Affordability in our real estate market has long been a top of mind issue, exacerbated now by the rise in rates. We have discussed the inventory shortage over the past several months and many have asked, “why not simply build more homes to solve the problem?”
Not only does the shortage of developeable land and cost to acquire it pose major hurdles, a recent study by the Urban Development Institute in Vancouver shows that taxes and fees to develop can be prohibitive for many smaller developers. The report looked at the costs of an 800 sqft. condo in Vancouver in 2023 and contributing factors to the unit’s staggering average price of $1,120,000. Fees and taxes per unit were 29.25% of the imagined condo’s cost. Keep in mind these do not include the cost to build or for land acquisition. (Click here to see the report)
While the Vancouver market is already wildly out of price for many, developers will always look at their bottom line, keeping their prices as high as the market will allow. The only way forward in this situation would be to flood the market forcing prices down, and while the expense to build is so high, this scenario seems an unlikely solution.
Creative home-ownership may be a way forward.
Rising values have led to an increasing number of homeowners opting to become co-owners. This can take various forms, whether it be splitting a single family dwelling with friends, building a laneway house, or buying duplexes for extended families to live next door. Census data shows that multi-generational households are now the fastest growing household type in Canada. In cases where home-buyers cannot afford to purchase on their own, they are combining their buying power with their parents, children, siblings or friends. (Click here to read the Royal Lepage article)
Interested in learning more about The Urban Development Institute report?
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