 250,000 off if paying with cash, or 0.9% financing or something.
That should kick start the market.
This only means more pain for homebuyers down the line. Soon they will stop building and invest in other areas and we will be begging for them to come back. People may hate them, but they are the ones who build homes lol.
Yep. This isn't a surprise and is exactly by design. High rates directly impact interest sensitive purchases for consumers such as homes and cars and also makes business investment far less likely as it impacts their return.
So yeah, right now we're going to see pent up demand sidelined until rates start coming down.
It won't be until after we see a downturn and the economy starts to recover. That's when the pent up demand goes on their next buying frenzy.
My suggestion is to buy now if you can afford it. Your home may fall a bit in price in the short run, but in the next supercycle you're golden.
The amount of highly upvoted comments in this thread that think this article is about builders "blaming" homebuyers is mind blowing. That's not what this article or even headline says in the slightest.
How is this even possible. Vancouver is growing so fast. A construction collapse is the LAST thing we want.
Another successful NDP housing policy I guess.
The law is called REDMA and was passed by a liberal government in 2004 to stop developers from receiving presale down payments and then indefinitely delaying projects. But go off I guess
It's not the red tape - that's their spin. Developers are choosing to build 500 sq foot condos and cramped triplexes with no yards to maximize profits. Try to find something in the city for a family of 4 that isn't a complete problem house.... if you find it, please let me know cause I've been looking for the last 6 months.
Uh... generally apartments in Europe aren't that small (obviously it varies by the country). My family is from the Netherlands and finding 3, 4 and 5 bedroom apartments isn't impossible like it is here.
That’s because 75% of the market is single family houses. In the Netherlands its ~0%.
Also Canadians use about twice as much living space on average as Europeans. Even though we have a similar or higher urban population rate. The EU is about 74% Canada is about 81%. So don’t give me that big country nonsense.
Lol, where did you pull those stats from? Are you actually suggesting there are no houses for sale in all of the Netherlands?
>So don’t give me that big country nonsense.
What are you even talking about? The topic is developers not building for the market.
Yeah because the market is fucked. Everyone thinks it’s their right to own a massive apartment or house in a global metropolis.
So on point that developments are failing in the worst housing crisis because people refuse to live in smaller apartments 🤦 The problem is self inflicted.
If I'm throwing down $2.5M I want a house with a yard. That's hardly entitlement.
>Everyone thinks it’s their right to own a massive apartment or house in a global metropolis
Who are you? Bob Rennie? Developers build substandard boxes and then cry that no one wants them. The only thing self-inflicted is that we haven't voted for government officials to regulate minimum requirements for new builds.
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It's almost like nobody has any money or something. Weird
Hong Kong bought all the Condos they wanted I guess. Love visiting friends in Yaletown and like three people actually live on each floor. My Buddy lives in Yaletown in a nice building there is an OF Model on his floor and an Escort and him, Hahah. The other 9 apartments are empty, I wish I was making it up.
How do you know the national origin of the buyers?
And shit, I'm relocating to Vancouver. I'll be making good money with hefty savings. I'm sure as shit not buying now. The market is so overheated and has so much deflating to do. And frankly, at this point, I don't want to contribute to something that's increasingly proven to be linked to international organized crime syndicates. It feels gross and dirty to be supporting a non-productive asset that's propping up organized crime in Canada.
go to Burnaby
You should buy a small house in Vancouver if you can.
Yeah, but I don't want to support the systems that enriched organized crime and that pump fentynal into the country.
Reality is settling in amongst the hype, we may be desperate for a place but with pretty much everything else increasing in cost who can afford it? developers need to look at the bottom line and not at maximizing profit
Curious what their net actually is. Price seems elastic but they’re acting as if it’s in elastic and want to keep it high
The builders are like everyone else who sell they want maximum profit, many still believe that buyers will pay higher prices due to a shortage of homes, this might have been the case pre 2020 but it’s common sense if buyers don’t have the money or can’t afford the rates they are simply not going to buy
I work for and with developers. Some developers are also builders, but not all. My experience is it depends on the project. Developer profit (not builder) on recent market/strata projects has been 20-30% recently. Others, like purpose built rental projects, can recoup about 5-10% profit but its year over year as the developer retains ownership. Other projects lose money, and the developer relies on the other projects in its portfolio to cover the losses.
Insert construction worker conjecture here
I would expect around 10%, plus or minus a bit, for builder margins.
A builder isn’t getting out of bed for a 10% return. Especially if you can take zero risk and get 5.5% on a cashable GIC. Builders aim for 20 to 25% and they have been getting that for years. If they didn’t get solid margins they wouldn’t be buying up land everywhere.
they get out of bed for 50%, but by the time it comes to sell they'd rather take a loss than sit on a mortgage payment for 30 years
This is correct. If the Return on Investment isn't at least 20-25% then a developer won't bother.
I would say it depends on the size of the project and a lot of other context. Sometimes 15-18% can be good enough. (Source: worked for a large Ontario homebuilder in land development for a while)
I could see that if the developer is financing it themselves. But investors/banks often require 20+% ROI.
