“We’ve all heard the old chestnut about supply and demand,” says Vancouver townhouse realtor Ariane Benjamin. “If supply outstrips demand, prices come down.”
It’s the foundation of economics 101, but according to a new article from BIV, the cost of condos in Vancouver’s biggest suburbs seems to be an exception to the rule.
“What’s causing the supply shortage is the restrictive single-family home neighbourhood zoning on 85% of our residential land base. That keeps out young families, middle income earners and renters, who can’t afford single-family homes,” said Anne McMullin, president and CEO of the Urban Development Institute, Pacific Region.”
However, based on a comparison of starts and affordability, condos and townhouses in areas like Burnaby, Surrey, and New Westminster, which have seen an explosion of strata projects, have actually become less affordable.
“Burnaby, which had the second-highest number of strata starts, has seen condominium affordability plunge nearly 10%. In the Brentwood area, where the most new condos are being built, the benchmark price of a resale condo is the highest–and least affordable–in Burnaby, at $747,400.”
The reason for the growth is the well-connected transit system, which makes suburban neighbourhoods more convenient and accessible for city workers who don’t mind commuting back and forth. Areas like Brentwood and Lougheed are both zoned for high-density housing. In fact, Avison Young recently sold 8.3 acres near the Brentwood SkyTrain station for $155 million–the highest residential land transaction that has occurred in Burnaby to date.
“Historically, wherever we’ve seen rapid transit developed in Metro Vancouver, we’ve seen an increase in new development along the corridors and [in] particular around stations,” said Michael Ferreira, principal of Urban Analytics Inc. “The form of housing is going to be more affordable; a condominium will be more affordable than a single-family home.”
“There’s no easy solution.” says Ariane. “It’s a strange phenomenon, but increasing supply seems to have done little to ease the Vancouver townhouse and condo market.”