Real estate companies say cost concessions will need to be made if they are to do everything they can, as quickly as they can, to help alleviate the province’s housing crisis.
More than 1,200 people, including developers, building owners and investors attended the Vancouver Real Estate Forum on Wednesday. Topics of discussion included rising construction and labour costs, post-pandemic building-use trends, and how to prepare for an influx of housing demand propelled by immigration.
“Development groups like ours are actually very good at designing properties to meet the needs of the people that are looking for accommodation,” David Podmore, president of Concert Properties, told Global News.
“But the one thing in the current circumstances that we really can’t do a lot with is the cost of land. The cost of land is very, very high.”
Podmore, who spoke at the forum, said there’s a “real opportunity” for private industry to partner with governments to tackle the housing crisis, but it’s going to take “a lot of concessions,” no matter who is involved.
“One of the models that really should be explored is making land available on a leasehold basis,” he suggested.
“Government would have to look at bringing down the cost for, and the development community have to get comfortable with working on the leased land, which would revert see at the end of the lease, which might be 80 years or might be 99 years, but they shouldn’t lose control of the land at any point.”
The province announced a multibillion-dollar, four-point housing plan earlier this week, aimed at cracking down on soaring real estate prices, increasing construction and creating more rental units.
Highlights of the ‘Homes for People’ project include a promise of legislation that allows up to four units on a single traditional housing lot, a tax on the proceeds of house-flipping, and a forgivable loan of 50 per cent of the cost of basement suite renovations, up to a maximum of $40,000 over five years, if the secondary suites are rented at below-market rate for at least five years.
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It also includes measures to speed up permitting and reduce development costs, with a goal of leveraging the private sector.
The plan is expected to cost $4-billion investment in the first three years and $12 billion over a decade.
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Podmore said he has found the Eby government’s approach to the crisis “encouraging,” and hopes municipalities will do what they can to reduce fees for developers as well.
Mark Kenney, president of CAPREIT, said the province also “seems to understand” the affordability and supply challenges, and the pressure required to crack down on the problem.
“The world wants to come to Canada and the world wants to come to B.C.,” he said.
“The three big cities in Canada — Toronto, Vancouver, Montreal — they have to have the capacity and the municipal willingness to put more units in play, so lots of talk about development fees, lots of talk about taxes. All of these costs do not build more supply.”
Canada aims to bring some 465,000 new permanent residents to the country in 2023. It’s unclear how many will wind up in B.C., although the province saw high levels migration in 2021, with more than 100,797 new residents settling in. It was the highest annual total since the 1960s.
“Our housing supply is not meeting population growth, so if it’s not meeting population growth, we can’t begin to address affordability,” said Brad Jones, senior vice-president of Wesgroup Properties.
“So we need all levels of government to work together and target immigration. We have a shortage of construction workers, we should be targeting skilled trades — we should be targeting those types of groups that will help us solve that problem.”
Jones also addressed the cost of building in B.C.; a recent Canada Mortgage and Housing Corporation (CMHC) report found various government fees and charges account for between seven and 20 per cent of building costs in Vancouver alone.
“That’s far, far more than anyone’s making in profit delivering housing,” he said, referencing the higher end of the scale. “I think it really boils down to time and cost.”
Housing Minister Ravi Kahlon has said the B.C. government is doing what it can to reduce costs and red tape, and expects to have more than 100,000 homes built or under construction in B.C. by 2027. The province is on track to meet its goal of 114,000 new units over 10 years, he added.
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