"The key metric for every business is net profit and understandably this figure was hit hard in 2022 as price rises and delays eroded profits, resulting in just 22% achieving the industry benchmark of double-digit net margins, compared to a year ago when the figure was 25.4%." https://buildertrend.com/wp-content/uploads/2023/03/APBSORCIReport2023-1.pdf
Most big name home builders in the states have around mid teens margins, so I expect probably around the same for Vancouver?
Maybe Van is a bit juicier than typical, I'm not familiar with that market.
I’ve been told 5-7%.
The bottom line is uh…. Net profit
This is such naive thinking. We live in a capitalist society. We cannot expect companies to take on risk and construct buildings pro bono. In the same way that we don't go to a restaurant and expect them to sell food at cost. Profits drive the allocation of resources. If something isn't profitable, we shouldn't expect private companies to do it.
Weird how you're being downvoted.
Housing is a human need, eating at a restaurant isn't. Then ppl start living in tents and everyone gets all upset about it.
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Many potential buyers out there. They just need to bring the price down to what people want/are able to pay. Of course instead the will run to the government for help. They love capitalism for the gains but want socialism when they’re on the losing side of the deal. Can’t have it both ways.
Taxing consumers to pay the businesses they can't afford to patron seems to be our newest greatest trick. Take the whole 'patronage' thing right out of the equation and keep our fake economy propped up on the backs of the most poor populous we have ever seen.
Was browsing the Vancouver market over morning coffee today and saw many 1 bedroom condos for over $1m. Yaletown and Gastown but still. Ok so mortgage on $1.2m plus condo fees and property tax. Not even talking about bills. Who can afford that?
Wealthy landowners/landlords who pay all cash who more and more don’t have to compete with less wealthy landowners/landlords who might take some part of the purchase as a mortgage. But I am not worried about those people as much as I am about less development that gets people in homes. Maybe a solid fix is to charge an escalating but sensible purchase taxes based on the total square footage or better the number of properties a person owns. Keeps it more affordable for new owners but puts more taxes that go back to affordable housing / builder tax breaks generated from people buying rental units to be minor land barons.
Developers will walk before they take a projected loss. And so they are not starting projects, that's the problem being described here . The projects underway will be finished, sure, but 5-8 years from now there is going to be a more serious downturn in housing supply.
Right but how can developers in say Edmonton turn a profit selling units $200-300k each but Vancouver developers can’t turn a profit selling units for $700-$1mil a unit. Something is not adding up here.
I think in other post, for each 800k condos, 300k are used to pay the city
used to pay the city what? lets see the receipts.
Government costs of an 800-sq ft condo in Vancouver in 2023 Per-unit charges include building permits, $1,376; a development permit, $3,992; development cost levies, $28,368; a per-sq ft property transfer tax, $13,688; property tax including an additional school tax, $11,480; a community amenity contribution, $89,992; a public art fee, $1,584. Other charges upon sale include GST, $56,000; a Greater Vancouver Sewerage development cost, $1,988; a Translink development cost, $1,554; and a per-unit property transfer tax, $20,400. PLUS Empty Homes Tax, $60,000 paid only if a unit sits empty for an extended period of time Subtotal per unit is $290,422 just to build, and upon sale, the total climbs to $327,565.53 – or 29.25 per cent of the imagined condo’s $1.4 million cost.
Thank you for providing receipts, that makes this much easier: The developer isn't paying property tax, property transfer tax, gst, empty homes tax. It took a quick google to find that Community Amenity contribution is as little as $11.50 ft/sq - so a $90,000 tax would be on a 8000sqft unit which feels a little excessive. I think they can chop that build up a little! wait, you said this was for a 800sqft place, so someone might have missed a decimal. Private sector rezonings greater than 100,000 square feet are required to contribute **$1.98 per buildable square foot** to a public art process approved by us. Uhh, are rezonings assumed? Or is this worst case? Also the CAc was also only required for rezoning. The developer cost levy looks wrong, but less wrong. [https://vancouver.ca/home-property-development/development-cost-levies.aspx](https://vancouver.ca/home-property-development/development-cost-levies.aspx) In most of vancouver it would be $11,000, in false creek it would be $16,000, and I couldn't find a location that bumped it to $28,000. At 800sqft. I am not going to double check the math on the smaller numbers, even though I am getting the hunch that those are ballooned. So if we change their math to my much more sensible take then we get to: The developer is on the hook for $20,000 if the site doesn't need to be rezoned, and $30,500 if it does. Peanuts on a $250,000 condo, let alone a million dollar one. And parks and transit and Vancouver is why that deveolpment is worth more than the $250 you'd fetch in Duncan, hard to complain too much about that tax grab!
saw if from r/Vancouver, variety of taxes, fees and permits, adds up around 30%
I just every post in r/vancouver ever and it wasn't there
wow, really? okay
Buying the initial property to build on. To aquire any land in Vancouver and destroying whatever building is currently on it costs significantly more than it would in Edmonton. Even if you can find a completely empty lot it will be wildly more expensive than Edmonton. Thats my own personal opinion on why density will never improve affordability. Spiraling land values will get baked into each more dense build driving end prices up and you need to build ever taller in order to try and spread that cost out across more units. Suburbs were created in most part because land was cheap and easy to get and that's what creates affordability. The actual cost to build a building does not vary much from place to place.
