We know about low mortgage rates and investor speculation, but there is another major driver behind Metro Vancouver real estate – transit.
Transit provides the framework for future development. It has the power to create entire communities and shape the region. And this unaffordable city needs it more than ever.
Developers already know that, which is why Intergulf Development Group vice-president Shaadi Faris will be keeping a close eye on the transit plebiscite results. Better transit won't just offer better regional access, but it will add fire to the already hot market.
"All development sites are based around transit – as a city, that is our issue," says Mr. Faris. "We are surrounded by water and mountains, and we can't expand that way, so we have to work around transit. Transit drives development here. It's our biggest concern.
"If they go ahead with this referendum, for sure what I'm going to do is say, 'Where is this new infrastructure going?' And I am going to look along those points and talk to different municipalities and ask, 'Where do you want to see the corresponding increase in density to serve these new transit stops?' That's going to lead the next wave of development. The Cambie Corridor is built because of the Canada Line. The Evergreen Line in Coquitlam, all those stops, same thing. It absolutely dictates the next wave of density in those places."
Developers know what's coming down the pike before anybody. If a municipality has plans to rezone single-family housing into multifamily to grow density around a transit hub, developers will snap up those properties first. The Cambie Corridor has generated billions of dollars in real estate investments because of the Canada Line. Intergulf is building Empire at QE Park, which will be the first condos ready for occupancy this year in the corridor. But it's only one of dozens of developments either on the way or going through the application process. There is Marine Gateway, MC2, Oakridge Centre redevelopment, Monarch at QE Park, Forty Nine West at Oak, King Edward Green, Cambie Star, Bennington House and Cambria Park, among numerous others.
Some observers make the argument that the public should reap the rewards of such major development that exists only because of transit infrastructure. For example, TransLink could have purchased the developable land around Canada Line and sold it to developers to cover some of the cost of the transit, says architect and principal at Bing Thom Architects, Michael Heeney.
"That way they get the uptick in the value, which they should get, because they invested millions of dollars."
Another analyst suggested a tax levy on transit-oriented developments.
"It's clear that transit could be paying for itself in some manner such as it does in other cities around the world," said the analyst, who preferred to remain nameless. "Transit infrastructure is one of the few government investments which actually makes money. If you build a new hospital or courthouse or some other civic improvement, it's a net cost. But a new transit line generates significant real estate profits.
"Here, the general public pays and private development benefits."
Mr. Shaadi has got his eye on the Broadway corridor to the University of British Columbia, whose future will also depend on rapid transit.
"Talking from an investment standpoint, [Broadway] will be interesting. People will want to position themselves speculatively and builders will get busy and scope out those sites once they're clear on where the stops are going to be."
He doesn't see a No vote standing in the way of the new corridor. The plebiscite will only help answer the question of who will pay for better transit. Regardless of the outcome, adjustments will have to be made. There are an estimated million-plus people expected to move to Metro Vancouver by 2041.
Vancouver was ranked as having the worst traffic congestion in Canada, with a level of 35 per cent. The city places 20th in most-congested cities in the world. Something has got to change.
That's why transportation consultants like George Poulos argue for higher density areas, better land use and transit-oriented developments. In the face of unaffordability, homebuyers often erroneously move further from their jobs for cheaper housing, he says. They are underestimating the costs of running a car.
"If you live in areas with limited mobility options and must drive everywhere – especially with a two car household – this could be very expensive," says Mr. Poulos, who has a degree in transportation engineering.
A keen backer of better transit, Mr. Poulos has supplied the data for an arsenal of interesting apps that figure out commuting costs and behaviours. It's all part of his work with Discourse Media, a group of journalists that publish urban development reports. Based on a rate of 66 cents per kilometre, and the average annual mileage for a personal-use car of 14,600 kilometres, it costs almost $10,000 a year to operate one car. For a two-car family, that's a hefty premium to live far from work.
Another study by David Hughes of Mortgage Group Ontario showed similar results. It compared the suburban commuter's property purchase with that of the urban resident who uses transit, car share, bicycles and taxis. The suburban couple paid $220,000 less but operated two cars. Based on a mortgage rate of 3.5 per cent with a 25-year amortization, the urban buyers came out ahead by $33,865 after 40 years.
The same variables wouldn't apply to everyone, but the point is clear. When buying a house far from one's job, commuting costs need to be factored into the overall cost. And that's not including other costs, such as the added stress of the road, or hours spent driving.
UBC adjunct planning professor Andy Yan says close to 60 per cent of transit users with mortgages are under the age of 40. That would make sense since incomes are relatively low compared to the rest of Canada, and property prices are sky high.
"The thing about transit is it typically helps fix those costs," says Mr. Yan. "It becomes one less cost variable a person has to account for when trying to find a place to live. It fits into the overall profile of transit. The general population that takes transit to work are people under age of 40. It all fits."
They are also mostly women. Of all workers who use transit, 60 per cent of them live on an income of less than $40,000. Of those, 60 per cent are women. And most commuting is happening between sub-regions like Langley and Surrey. Vancouver is not draining out every night, says Mr. Poulos. People living outside of the urban core are also working outside the urban core.
"It's far more dispersed in the sense that we have people living and working in the same area. It's slightly unusual."
Mr. Heeney and Mr. Yan were involved in the community plan for Surrey City Centre, which is a success story largely because of the SkyTrain station. When the university campuses began opening there, they initially worried that students would fill the mall parking lot. It turned out that 80 per cent of students use rapid transit to get there, from all over the region.
"That development was then accessible to the entire region and everybody understood the value of Surrey City Centre, which is much more convenient than downtown to most people in the region," says Mr. Heeney.
That intra-region travel needs the support of better transit if we're to get people out of their cars. An area like South Surrey, where the population is booming, is screaming for a better way to connect to the region, says Landcor's Rudy Nielsen.
"South Surrey desperately needs SkyTrain because they are building thousands and thousands of townhouses every year. It's really growing fast. It used to be a laid back, quiet community. Now it's all being snapped up by developers."