Vancouver Market Update Its All About Townhouses Condos & Taxes

More granular data from SnapStats shows that adjustment is already happening. There was a 16-per-cent price drop in detached houses on Vancouver’s west side in September. The median sale price dropped from $3.55-million in August to $2.99-million. Out of 617 houses listed, only 10 per cent sold. However, 40 per cent of west-side condos and townhomes sold that month, holding steady with a median price of $665,000. On the east side, 54 per cent of condos and townhomes sold, with a median price of $475,000. In north Vancouver, condos and townhouses rose 23 per cent in price, to $590,000. In Tsawwassen, condos and townhouses shot up 40 per cent. Only west Vancouver’s condo and townhouse sales dropped in price, by 23 per cent. Overall, according to the stats, the attached market is holding far steadier than the single-family house market.

However, the detached-house market in much of the region remains unaffordable for the average household income – and nobody expects it to become affordable again. That means there’s a pent-up demand for the townhouse. The city of Vancouver is encouraging such development, and developers are responding.

“We’ve been increasing zoning opportunities by changing the zoning,” says Anita Molaro, Assistant Director of Urban Design for the city. “They are definitely building more now because they are able to.”

The city started allowing the stacked townhouse in 2013, with the Norquay Village neighbourhood plan, followed by another stacked townhouse zone in Marpole. The new Grandview-Woodlands plan includes townhouses, so city staffers are writing new zoning that will go to council for approval next year, says Ms. Molaro. She says they’re including stacked townhouses in phase three of the Cambie Corridor, too. It’s part of a citywide effort to use townhouses as transition zones between higher-density buildings and single-family houses along arterial roads.

Eric Andreasen, vice-president for Adera Development Group, says the townhouse demand far exceeds supply. Adera has built 13 residential projects at the University of British Columbia, and they’re currently marketing townhomes as part of the new 106-unit Virtuoso. It is 75 per cent sold. He says the last 18 months have been “amazing.”

If you can assemble a big enough lot with the right zoning, you can build townhomes – not several hundred units, but 30 or 40 units type of thing. But they are spoken for pretty quickly, because there is a ton of demand. It’s a higher price bracket [than a condo], but there are enough people that can afford it.

Where a single family house might be around $2-million, your townhomes are going to be 60 or 70 per cent of that. It’s still a lot of money. But you have people who want to stay close to the core of the city. That’s the niche that townhomes fill.

We can tell you that is equally big outside city of Vancouver limits. An example is the last phase of South Ridge Club in South Surrey (South Surrey Home Hunter), which is made up of 72 executive townhomes with rooftop patios around a private clubhouse with pool, movie theatre and other amenities. The first phase has sold out and the second phase has about 11 units left. They expect to sell to downsizers, but we can tell you that many of the buyers are young couples and families.

“South Surrey has dramatically transformed over [the] last eight or nine years. There are single-family houses still going in, but there is an enormous number of townhome applications going to the city.” We recently sold an older character home on an acre on 168th st. in the Grandview Heights development area for $2 million to one of our many investment clients. That property is also zoned for, you guessed it, townhouses.

Cressey has been busy marketing townhomes to both ends of the market – the wealthy and the young buyer that can’t afford a house. With the 40-unit McKinnon, Cressey is marketing luxury townhomes in Kerrisdale that are around 2,500 square-feet and, according to Turcotte, are priced around $1,200 a square foot. Cressey has two more proposals underway on the east side, at Commercial Drive and Pender Street, and another at Kingsway and Knight. They’re considering stacked two and three bedroom townhouses for both. The two bedrooms would be around 1,100 square-feet and the three bedrooms around 1,250 square feet. The starting price should come in well under $1 million.

The developments make sense in areas where single-family homes aren’t insanely priced. And houses on major roads are usually more reasonably priced, anyway, which makes small land assemblies easier. So, the popularity of the townhome is due to a combination of zoning and regulatory conditions, but also simple economics. South Surrey has become the Mecca for Fraser Valley luxury homes of every conceivable design, size and price tag, the same can be said for the massive growth in townhouse developments.

Mosaic Homes has been building townhouses throughout the Lower Mainland for the last 16 years, and have also seen a surge of interest everywhere from Pitt Meadows, South Surrey to Vancouver.

This year, the developer sold nearly 100 townhomes at its Kitchner project in Morgan Heights in South Surrey in a two-month period. We can confirm they’d normally expect to take a year to sell that many homes. So they fast-tracked another, bigger, 200-unit project also in the Morgan Heights neighbourhood, which went on the market this month. They sold more than 50 townhomes on the first day of sales. Those homes sold anywhere from $400,000 to $800,000. A house in the same neighbourhood, would sell for around $1.5-million.

In Vancouver, Mosaic is building the Edward at King Edward and Yukon, which will include townhomes priced at around $1-million. That’s a lot less than the $2.99-million median sale price for a detached house on the west side in September.

In terms of price, our BCHH real estate experts believe the townhouse is at or below where the single-family starter house was five years ago.

“It’s made me wonder, ‘what is this shift?’”  “And we really believe it’s the escalation of single-family home prices, and the lack of accessibility and supply of a single family home.

“It’s a monumental shift in housing expectations. You had many young buyers and young families holding out for a single family house and they have reconciled that fact that it might just not be in their future. The townhome is the next best option.”