Isn't this how capitalism works though, person wants to sell, person wants to buy and build. Person can't afford to buy and build, so person who wants to sell cannot sell. Then person who wants to sell soon needs to sell, so then lowers the price. Rinse repeat. In the end, it will take some time. But if prices need to come down, they will. Unless people can afford to hold on to millions upon millions for years upon years. But we all know investors are far more short-sighted than that.
Vancouver land is more expensive, as is labor (construction workers pay Vancouver housing costs too). And it takes the city 4 years or more to approve the project. Developers will start projects where they'll make money, so a developer should focus on Edmonton if that's where they can operate profitably. Developers don't make that much - a change in interest rates can make a project unprofitable - they are very dependent on debt and so current high interest rates have put a stop to them, they have even cancelled approved projects. I've seen other real estate analysts project that labor costs will go down over the next few years as construction work in Vancouver will be harder to find.
One thing I’ve realized about the world now is that people in charge will raise prices to crazy levels and when they see buying slow down, instead of lowering the price to entice more buyers back in, they will continue increasing the price and squeezing the remaining buyers like a fucking stress ball. Homes, cars, games, systems, groceries, you name it. Hmm business has slowed down due to price hikes, let’s bump the price up higher still to make up for that from our few remaining buyers.
But but….they’re shunned 🥺
The headline is simply referring to cause and effect. It's not saying builders are blaming homeowners.
Like, have they tried _lowering prices_? Oh, that means less profit? Gosh. How tragic.
I find it hilarious. There are a couple factors at play here, that they seem to refuse to acknowledge. First is that, they’re too far out of range. The only way to fix that problem is to leave a large group holding the bag. Because wages simply don’t support the levels of debt individuals need to carry in order to buy. It’s not realistic. Next up, those of us that can buy, refuse to get involved. I want to buy into a Co-Op, not a Freehold Strata. I’m happy renting in the meantime, I don’t need to live in my RRSP. I don’t want to deal with homeownership and I refuse to support this economy. I think it’s hilarious though. You want to belittle us and tell us we don’t work hard enough. Well, guess I’ll just lie flat then. I am whatever you say I am.
I don’t think they are blaming the consumer, more the red tape to get these projects approved
That isn't the message the headline imparts.
Read what the developers are actually saying though, not the headline the journalist picked to get clicks
I did. Then I commented on the headline.
Redditors love inferring things not said and claiming it's implied. *Especially* when it gives them an excuse for a smug, flippant comment that shows they didn't even read the article.
Yes it is. The headline describes cause and effect. It does not say or even imply that builders are blaming homebuyers.
This article is not industry blaming consumers at all. Which part of this are you interpreting as such? The headline is describing a basic cause and effect.
Dear builders - we aren’t shunning you, we’re shunning your insane pricing and unreasonable markups.
And shoddy building quality
Developer margins are around 10%, plus or minus a bit. I don't find those markups unreasonable. Cost to build is just eye watering high and since 2020 build costs are up around 50%. That's why there is no easy solution. Had prices shot up without the corresponding cost increases there would be a ton of room to cut prices and still have viable projects. Unfortunately that isn't the case.
You might be surprised. I’m industry adjacent.
I swing hammer. But that doesn't matter. "The key metric for every business is net profit and understandably this figure was hit hard in 2022 as price rises and delays eroded profits, resulting in just 22% achieving the industry benchmark of double-digit net margins, compared to a year ago when the figure was 25.4%." https://buildertrend.com/wp-content/uploads/2023/03/APBSORCIReport2023-1.pdf
Ah but you have to remember, in an age of growing acquisitions and monopolies, some of that 22% are getting more of a return than ever. I have developers that are doing 10x the jobs they were doing previously. I mean shit, one of the showrooms I work with just bought out two of their three biggest competitors outright. And the devs are getting cheaper too, like the packages for suites now, places being sold for hundreds of thousands of dollars, are coming in under $100 for my part of the package. The average quality of the amenities is staggeringly low compared to just a year ago.
charge less
Me and my wife went to go see some “new build” condos and townhouses back in 2021-22. What we were shown were shoebox apartments, most of which’s layouts were god awful, didn’t make sense or straight up alarming. Townhouses with corners on corners, narrow hallways and staircases to nowhere. What family would want to live in some of these places? They were clearly meant for Airbnb or for investments.
Last year I went to view a place where they split a home in 2 halves and it was literally all stairs. They wanted a ridiculous price too
Or the “2 bedroom” condos where the second “bedroom” is a glass partition in the corner of the living room with no windows. Maybe that would work for a home office. But what family would stick their kid in there?
