Michael Geller: Past and future predictions for B.C. real estate

Opinion: Real estate commentator Michael Geller reflects on his predictions for 2023, and shares insights on Vancouver housing for 2024

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When The Vancouver Sun invited me to write another year-end outlook column, I immediately wondered whether any of my 2022 predictions had come true. After all, while it is easy to make predictions, the past few years have taught us how difficult it is to get them right.

Last year, some of my predictions turned out to be correct, but many were incredibly wrong.

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For instance, I observed there was a desire for more housing choices within established single-family neighbourhoods. I noted that many municipalities in B.C. had new mayors and councils, and the province had an energetic new premier. Housing affordability was and would remain top of mind.

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While I did not expect expanded speculation and vacancy taxes, there was a growing acceptance that streamlining provincial and municipal approval procedures would reduce housing costs. I even created a holiday greeting card offering ideas for the Twelve Days of Christmas, describing how governments could improve development approval procedures.

Although I was wrong about the speculation and vacancy tax — which was, surprisingly, expanded to 13 more communities, including Parksville and Qualicum Beach — the provincial government appeared to have adopted many of the suggestions in my humble holiday greeting card.

It overhauled municipal planning and approval procedures by eliminating the need for many rezonings and public hearings. It even put an end to “let’s make a deal” community amenity contributions — negotiated and charged to developers for things such as community centres, daycares and parks, but passed on to homebuyers and renters.

More significantly, the province passed legislation allowing “missing middle” small-scale, multi-housing on most single-family lots throughout the province. I did not expect legislation of this scope, nor do I expect to see many multi-family homes on single-family lots in the coming year either in Vancouver or around the province.

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For one thing, too many details still need to be worked out, including reconciling the province’s latest policy directives and existing municipal zoning regulations. There is also a need to determine how best to fund the required upgrades to municipal services and community amenities.

While many municipal politicians and planners are worried the province is taking over their historic planning functions, I expect municipalities will continue to play the major role in regulating new developments. After all, if the municipal engineer determines there is insufficient sewer capacity in an area, multi-housing projects will not proceed.

Last year, I predicted that in 2023, we could expect to see greater interest in “mass timber” construction and offsite manufactured housing. This turned out to be correct.

Many are discovering that manufactured housing is faster, quality-controlled, less wasteful, and more energy efficient. Factory construction can also help address the province’s severe shortage of skilled construction labour. Since the federal government is dreaming of building 3.5 million new homes across Canada by 2030, expect even more applications of factory construction in the years to come.

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In previous year-end forecasts, I often wrote about the need to reduce excessive minimum parking regulations. After all, most cars cause pollution, traffic congestion and climate change, and are expensive to operate. However, this past year, I was shocked by decisions by Vancouver City Council and the province that, in certain instances, there would not be a requirement for any off-street parking.

While I am pleased to see minimum parking requirements eliminated, I do not expect many projects to proceed without parking. Although car-sharing opportunities are increasing, and public transit is improving, many of us cannot get by without our cars. As people start bickering over limited on-street parking, developers and homebuilders will still need to provide off-street parking if they want to attract buyers to new homes.

In several year-end forecasts, I have promoted home-sharing as a partial solution to our housing crisis. After all, it is estimated that 18 per cent of all Metro Vancouver bedrooms are empty at a time when there is a severe shortage of affordable rental accommodation.

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Last year, I wrote about home-share websites that matched seniors with other seniors or students, or other household pairings. So, I was pleased to read Vancouver Sun reporter Lori Culbert’s recent story describing how home-sharing can benefit both tenants and homeowners struggling with a high mortgage.

The article reported that listings for shared accommodation increased 42 per cent year-over-year. Where past listings featured people looking for a roommate, now more listings are homeowners looking to fill spare rooms. And some landlords are even posting ads for people to share an apartment.

I am currently working on an affordable North Shore housing project in which most apartments feature a flexible design so they can be shared by unrelated people. Many living rooms are designed to become bedrooms at night, as is customary in many homes worldwide.

So, what about future home prices and rents?

Last year, I observed that notwithstanding ambitious federal immigration targets, most analysts expected home prices to decline in 2023 but not crash. However, rents would continue to rise since many approved projects would not proceed — due to higher construction costs and interest rates — and would be put on the back burner.

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Rents did rise significantly in part because new projects could not be financed. However, analysts were wrong about house prices. While they varied by location and product type, overall prices increased by an average of 4.3 per cent.

As we approach 2024, many British Columbians, especially the hundreds of thousands of homeowners facing mortgage renewals, are worried about future interest rates, house prices and rental costs.

During the past month, I have been studying economists’ predictions for the coming year. Other than agreeing that interest rates are not likely to increase, there appears to be little consensus.

From my perspective as someone involved in residential development, given the shortage of skilled labour and higher construction costs, combined with ever-increasing municipal fees and charges, I expect new housing will be more expensive to build.

Sadly, not only will this result in higher prices and rents for new homes, but it will also inflate existing home prices and rents since, as we have witnessed over recent years, a rising tide lifts all boats.

On this depressing note, let me wish you a happy holiday season and a more peaceful and affordable 2024.

Michael Geller is an urban planner, real estate consultant and property developer. He serves on the adjunct faculty of SFU’s Centre for Sustainable Development and School of Resource and Environmental Management. His blog can be found at gellersworldtravel.blogspot.ca.

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