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December 11, 2023 | For Better or for Worse

Steve Saretsky

Steve Saretsky is a Vancouver residential Realtor and author behind one of Vancouver’s most popular real estate blogs, Vancity Condo Guide. Steve is widely considered a thought leader in the industry with regular appearances on BNN, CBC, CKNW, CTV and as a contributor to BC Business Magazine. Steve provides advisory services to banks, hedge funds, developers, and various types of investors.

Happy Monday Morning!

In last weeks note we highlighted the BC Governments passing of bill 44 which effectively stripped municipalities of their zoning power by eliminating single family zoning, and requiring high-density development next to transit. The magnitude of these changes should not be understated. This is perhaps the single largest housing policy change in the history of British Columbia, far surpassing the demand side policies such as the foreign buyers tax and speculation tax.

Whether your political views agree with the legislation or not does not matter at this point, changes are coming whether we like it or not, and they will drastically alter neighbourhoods throughout this province.

Let’s unpack this.

Single family zoning is now eliminated throughout the province in areas with a population greater than 5000 people. It doesn’t mean you can’t building single family houses anymore, it just means you can’t restrict multiple units on a single family lot. Here’s the coles notes to share with your buddy at the water cooler:

  • Municipalities have until June 30, 2024 to update their zoning bylaws to comply with the legislation.
  • All single family zoning must allow one secondary suite and/or an ADU (accessory dwelling unit, also known as a coach house or laneway)
  • All single family zoning must now allow a minimum of 3 units on a lot size 3000sqft or less
  • Allow a minimum of 4 units on lots larger than 3000sqft
  • Allow a minimum of 6 units if within 400 meters of a bus stop and the lot must be larger than 3025sqft.
  • Minimum of 3 storey building height
  • Sets out recommended legislation for minimum site coverage depending on lot size
  • Sets out recommended legislation for maximum parking requirements

Like I said, this is huge. If you want to read the full 90 page document you can fill your boots here. Basically the BC Government is forcing through missing middle housing and they’ve eliminated most of the loopholes that municipalities might try to exploit to make multiplex unviable. However, here’s the reality, just because you can legally build 6 units on a 3025sqft lot, doesn’t mean you should. This is where builders will have to assess project viability and product market fit. For example, jamming 6 one bedroom units on a lot in Point Grey is a surefire way to lose money. The reality is highest and best use in Point Grey is still a $7M luxury single family house despite YIMBY fantasies.

Will this spur a flurry of building? Not immediately. Interest rates are still elevated, cost of construction is still pricey, and the economy sucks. Builders build when access to credit is available and the market outlook is favorable. However, give it a few years. Here’s what happened in Auckland New Zealand, the largest city in New Zealand, when they eliminated single family zoning.

That brings us to the other section of Bill 44, transit oriented development, otherwise known as TOD. If you don’t like density then close this page because you’re really going to hate TOD.

TOD (transit oriented development) sets out minimum density requirements around sky train stations, bus exchanges and the West Coast Express. It also eliminates any parking requirements in these areas.

The province will designate 100 TOD areas over the coming months. They’ve officially unveiled 52 already. The full list is here.

If you own a single family lot in one of these TODs, congrats you’ve hit the housing lottery. On the flip side, brace yourself for a massive tax bill come 2025. BC assessment, which asssess your property value each year for determining property taxes, determines land value based off highest and best use. In other words, if you can now legally build a 20 story condo building on your single family lot then your land value, and your tax bill are going to soar. I suppose it’s a small price to pay given the free land lift, but nontheless it will force some unknowing owners to sell.

While some land will see an immediate repricing of value (ie the old single family housing going to 20 storey), the commercial land market as a whole is still under pressure. After all, developers now have a plethora of developable land to choose from. Here’s commercial land broker Dave Taylor summarizing the currrent environment perfectly.

For better or for worse, this will be the single largest housing policy change this province has ever seen. Circle back here in ten years for the report card.

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December 11th, 2023

Posted In: Steve Saretsky Blog

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