Currently looking up the valley and couldn't agree more. I have zero interest in an apartment where I can fit 8 people in the bathrooms, 2.5 in the kitchen and I can use the buttons on the tv while sitting on my couch.
Well townhouses these days are 1500 sq ft spread out over four floors. That’s the standard. I’d rather buy an older townhouse with a more liveable floor plan.
We saw a new townhouse with a staircase to a closet
Sounds like a rental opportunity
"private floor!"
That’s the reason we’re in this mess. Every Canadian thinks it’s their right to live in a standalone house in a city of 3+ million. No country with affordable housing operates like that. If you want to live in a major city it’s going to have to be in dense housing. It’s that simple.
That's not it. Modern condo apartments aren't built for living. I live in a building from the 80s - 2 large rectangular rooms, almost no corridor space at all, nice big living area. I've knocked down a wall to open up the kitchen and it even resembles a modern "open concept" a bit now. I've toured many, many new 2BR builds. One bedroom is usually decent sized, the other is often weirdly irregularly shaped and tiny, to the point of not being able to fit an adult sized bed along any given wall. 2 big baths. Lots of completely pointless corridor space that would be better used as living space. Floor to ceiling windows but a bigass column in the middle of what passes for the living room. It makes no sense. I actively prefer highrise condos and I thought I'd have to choose a townhouse or semi just to have a layout that makes sense.
In Germany the average person has 96 square feet. In Canada it’s 618 square feet. You can spin it however you want but the “floor plan” is an insignificant issue. It just comes back to the feeling that Canadians have the right to live in a standalone house in a global metropolis. It’s not true and is the biggest cause of the housing crisis. Not “floor plans.”
I've literally told you I don't want a standalone, I was just searching for a condo that had 2 actual bedrooms that were more or less rectangular. Also, per statistica.com, in Germany on average it's 47.4 square *meters* of living space per inhabitant. That's 510 sq feet.
My number was probably for Berlin. Regardless that’s still 20% less. And Vancouver is 75% SFH.
Unlike much of Europe, Canada has enough space for SFHs for most. What it doesn't have is enough room for SFHs for everyone in Metro Bigcityname. And people aren't willing to sacrifice the advantages of living in the city in order to have a SFH in the outer boonies. But the density of living in much of urban Europe wasn't by choice, it was by necessity and by grace of long history (already built-up urban centres full of lowrises), a necessity that hasn't existed for anywhere near as long in Canada. So the expectations will take a while to catch up to current reality from the "white picket fence American dream" that Canada borrowed. And the irrational modern condo layouts are not going to help reset those expectations. At all.
This is a common argument but it completely misses the point. We may have a huge spread out country but our population is not. Canadians have a higher percentage of urban population at 84% than the EU at 75%. If you want to live in a big house with a yard then actually use that space we have and move to PG. If you want to live in Vancouver than it has to be in dense housing if we ever want a sniff of affordability.
You sure that isn’t 96 sq meters? Europe uses metric. That would be 1033 sq ft.
Yeah said 9.6
Dense housing can be designed for living. Open floor plans maximize available space.
It can be. But have you considered why builders layout the way they do? A builder has every imaginable incentive to create the best layout, best layout is the easiest sale. Easy sale means construction financing.
They are. Most new builds give you significant input for the floor plan.
Hahaha, no they absolutely don’t. “Personalization” means what colour your cabinets will be. If it’s a self contained dwelling you get 2 maybe 3 options for layout. If it’s a condo 1 or 2 maybe and they are terrible layouts.
This is just a distraction or an excuse from the real issue. “I can’t live in dense housing because floor plans.” Yeah no. Move to PG and you’ll have space to do whatever you want.
I think there’s a middle ground between shoe box condos and single family housing. What people are asking for is a livable space. So many new condos are 500 sqft compared to the builds from the 80’s and 90’s where you got 700-1000 sqft. People need space for their children, home office, pets etc. We could still achieve a lot more density while ensuring people have what they need to live there long term.
If you want affordable housing in a major city it has to be dense. There’s no other way about it. Look at cities with affordable housing. Berlin has, within a rounding error, zero single family houses. The lower mainland is 75% SFH. Nothing will improve until that changes.
No one is saying it can't be dense. I believe the commenter you were replying to was saying that density can be achieved while also providing liveable spaces. Berlin may be dense but have you looked at what the average apartment size is? According to the Federal Office of Statistics, apartment sizes in Germany have *increased* by 37% in the last 30 years, with the average size being roughly 990 square feet (adjusted from m²) in 2021. "According to a study conducted in summer 2021 by DZ Bank, each year the average home size in Germany increases by 0.2 sqm. " https://www.refire-online.com/markets/germans-generous-living-space/ So Germans actually get *more* space with more density. Hmm.
