With a family of doctors soon to be priced out of the local housing market, the News examines the balance between neighbourhood specific homes and market forces
GRAEME WOOD / RICHMOND NEWS
SEPTEMBER 4, 2015 01:46 PM
As residents and local politicians prepare for a public hearing Tuesday about the size of new luxury homes, the Royal Bank of Canada, this week, released its 2015 second quarter housing affordability report, noting that housing prices in Richmond are closely tied to those in Vancouver.
In Vancouver, RBC concluded 91 per cent of an average earner’s pre-tax income would be required to maintain an average two-storey home. The national average is 48 per cent.
Earlier this year, Vancity credit union produced a report that named Richmond as part of the Metro Vancouver area that is in the depths of an “affordability crisis,” an issue that some argue may well leave an entire generation high and dry while decomposing the fabric of the community.
In 2005, a typical, detached home cost $400,000 in Richmond. The latest figures from the Real Estate Board of Greater Vancouver show that Richmond’s average home price is now $1.2 million, a 17 per cent increase since last year and a 36 per cent increase over the last five years. Vancity noted if the current trend continues, homes across the Metro area will cost $2.1 million, on average, by 2030.
The Canadian Mortgage and Housing Corporation’s benchmark for “affordability” is spending about one-third of gross annual income on housing, including utilities, insurance and property taxes. A 25-year mortgage on a $1.2 million home, at three per cent interest, will come to $5,700 per month. Add the aforementioned extra costs and two medical doctors (median income of about $110,000 each) are priced out.
In other words, according to Gordon Price, the director of Simon Fraser University’s City Program, “the era of single-family homes for the middle class is over” in Richmond.
Knowing this, the problem — and question — becomes; what do politicians, community leaders and urban planners do, if anything?
Price notes the City of Richmond has some mechanisms available to it. However, whatever the answer may be, it is clear that maintaining single-family home neighbourhoods is of paramount importance to Richmond city councillors, a majority of whom have recently shown a propensity to accept the pleas of developers who have asked to maintain the city’s luxury market for new homes.
And yet, regardless of what changes an anticipated bylaw amendment (set for the public hearing on Tuesday) to home setbacks and ceiling heights may bring (some say nothing), a subtle transformation of Richmond’s neighbourhoods — or at least some of them — may soon occur with the subdivison of large lots into smaller ones. But the buck will stop there.
Coun. Bill McNulty is the longest-running councillor for Richmond First, a civic party that has long maintained — despite this last decade’s immense rising costs for housing — that Richmond must preserve the “character” of single-family neighbourhoods. Such an agenda is the lynchpin of the city’s Official Community Plan to 2041, which also includes densification of the downtown core (City Centre) — a decision intended to act as a relief mechanism to the demand for more housing in the region.
No greater is the need for that relief evident than in witnessing 20-year-old ‘McMansions’ being torn down on arterial roads to make room for townhouses.
Furthermore, McNulty says developers are frequently making requests to build townhouses in the neighbourhoods. But he won’t have any of it.
“Then we become a city of townhouses and forget about it,” says McNulty. However, he is open to creating smaller homes.
“We need to take a second look at if we should be subdividing lots,” he says.
Coun. Derek Dang says he can “see us going for a somewhat modified smaller lot.”
Dang, a property manager, is at the forefront of this movement, being part owner of a development that is subdividing one house into three, new, compact homes in Steveston.
Coun. Carol Day tabled a pre-election platform in 2014 to build smaller homes within the neighbourhoods to improve affordability.
However, she also calls single-family neighbourhoods the “backbone” of Richmond.
“Probably 95 per cent of people I have talked to would rather have more families coming to the neighbourhood, smaller lots, and more modest houses. And so, I think we are going to see a big trend change and I’m hopeful we can be part of that positive change,” says Day.
During the election, Coun. Harold Steves also stated he wanted to maintain single-family home neighbourhoods. And he, too, says he’s concerned about housing affordability.
Price, whose program is funded and/or supported by a range of interests, from real estate groups to municipalities to non-profit associations associated with urban planning, says there are “somewhat conflicting desires or agendas or ideologies at a time of change, with inadequate data in an extraordinarily difficult political minefield.”
Price first acknowledges how single-family neighbourhoods are, effectively, the “DNA” of Richmond. And yet, while there is a desire to maintain the civic nucleic acid that supposedly binds Richmondites, there is also pushback to maintain land values.
“In other words, we want you to retain the sense that this is still middle class housing, even though it’s been priced up…but if you do anything it better not affect our land values,” he chuckles.
Dang agrees, stating while many residents complain about mega homes, “you’ve got people who don’t want to see their lots go smaller because they think their lots are worth way more as they are…so there’s no hope.”
Finally — as Price notes — there is the issue of Chinese money.
“The issue, which no one wants to talk about, is ‘oh my gosh, we’re being sold off to China.’”
Dang himself was reticent to admit that he hears conflicting sentiments from residents who complain about Chinese influence, but also wouldn’t mind selling their homes to Chinese buyers.
Meanwhile, Mayor Malcolm Brodie has stated he has reservations on restricting the open market, as many other Western nations have done when it comes to real estate.
