The City of Vancouver, under intense pressure to do something to help relieve skyrocketing housing prices, is planning to bring in a new policy mandating more “family-friendly” units in new condo projects.
The proposed policy, going to council next week, will call for a minimum of 35 per cent of all units in new projects to be either two or three bedrooms. Developers would be required to include 25 per cent two bedroom units, and 10 per cent three bedroom units.
This same policy will also apply to new secured market rental buildings.
“Vancouver is growing and we need more housing built for families – historically the City didn’t ensure enough was built to meet demand,” said Mayor Gregor Robertson in a press release. “This important policy will help make our neighbourhoods more family-friendly and vibrant, and ensure that as Vancouver grows, families can find housing options that work for them.”
However, there is a big problem with this new policy. It does absolutely nothing to improve affordability for families now forced to live in condos because of outrageous single family home prices.
All this policy will do is create more large, expensive condos across the city that are completely out of reach for most working families. With single family housing out of reach for most Vancouver families, condos and townhomes are the only option. Unfortunately, these larger units with two and three bedrooms are anything but affordable.
At Navio at the Creek, a two building condo project by Concert Properties next to the former Olympic Village, there are a wide-selection of two and three bedroom homes.
These units would be suitable for families looking to live close to the downtown core. In fact, with Science World right next to this development, as well as the Creekside Community Centre, the location is ideal for families. A brand-new elementary school, International Village Elementary, is currently being constructed nearby and is scheduled to open in 2017.
But it’s not clear what families would be able to afford the prices for these two and three bedroom units, which by the way, is not a luxury development.
Local realtor Steve Saretsky shared the price list for the two and three bedroom units at Navio, and the prices are truly eye-popping.
— Steve Saretsky (@SteveSaretsky) June 28, 2016
An entry level two bedroom unit of 808 square feet starts at $911,900 (plus GST). If you are looking for a bit more space for your family, perhaps something around 1,400 square feet, that will set you back $2 million dollars – or to be precise, $1,999,999.
Let’s say an dual income family with one child wanted to purchase this small two bedroom unit at Navio on the Creek. Purchase price is $911,900 plus $45,595 GST for a total of $957,495. Remember this is for a two bedroom, 808 square foot unit.
The required 10 per cent downpayment is $95,750. How many families do you know that have almost $100,000 saved for a downpayment?
The total amount mortgaged would be $882,427.
The average family income in Vancouver is $73,390, meaning a family with a 10 per cent downpayment could only borrow $431,115 — and this two bedroom unit costs more than twice that.
The family would need to make an average annual income of $145,000 just to qualify for a mortgage on this two bedroom condo.
If they did have an income of $145,000, at today’s historically low interest rates, the monthly payment will be a cool $3,883 on a five year fixed rate of 2.34 per cent.
Property transfer tax will also run $17,150. There will also be condo fees, at around $500 per month, plus property taxes and other bills.
How many families with children do you know that can afford these prices for a two bedroom condo? Very few indeed.
This isn’t just isolated to this project in the Olympic Village.
Another new condo development, 8x on the Park, also has lots of large “family friendly” condo units, the type the City of Vancouver is hoping to force developers to build.
At that development, next to Emery Barnes Park which is often filled with young families, two bedroom units start at $1,139,900, and three bedrooms start at $1,429,900.
The city can bring as many policies as they want to force developers to build units big enough for families, but until something is done to address affordability, the only people who will be able to afford these new units are foreign investors or wealthy empty nesters.
Clearly, Vancouver is not family friendly, despite what the city says.