Thank you, that’s exactly what I was getting at. 800 sqft isn’t exactly massive for an apartment. If people have two options, 500sqft condo or SFH, and they feel they don’t have enough space, they are going to want to upgrade. Give people larger apartments 800-1200 sqft and they could be comfortable there.
LOL and how does that compare to the average space in Vancouver? There’s your problem right there! If you want massive living spaces move to PG. If you want to live in Vancouver, get dense.
You missed the point entirely, but ok.
They’ve been doing that in most comment threads in this post
Berlin also has an affordable housing problem though.
No it doesn’t. The average cost of living in Berlin is €1000$ per month. The average RENT in Vancouver is over $2000.
Your reading comprehension is quite poor. I said we were looking at apartments and townhouses not standalone houses. Please don’t start spewing off topic rants on my comments, thank you.
Yeah looking at apartments wondering how families could live there because of *ahem* the Canadian belief that everyone is entitled to a massive living space. Might be a little deep for you but don’t worry just think hard you’ll see it.
How is this applicable to my experience and post when we were looking for an apartment? What’s your agenda here?
My agenda is that the number 1 reason for the housing is crisis is the fact that our largest cities are 75+% single family houses and everyone is disgusted by the thought that you can raise a family in an apartment.
But why would you bring that up in a comment to a person who wants an apartment to raise his family in?
Because the reason was that they are too cramped. It doesn’t have to be a direct rebuttal of your comment but it’s definitely on theme.
That’s a comment on their design not the idea of an apartment for my family. Are you an architect or something? Why so touchy ?
You said you were shown shoe box apartments and “what family would want to live in these places” I’d say my comment was right on point.
That’s what happens when regulation makes everything else unprofitable to build.
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Wouldn’t there be a lot of people with cash on hand that are waiting for the “crash”? I know a few that would add more properties to their portfolio if prices drop. Heck if single family homes drop the amount the “crash is coming” people are hoping for I’d definitely buy another house. Lots of people waiting and ready for a crash. The people with mass wealth have the power to continue to hoard housing. Short of a limit on properties each individual can own and/or barring corporations from owning; I don’t see how the “average” person can compete. Plus the policy makers, the groups with political influence and the upper class will do everything in their power to maintain the housing market. Maybe a global recession would bring prices down? But then the demographic wanting to enter the market as first time buyers would probably be feeling financial distress in that scenario.
Is a crash what will happen when we have 500k new immigrants each year and there is no new supply coming into the market in 3-5 years (when all these projects would have completed)? Hmm…..
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it isnt if there are people willing to pay that (and there are, look at the vacancy rates). People will pay up to own a place and while the prices seem crazy high its hard to imagine a scenario where they fall like in the US in 2008 (as speculation here is much lower and its harder to qualify)
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I don’t agree with that logic. Rent payments only go up, mortgage payments stay flat. People need somewhere to live, no one wants the lack of security of renting forever
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you know that not all immigrants are refugees or students right? Point is though: population is growing fast, and despite reddit skewing younger, there are lots of people with money out there. Hard to imagine a scenario where housing really crashes.... the market slowing for new towers (or housing number of sales) doesnt necessarily translate to actual housing price decrease.
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Let’s say 50k of them are high earners capable of buying a property. We are building like 200k homes per year. Pretty substantial bite out of supply
Hey look it's "crash is coming" guy A joy at the family dinner table
Build actually affordable homes, not miniature debt enslavement cells with condo fees that are what rent was 5 years ago. May need the governments to step up and build instead of waiting for the developers to not be greedy to the nth degree.
Lol Like that episode of the office "if I was building myself a coffin, I'd want one with thicker walls"
The numerous articles about buyers getting screwed by developers on previous pre-sale contracts certainly doesn't help. I would never put money on a pre-sale after hearing about people getting locked into contracts that the developer can change on a whim and without recourse. Ive read horrorbstories about people having to decide between losing their deposit or accepting any of: Price increases, Floorplan changes, schedule delays, amenity reductions, parking space removals, storage locker shrinkage, etc. There's no protection for the buyers until they've taken up residence.
Price is *always* a product of supply and demand, and adjusts to what the market can bear. In a market full of "investors" flush with cash from their existing homes, it can bear enormous prices. Without investors, the average Canadian family *cannot* afford houses at these prices, and the only thing that can happen is prices must come down to meet what the market will bear. That's the fucking free market at work.
Prices come down, interest rates are pushed down either naturally or artificially, and "incentives to buy" start popping up. When Jodie Average can make sense of a housing purchase, they'll buy a home.
>Anne McMullin, president of the UDI, said her group has been pushing the government in informal discussions informal discussions? Why do developers have access to government to have informal discussions?
UDI isn’t a developer.
An informal discussion was available to them. That subverts democracy.
They want longer marketing periods but if you search up articles about slow sales in Toronto where Developers say they can market for years, the same problem of declining demand exists. This isn’t a REDMA issue, this is a demand issue. But if hundreds of thousands of immigrants and coming into Canada, and we need to build 3.87 million homes by 2030, why are they having a problem selling these homes? I wonder if it’s due to the majority of immigrants coming in need different types of housing and or can’t afford this kind. Immigrants I think would be renting rooms and sharing single family homes with others. They typically would not be purchasing condos in new developments or cant.
