Piecing together a deal
scrambling to bundle up Vancouver homes into so-called land assemblies,
convinced such properties are worth more than the sum of their parts.
But as Frances Bula reports, it could be an expensive gamble
When the four homeowners on Cambie Street banded together last year to sell their houses as a package, they were looking for a profitable ride on Vancouver’s current real-estate wave. One feels like he won the lottery. But his neighbours are mournful and unsure how much they’ve really benefited.
As Vancouver undergoes a massive transformation along some of its main streets from suburban rows of single-family houses to corridors of townhouses and six-storey condo blocks, homeowners are agreeing to sell together to get a higher price from buyers who want big chunks of land for major new developments. The mass sales – known as “land assemblies” – have real estate agents, owners, local developers and a big new contingent of foreign investors scrambling to get in.
For Sale signs line streets like Cambie, Oak, Granville, 41st, 49th and 25th. But the scramble is producing disappointment, major tussles with city planners, over-hype and speculation along the way.
“It’s a frenzy out there,” says one of Vancouver’s major developers, Beau Jarvis, senior vice-president at Wesgroup Properties.
“There is foreign capital that’s driving the development. And with the expectations of landowners, it creates problems.”
That’s especially true for some owners who think they’re going to make a fortune and then find out they aren’t because, no matter what they think or what an agent has told them, the city isn’t going to allow their houses to be rezoned for denser development.
Here, along a row of modest 1960s houses on Cambie, across from the lush green of the Langara golf course, things worked out for Kam Lai. His property was captured by the city’s plan to densify along the Canada Line corridor.
He is thrilled to cash out with $2-million more than he thinks he could have earned for his house under normal conditions.
“We bought for $500,000 12 years ago and got six times that. It’s unheard of in Vancouver,” says 60-year-old Mr. Lai, whose family’s brick rancher passed officially out of his possession this week. He’d listed it back in 2008 for $1.1-million and got no bites. He plans to buy a small condo in the area, so he can stay close to his mother’s care facility.
But his neighbours, Kirby Tam and Anita Lum, are much less happy. They bought their house – a raised-ranch-style house painted royal blue, with a well-cared-for lawn – next door to the Lais in 2001, planning to stay forever.
Ms. Lum grew up in the area and went to nearby Jamieson elementary school as a child. Their three children go there now. Mr. Tam put a new metal roof on recently for $28,000. The house is filled with wedding pictures and children’s toys and more than a decade of memories.
“Yes, you make a fortune but it costs a fortune to buy back into the neighbourhood,” said Mr. Tam, a cardio-lab technician who felt lucky that he and his wife were able to get a toehold in the Oakridge area during a small dip in the housing market 14 years ago.
They thought about refusing to sell. “But if the developers build all around me, I’ll be surrounded, and the value is going to decrease.” They’d seen a house on Oak Street where the owner had decided to hold out. Now it sits, by itself, with big condo developments overshadowing it on each side.
Mr. Tam said he and his wife felt helpless in the face of the city’s plans for the area and the negotiations with the developer. They knew the neighbour on the other side seemed to have bought the deteriorating split-level four years ago just to flip the property in exactly this kind of a deal. And they worried they would lose the investment they’d made in their house.
So they agreed to sell. The Mosaic development-permit application sign in front of their neighbour’s house says the plan is to create 72 units in two six-storey buildings and one single-storey townhouse.
They bought their house for $436,000 and will get something close to $3-million. But now they have to find a house nearby. Everything in Oakridge big enough for a family of five costs that amount of money.
Savey Mattu, the realtor who put this deal together for the development company Mosaic, said he tries to give homeowners a realistic picture. He said he warns them that they’re not going to make a killing from selling, because the city’s policy is that it takes about 75 per cent of the increased value of land in any rezoning. That 75-per-cent take, called a community-amenity contribution, is to help pay for the new services that the denser neighbourhood is going to need.
“That’s factored into the price,” said Mr. Mattu, who has done dozens of land assemblies around Vancouver in the past 35 years, including many along Cambie. “The [city’s community-amenity contribution] really ends up being paid by the homeowner.”
The land is worth more in an area where the neighbourhood’s official plan allows for change. So it’s no surprise that a homeowner might get double or triple the value the house had when it was restricted to single-family only. “There’s no magic there,” Mr. Mattu said.
But the developer is not going to pay five or 10 times the value, because developers know the city is waiting to take its share.
And Mr. Mattu said he especially tries to warn owners when they don’t have any chance of selling because city planners won’t allow any new density.
“We see lots of people all over the place trying to organize themselves. I say, ‘I’m sorry, I can’t help you. You’re just fooling yourselves.’ ”
That’s what he would have said to the group of five homeowners at Knight Street and 49th Avenue if they hadn’t decided they were going to avoid realtors.
Instead, accountant Matt Pulakkavil rounded up four neighbours, including his parents, to try to broker a five-house deal. He said he got the idea because of the development he was seeing around Knight and Kingsway and near Knight and Southeast Marine Drive.
“If someone were to give us the money we want, we could move somewhere else nearby,” he told The Globe this week.
The houses are currently worth about $800,000 apiece. He was trying to get $2.5-million for each one. But so far, he’s had only one taker – someone who wanted to tie up the properties with conditions for possibly as much as a year. And, as he’s about to find out from city planners, there are no plans to increase density in that area. It’s nowhere near the Kingsway intersection, where the city created a plan a decade ago allowing some density to create a neighbourhood centre, says the city’s general manager of planning, Brian Jackson.
The same is true for many of the houses being offered along Granville outside of areas in the Marpole plan designated for density, says Mr. Jackson, who sometimes jokes about putting up his own “No Development Potential” signs on some streets.
Mr. Jackson has been sending out warnings to realtors and homeowners since the land-assembly craze took off. “Some of these land assemblies, they are real-estate speculation. I have been very blunt for these people that under current policy, there is nothing for us to consider other than single-family homes.”
Councillor Raymond Louie, who follows development issues closely, has been issuing the same warning.
The only applications the city might consider are special projects under the city’s interim-rezoning policy, which have to be developments that provide either rental or home-ownership projects that sell at 20 per cent below normal market. Only a total of 20 of those are being allowed and that kind of affordability wouldn’t be possible if a developer paid an exorbitant price for the land.
Mr. Jackson says the 6100 block of Granville, in particular, falls into the category of an absolute no-change zone from single family.
That block is one of 10 land assemblies that realtor Michelle Yu, whose signs have been particularly prominent, has on her website. The website lists it as the only one sold.
Ms. Yu has been quoted in other news media about the significant profits she had scored for her customers through land assemblies. She did not return calls and messages this week from The Globe and Mail.
Since her initial statements were published, Mr. Jackson has repeatedly said properties on Granville will not be rezoned. Property sale records are not available until six months after a house is sold, so it’s unclear what stage the sale is at.
One of the eight homeowners on the block, Terry Lashman, was asked about the sale of his home. He declined comment.
“What does she [Ms. Yu] say?” he said.