Vancouver's new housing affordability initiative is only going to increase
the value of single detached homes even more in my opinion. The price
appreciation gap between detached single family homes and condos had been
growing the past 20 years. Back in 1977 there was very little difference in the
average price of a condo compared to a single family home. Now that gap
is huge! the average detached home is worth almost 3 times that of the average
condo. This new initiative which will help developers cut red tape and allow
them to build denser housing projects faster which will result in more
applications to rezone existing single family homes into multi family strata
condos and townhomes. The math is quite simple if you redevelop more single
family land into condos it will increase single family land prices even
more because it reduces the supply of these single family homes. When you have
fewer homes out there the value tends to increase.
On the flip side by building more and more condos you will create a
moderating effect on overall prices for these townhomes and condos. This is why
we have seen very little price appreciation in downtown Vancouver condo
market over the past 5 years while the price of detached single family homes in
Vancouver West side, East side and Richmond are up quite substantially over the
past 5 years.
Now before all the Real Estate haters start sending me emails remember i am
not saying the price of detached homes is going up and never coming down. i am
simply explain some of the basic market fundamentals at work in the lower
mainland RE market. Prices in the short term 1 to 8 years can go up and down and
if you look at the average Vancouver price graph i showed you from 1977 to 2012
you will see there were a number of downturns in the price in that 35 year
chart. you will also notice that the long term metric is up way up