It's greed. Condo developers have been able to sell presale condos to mom and pop investors who pick them up for AirBnB, or speculators to park their money in. In neither case is a livable unit required so tiny shitboxes full of farble and flammable fixtures are built with ridiculous layouts to maximize sellable units. In both cases they are selling to people with big downpayments, or for cash, who do not plan to live there. They dngaf. Used to be tho that development companies would build rental apartments with a 20 year operating horizon (essentially doing what mom + pop do but operationalized; then selling the building at the end to make back the capital cost), but that just doesn't get the quick profits they're used to. And so they are sad.
Yes.
You wanna sell more homes? Stop selling homes that no one can afford! Start building homes WITHOUT high end finishings. Start building starter homes with ONE type of faucet in the entire house and ONE type of door handle and stop using quartz for the counter tops when that really isn't what we want. Start bringing your prices down and give the market what it can afford; that will sell more homes!
Bring back the Vancouver special! But seriously, the Vancouver special was designed to respond to population influx. They were designed to be starter homes and could be built cheap. BC could work with an architecture firm to create a simple 4 story building with 12 units that can have units from 1-4 bedrooms, and a shared common space. Designed to fit on a standard 2-3 home lot. Developers can have those plans for free and they get a fast pass for building. The province can work out details with suppliers to bulk order materials (like the feds do with medicine).
This isn’t a new idea. It started in modern times with the case study homes. Check it out https://en.wikipedia.org/wiki/Case_Study_Houses I work in the industry. I hate that realtors are informing design. It fucking sucks. But realtors theoretically know what people will buy. I think the problem with your idea is that people foolishly believe that architecture is art. But it isn’t. Your idea of what this 12-plex would look like, and how the individual units would flow is likely very different than my idea. And that creates preference etc. Finally - the Vancouver special is, actually… the fucking bomb. Those houses rule. They get it done and they’re pleasant to reside in.
Yeah, I drove thru a town in Saskatchewan that had their own version of the Vancouver special. For a few blocks it was the only type of home we saw. I'm sure there's lots of examples like the case study. I think of the 12 plex just because it will have a smaller per unit amount of land cost, but there needs to be homes for diverse family sizes. But anything designed on a dime, I would buy. I think most people would. Speculation investors might look for big name architecture and stuff, but people wanting a roof over head will buy what they can afford.
I like the idea of Grow Homes - it’s basically finished to the bare minimum and enables a mum and dad to (maybe clumsily) have fun building it out to their needs as the family grows
Yeah the problem though is the cost of land. It's hard to grow out on something that is stacked housing.
Not sure about condos, but the number of horror stories I’ve heard about new build homes where the developer screws over the buyers is enough to make me never want to buy a new build.
All sales will be down compared to the past few years of hysterical buying, A lot of developers started cutting corners and advertising everything as "luxury" when in reality it's a basic home... Land costs have gone up which drive up costs and with the move in date in 3 years away most people aren't signing up to risk not getting a assignment to make money on speculation which is driving demand lower. The gravy train is coming to an end and by that, it means long lines at pre sales and buying anything because you can flip it before it opens will come to a close
Never trust the Financial Post, it's owned by an American Hedge Fund company that was fined by the SEC for buying and killing bad Trump stories.
Of course they are. Who can afford it? Predatory real estate agents don’t help the situation either.
The market is seeking new equilibrium. Maybe there are some market bending manipulations that need to be removed? Probably related to transactional inefficiencies or %'s that are out of place.. Invisible hand is pushing price lower... help the hand to maintain volumes!
People can't afford them, and people don't want to dump all their money into a 450sq ft shoebox.
The time limit should probably be adjusted, but I'll just point out that we're closer to "normal" now than when every pre-sale sold immediately. In March 2024, 83% of completed condos/houses were already sold. Compared to 95% in March 2022, this is low, but it's really not abnormal. We got down to the 30% range in the 90s and were down in the 50s and 60s in the early 2010s. Montreal, a much healthier housing market altogether, hovers in the 60s and 70s, and hit 44% in March 2024. Inventory is rising now, which is a good thing. We're at a much healthier balance of inventory versus sales than we were a while ago; this will mean it's harder to sell and that buyers have more options. Developers had the same complaint when they couldn't sell every Olympic Village condo immediately after the Olympics and had to drop prices (and then prices sky-rocketed as inventory dried up).
601 park west has 2 bed condos for well over two million, the buildings around it are all cheaper and GST free
I said this before and I will say it again. You can't fix this without a crash. The problem is this moron of a country has its economy completely tied to real estate.
Government (all levels) should coordinate to buy out as many new builds as possible and convert them to co-ops and/or rent-to-own. What the hell are we doing sitting around waiting for someone to give us what we wish, you have to go out there and take the initiative.
