City policy also driving renters out of Vancouver to the suburbs, realtors say
Marke Andrews
Sun
Two Vancouver realtors who have completed a survey of sales over the first six months of the year say Vancouver’s moratorium on demolition of rental housing is forcing rents higher and driving renters out of the city and into the suburbs.
David Goodman and Mark Goodman, Macdonald Commercial realtors who co-authored The Goodman Report, note sales of apartment buildings in Vancouver in the first half of 2007 declined 34 per cent from the same period last year, while suburban buildings sales increased by 10 per cent.
In hard numbers, 31 Vancouver buildings sold for $134.3 million this year, compared to 47 buildings worth $208 million in 2006. In the suburbs, 46 buildings worth $138.6 million sold, compared to 42 buildings worth $136.8 million in 2006.
The authors state that Vancouver city council’s moratorium on rental housing demolition until December 31, 2009, penalizes apartment-block owners, the report recommended that they “should be entitled to have the land portion of their properties re-assessed at a lower figure to reflect the implications of this bylaw.”
The report predicts Vancouver’s low vacancy rate for rental apartments will worsen, and “rents on turnover [apartments vacated by existing renters] will escalate well beyond the rate of inflation or the posted CMHC [Canada Mortgage and Housing Corporation] averages.”
In the most recent CMHC statistics, rental vacancy rates in Greater Vancouver in April were 0.8 per cent for bachelor apartments, 0.7 per cent for one-bedroom units, 1.2 per cent for two-bedrooms and 3.2 per cent for three or more bedrooms. There were no breakdowns by neighbourhood, but in 2006 rental rates for a one-bedroom apartment ranged from a low of 0.1 per cent in West Vancouver to three per cent in Surrey. Vancouver’s 2006 vacancy rate was 0.3 per cent.
There were no new apartment buildings in Surrey, Langley, Richmond, Port Coquitlam, Port Moody or West Vancouver. Of the regions outside Vancouver, Burnaby was the busiest area, with 23 buildings sold in the first half of the year, compared to just seven in the first half of 2006. New Westminster (seven buildings), North Vancouver (seven) and Coquitlam (five) were other areas of activity.
David Goodman says it’s a bad time for renters to find accommodation in Vancouver.
“It’s getting increasingly difficult,” said Goodman in an interview. “There are shortages of rental accommodation and not many prospects of new supply coming down the chain.
“There are no incentives that we’re aware of that are going to make it easier for developers to build rentals,” said Goodman, who adds that without a change in density or height allowances, or without allowing developers to build rentals with market housing on the same site, it’s just not economically feasible to build a rentals-only structure.
Vancouver council put the moratorium in place to protect existing rental housing from being torn down to build market housing, but Goodman believes it’s having the opposite effect.
“I see the vacancy rate going from bad to worse and the moratorium will do virtually nothing to enhance the rental supply,” said Goodman.
However, CMHC senior market analyst Robyn Adamache sees some easing of the vacancy rate next year because more condominium projects will be completed. “A lot of people who are living in rentals are waiting for their condos to be finished,” said Adamache.
© The Vancouver Sun 2007