When you look at the graph, it’s really shocking.
In the Lower Mainland, we’re used to being at the heavy end of graphs when it comes to housing stats. But this one seems obscene.
In Vancouver, if you want to build a new single-detached home, you have to realize that the extra costs – things like permit fees, tariffs, development cost charges, aka CACs, rezoning fees, other random fees for bending obscure rules – are more than double what they are in any other Census Metropolitan Area (CMA) of Canada. The costs add up to an average of $644,000 on top of the cost to build.
So that graph? We’re weighing it down a lot more heavily than usual. Every other CMA is hovering around the median, like a properly functioning market – and there we are, bursting through the top.
It’s always Vancouver where the incredulous
becomes standard operating procedure in the housing market.
But Why Abbotsford?
The city of Abbotsford might provide an even better illustration of the warping effects of the extra costs we impose on ourselves to build new homes. Vancouver will always be hopelessly hemmed in by the mountains and ocean, and speculators and billionaires will always find ways to distort the market on their own.
But in pastoral Abbotsford, the cost to build is actually one of the lowest in the country. The empty land, full of development potential, is relatively plentiful. But those extra costs wind up putting Abbotsford in a disgraceful second place in this race, adding an average of $311,000 to the cost to build.
How does that happen?
Many of these extra costs come from the heavy load of taxes that the provincial government imposes on developers. There really does seem to be a disconnect when politicians pass these policies. They believe that they can just siphon off profits from big developers to benefit local projects, or to use however they please – but in virtually every case, those costs are passed on to home buyers. That’s just how the market works. This drives up home prices and makes the housing crisis – the one they have a mandate to solve - that much worse.
Our co-founder, Daniel Greenhalgh, has weighed in with his thoughts on some of these taxes before. But the more potent solution, he believes, is loosening some of the decades-old restrictions on ALR (Agricultural Land Reserve) land.
“You’ve got so much ALR land in the Lower Mainland that can no longer be used for farming. There’s no reason it should still be protected, especially when we desperately need new housing supply. We should free some of that land up, on a case-by-case basis, and reduce the strain on land supply in the Lower Mainland.”
Other solutions, like incentivizing infill development and fast-tracking permits for purpose-built rental and affordable housing projects, would chip away at the out-of-control costs to build. But it will take much more drastic measures to get that graph down to something less insane.