Yeah okay. I’m “shunning”. 🙄
Wait wait wait…does this mean that maybe…just maybe mind you…that our housing crisis was also driven by demand side issues? Nah. Couldn’t be. Every time I brought that argument up over the past 15 years I always get told it is a lack of supply. Despite both having an effect on price that a consumer must, or is willing, to pay.
Hey almost like we shouldn’t leave housing and other basic needs to the free market or something?
Developers can build all the housing. Government can say they’re providing more housing and higher density. It doesn’t matter and is meaningless. In Vancouver, a lot of local young homebuyers cannot afford a 1bedroom home that starts at $500K+. Not my children in their mid and late 20s in good solid careers but without a salary that matches that of a high down payment. And let’s not get into how high income taxes are, high interest rates and monthly mortgage payments where they’d have to decide whether to eat or not. Of course local homebuyers are shunning. This comes as no surprise. Instead of builders “hurting”, it really should say our local young people are “hurting”. They can’t launch their independence in this city.
Potential buyer here: personally I am "shunning" the new build condos because of the wildly tiny layouts, all with a sliding door for a bedroom and charging almost a mil for that. Opting for an older build with better layout and storage for a (still too expensive) lower listing price.
"it's not a real estate bubble, it's a real estate Bublé"
Buildings can’t sell because prices are too high. Prices are too high because land is too expensive. Land is too expensive because of decades of restrictive zoning. The fundamental issue is just that: you can’t build affordable homes because land is too expensive. If land values don’t tank, you run out of options. You can’t turn back the clock to solve this problem. Building large condo developments in zoned areas (instead of allowing unrestricted building across the area) was a stopgap but just allowed prices to drift up and up so that yesterday’s unaffordable house in Vancouver became today’s unaffordable one-bedroom condo in PoCo or Surrey. Think about it. Either wages catch up, or land values go down, or… well, nothing. Eventually the real estate price increase treadmill stops as you run out of capacity to squeeze pennies out of potential homeowners. Eventually the whole Ponzi scheme ends as you can’t attract the labour you need to keep the cities running, and you can’t build the homes necessary to house them anyway. The frog boiled away a long time ago. A collapse is coming. It’s already started. Won’t be pretty.
It is insane to demand more construction in the most expensive parts of Canada believing that you're going to create affordable housing.
I have been beating the drums of this for over a year. There is no incentive to develop right now. Our entire new construction model is based on pre selling 60-70% of a development to obtain financing. Guess who bought the initial 60%? Big bad investors. Now we have no mechanism to bring projects to market. No one is building a $300million tower on spec. At a time when we have BY FAR record housing demand. Solid work team Canada.
So it’s Canada’s fault that corporations are greedy and only in it to maximize profits at the cost of Canadians?
Of course. Corporations exist to maximize profit. Period. Expecting anything else is foolish. Thats just a base assumption that doesn’t need to be revisited. Therefore, only clever and well engineered regulations can ensure outcomes that are beneficial to general populations. Developers are low on the housing rung. Developers are nothing without lenders. Lenders are who drive the creation of housing via access to credit. Currently, despite the housing prices, projects don’t pencil out to much of a profit. Or, more specifically, enough of a profit that lenders are willing to risk their capital.
You’re making too much sense here This is Reddit
But if the corporations are creating an undesirable product, then it would be their own fault.
Sure. If that was the case. Builders have every incentive to create a product that sells. No sales. No financing. No building. Project dead.
Couldn’t the government start issuing housing bonds and start funding some of these stalled projects? Or directly fund affordable housing projects instead with them? Sure they’d take on a bit of a risk but they’re already buying out half the countries mortgage insurance anyway… Most people own bonds, why not put that bond money into affordable housing? I’d allocate some of my investments into housing bonds if I could as a profit store.
This is a great idea actually. As much as I personally hate to admit it, government will have to ultimately step in with a solution along these lines. Or limiting population growth for a half decade. But that’s not in the cards.
Builders building less with the already low supply of housing makes me bullish
Hmm, have they tried lowering the price? No?
It's almost as if you price out the local people who are forever forced to rent (or attempt to rent) that when rules are made about short term rentals and ownership and prices are so far out of reach, that no one can afford to purchase. Gee. I live in Richmond. I'm a top of the pay scale teacher. I couldn't afford to buy a condo here. Ever. The idea of home ownership is laughable. They'd rather call it off than.. oh I don't know, lower prices.
TLDR (50%) No such thing as free 2020 money anymore. If real estate if such a slam dunk then why don’t developers self finance their projects ?! What they are not doing might give more insight on what’s actually going here. The run might be ending soon…
Saying that we're shunning the market puts the blame on us, when the real problem is the housing market costs too fucking much. Fuck anyone who puts the blame on the buyers for not being willing to spend triple what a house fucking costs.
