Peter Simpson
Sun
Almost daily the print media have been publishing reports about our robust housing market. And not just buried in the back with the obits and classifieds. I’m talking front page, above the fold.
Reporters and editors don’t have to dig too deep for newsworthy material – every financial institution, every government agency that deals with statistics, and every housing analyst and economist have released glowing reports about the state of the housing market, particularly throughout the Lower Mainland.
You’ve likely read or heard the stories: The realtor salivating over the fact the home he listed sold for $112,000 over asking price; the empty-nester couple loving the fact they just got $2 million for the home they purchased two years ago for $660,000; or the young man who flipped an oceanview condo for $200,000 more than the pre-construction price he paid two-and-a-half years earlier.
The only elements missing from those newspaper reports were the dancing-in-the-streets photos.
Don’t get me wrong, the homeowners’ good fortune is indeed something to celebrate, and a person in my position can’t help but view the current housing market as a marvellous moment in real estate, but as a father of two daughters, I have this nagging question: Where will my children live?
Not surprisingly, first-time home buyers are concerned with rising home prices. For the past 11 years, the Greater Vancouver Home Builders’ Association has conducted an annual survey of potential first-time home buyers. Although responses to, say, questions about housing preference differ from year to year, the one constant is the universal fear that high prices will prevent them from owning a home.
Last week I had an interesting conversation with a young woman who is our association’s marketing and education co-ordinator. Wendy McNeil, 28, and Tony Dojosefski, 29, currently live in a rented 850 square-foot condo in downtown Vancouver and, spurred on by low mortgage rates and rising real estate values, they are actively searching for their first home.
Tony is a lifelong downtown condo dweller. Wendy grew up in a single-family home in Steveston. Their purchase preference, made after much thoughtful debate, is a townhouse with some semblance of a backyard. To accomplish their goal, they realize they must venture into the ‘burbs.
“The process of looking for our first home is very intimidating. We want to buy a nice place at a price we can afford, but we also understand we must compromise on the location, so we are looking at townhomes in Surrey. I describe Tony as a stereotypical Mr. Urban who is used to 24-hour access to everything, so suburban living will likely be a big adjustment for him,” said Wendy.
Wendy and Tony are still looking for “the one” and expect to make a decision soon.
Don’t wait too long, folks. Land prices are rising, as are the costs of skilled labour, some building materials, and the myriad development charges, taxes and levies imposed by all levels of government.
Architects, developers and builders are responding to these challenges by designing and building communities that use the available land more efficiently. Multi-family projects – highrise condos, lowrise condos, row houses, townhomes – are becoming more prevalent.
Twenty years ago, multi-family housing starts were 45% of the market in the Lower Mainland. This year to date multi-family starts are 75% of the market. In fact, the last time single-family starts outpaced multi-family starts was in 1988. Although not impossible, it is exceedingly difficult for the average first-time home buyer to start off with a single-family home in the Lower Mainland.
Townhome offerings have undergone significant design transformations over the years. In the late ’80s and early ’90s, most were spread out horizontally, many single-storey, all with double garages. Today, townhomes are more vertical, many with tandem two-car garages. The goal, thankfully, is to use land more efficiently and maintain the affordability threshold. Architects and designers, too, have done an admirable job of maximizing interior space. And today’s product choices are wonderful.
So, is this a good time to buy your first home or trade up? This market appears to be the real deal. I recently returned from a meeting of the Economic Research Committee in Ottawa. Three of Canada‘s leading housing economists agreed that the Canadian economy is doing very well, there is no real estate bubble and low borrowing costs will continue to support strong growth in housing.
There are many prospective first-time home buyers like Wendy and Tony, agonizing over what they should do. In my office I have a photo of an old man with white hair and full white beard. The caption underneath reads: “This is the young man who waited for real estate values to come down.”
Enough said.
Peter Simpson is the chief executive officer of the Greater Vancouver Home Builders’ Association.
E-mail: [email protected]
© The Vancouver Sun 2005