Day, now in her first term as a councillor, was the only elected candidate to raise the issue of the need to address foreign investment in real estate and work with senior levels of government.
Price notes the housing affordability problem is one driven by supply and demand and solutions can be found at both ends.
On the demand side, wealth from China is, in Price’s opinion, a major factor driving up housing costs.
Perhaps going one step further in this silent debate is South China Morning Post journalist Ian Young, who has extensively tracked Chinese wealth migration to Metro Vancouver.
“Foreign buyers probably aren’t to blame for Vancouver’s lack of affordability. But foreign money probably is. And cracking down on the foreignness of funds will prove much harder than dealing with the foreignness of buyers, even if the will to do so exists,” wrote Young.
Young has pointed to programs such as the (now cancelled) Immigrant Investor Program, which he’s reported brought upwards of 50,000 “millionaire migrants” to Vancouver from 2005-2012.
Young says politicians are “treading carefully” as to not rock the boat of developers and real estate professionals who are benefiting from anecdotal stories of homes being sold for well over the asking price.
According to City of Richmond spokesperson Ted Townsend, the city claims responsibility for tracking foreign money rests with the provincial and federal governments.
While a referral to have the city research the matter was recently issued by a council committee, Townsend said, “We continue to monitor developments in this area to see what other governments may do and will report back to council if the landscape changes.”
Young notes data on immigration patterns has been all but kiboshed with the cancellation of the federal long-forum census prior to 2011.
Price says local governments need to open the conversation on all foreign money — Chinese or otherwise.
“It requires extraordinary leadership, great communication and a recognition of the problems and what can be done. And if the willingness is there, you can work through this. But at this point, it seems the desire is not to talk about it,” says Price.
Simultaneously, a discussion on other ways a municipality can control housing prices could also take place.
According to Price, a former Vancouver city councillor, the city has two major tools to control affordability: form of development and taxation.
On the former, Price notes Richmond can rein in large homes by allowing the division of lots and/or controlling the size of such homes.
“Yes, it will affect land values and yes, that’s okay. You really do have to square that circle,” says Price.
“We need a community of diversity in order to have a healthy community socially, if not just to provide people in the labour force — the teachers, firefighters and baristas — a place in the community.”
Notably, the bylaw amendments before council will not address the actual livable area of homes in the city, but only some aspects of building massing (volume) as well as greater setbacks on larger lots.
They also don’t allow for more lot divisions. Dang says that would require extensive public consultation.
Price also notes there is also merit to taxation measures, such as raising property taxes, as a disincentive to foreign investment or wealth migration to the city.
“I don’t think the argument will go very far,” says Price.
For existing residents, Price notes property taxes can be deferred for a marginal rate of interest (one per cent).
“Here you are, sitting on a piece of land that’s accumulating value; you’ve done nothing to earn that but own it,” says Price, who suggests the extra revenue could be used for affordable housing, a responsibility the federal government abdicated itself of in the early 1990s.
Price says the conversation on such controls (building form, densification, taxation and foreign money) will effectively boil down to valuing community versus valuing property values.
“But you have to be honest about it,” he says.
Among the forms of development presently being floated by the development community, is neighbourhood-specific zoning.
To date, Westermark calls Richmond’s approach to zoning “homogenous.”
“We need to start looking at places like Vancouver, where individual neighbourhoods have different rules. Kitsilano is all duplexes and triplexes; Kerrisdale is large homes; others allow granny flats and coach houses,” said Westermark.
He explains that while a particular zoning regulation may work for Westwind, it may not work elsewhere, such as Broadmoor, where luxury homes are now the norm.
For instance, Westwind residents could agree to subdivide lots and allow smaller homes to be built, or allow for duplexes in order to maintain green space.
Some neighbourhoods could accept more density (coach houses, granny flats, duplexes or townhouses) than others, he says.
As a result of introducing new forms of development, lower housing costs could allow people moving into that neighbourhood to “be more consistent with the existing demographic than the people moving in right now where (new) houses are two or three times more costly than the existing housing stock,” says Westermark.
Furthermore, he suggests localized home design controls would allow for such neighbourhoods to maintain a consistent form.
“You could do a lot to preserve the character by looking at different housing forms. It’s a conversation that needs to be had,” says Westermark.
Notably, the City of Richmond’s chief planner, Joe Erceg, who was unavailable for an interview, has said previously that such a process would be a complicated one.
But Price says such a plan would still need to attract a variety of people within the city.
“One cannot isolate people in separate parts of the community,” he says.
Such zoning could create ghettos of have and have-not neighbourhoods; a problem Richmond is already increasingly struggling with according to poverty critics, as well as Steves, an outspoken critic of the city’s affordable housing plan, which has shown a disposition to pool affordable housing funds into large projects.
City council has asked city staff to investigate whether the affordable housing strategy requires more funding. Preliminary recommendations from staff showed that development charges for the strategy will go up.
Also, presently, only developments of more than 80 units must include five per cent of built affordable units (rent controlled according to a tenant’s income). Whether that changes as well, or whether council finds a new direction, will be a political decision.
“What kind of social stratification are we willing to accept? …It crunches down to ideology,” says Price.