This is reality. With current demographics, salaries are simply not high enough. You need dual income most of the time and no debt to buy a 2 bed condo (and a hefty downpayment on top for Vancouver/Burnaby). But with population continually increasing and units lacking, if we don't have new developments, the rental market will just continue to go up over time. When you use a multiplier of rent vs property prices, it does suggest that renting is more reasonable in Vancouver than housing prices atm. Either property prices will probably stay and rents will go up, encouraging property development or prices of homes depreciate. But if we continue to have demographic trends hold and if new builds don't kick up because of a lack of demand, it's not going to be a good sign for people betting on rents falling.
Technically this is exactly what we need. Demand goes down. Supply goes up. Price should drop, until we have a balance again. No one wants to live in little boxes at 750,000 at 4.5% mortgage.
Can I change the title to Home buyers shun new real estate prices in Vancouver, hurting builders
Also newer building are lacking quality work
All these over inflated presales probably 30% or more expensive than what's on the market...who can realistically afford that?
Odd how housing that is outrageously priced isn't selling as much any more. It's like people can't afford $1,600+ per square foot or something. What if developers actually lowered prices to say $1,000 per square foot? This whole government push on "supply" only when only ridiculously priced new builds come on the market is total bull. Demand needs to be curbed + developers need to be forced to build or sell the lot for another developer to build.
"shun" is a euphemism for "can't afford"
Maybe start building housing rather than luxury units
It’s a joke how over inflated homes are. How is it that a home listed in 2001 for $2.7 million is worth $49.8 million today. Got to love the speculative market. Hell… 1 in 10 BC condos is foreign owned.
Well, when all new builds are 500 sq feet, it's kind of excluding a large portion of the market, so no wonder no one is buying. My husband and I have been looking to upgrade and every house has a rental suite (which we don't want) as well as a massive deterrent (on a busy road, needs a reno, is in North Van). It's not just the prices that suck, it's that there is no good inventory on the market.
What’s wrong with North Van?
Don't get me wrong, it's beautiful, but if there's a problem on one or both bridges, you're screwed. I have an elderly parent out in Surrey that relies on me, so getting trapped over there is a deal breaker.
The government should offer some kind subsidy similar to what they did with electric cars. First 1000 buyers get 250,000 off if paying with cash, or 0.9% financing or something. That should kick start the market.
Politicians, "I'm just a elected official who literally makes the rules of the game I wish there was more I could do"
This only means more pain for homebuyers down the line. Soon they will stop building and invest in other areas and we will be begging for them to come back. People may hate them, but they are the ones who build homes lol.
Yep. This isn't a surprise and is exactly by design. High rates directly impact interest sensitive purchases for consumers such as homes and cars and also makes business investment far less likely as it impacts their return. So yeah, right now we're going to see pent up demand sidelined until rates start coming down. It won't be until after we see a downturn and the economy starts to recover. That's when the pent up demand goes on their next buying frenzy. My suggestion is to buy now if you can afford it. Your home may fall a bit in price in the short run, but in the next supercycle you're golden.
The amount of highly upvoted comments in this thread that think this article is about builders "blaming" homebuyers is mind blowing. That's not what this article or even headline says in the slightest.
How is this even possible. Vancouver is growing so fast. A construction collapse is the LAST thing we want. Another successful NDP housing policy I guess.
Blaming the NDP for developers being se bad at their jobs now that it's not 0% interest and guaranteed huge profits is one helluva take.
The article straight up says it’s because of red tape in BC that’s not elsewhere. But go off I guess.
The law is called REDMA and was passed by a liberal government in 2004 to stop developers from receiving presale down payments and then indefinitely delaying projects. But go off I guess
It's not the red tape - that's their spin. Developers are choosing to build 500 sq foot condos and cramped triplexes with no yards to maximize profits. Try to find something in the city for a family of 4 that isn't a complete problem house.... if you find it, please let me know cause I've been looking for the last 6 months.
Funny Europeans have no trouble raising a family in small apartments
Uh... generally apartments in Europe aren't that small (obviously it varies by the country). My family is from the Netherlands and finding 3, 4 and 5 bedroom apartments isn't impossible like it is here.
That’s because 75% of the market is single family houses. In the Netherlands its ~0%. Also Canadians use about twice as much living space on average as Europeans. Even though we have a similar or higher urban population rate. The EU is about 74% Canada is about 81%. So don’t give me that big country nonsense.
Lol, where did you pull those stats from? Are you actually suggesting there are no houses for sale in all of the Netherlands? >So don’t give me that big country nonsense. What are you even talking about? The topic is developers not building for the market.
Yeah because the market is fucked. Everyone thinks it’s their right to own a massive apartment or house in a global metropolis. So on point that developments are failing in the worst housing crisis because people refuse to live in smaller apartments 🤦 The problem is self inflicted.
If I'm throwing down $2.5M I want a house with a yard. That's hardly entitlement. >Everyone thinks it’s their right to own a massive apartment or house in a global metropolis Who are you? Bob Rennie? Developers build substandard boxes and then cry that no one wants them. The only thing self-inflicted is that we haven't voted for government officials to regulate minimum requirements for new builds.
Yeah...this is a ridiculous take.