Vancouver neighbourhoods that underwent community plans by the city in the past decade have seen the highest spikes in property values – particularly in vulnerable, low-income neighbourhoods.
If affordability was the goal, then the plans are a fail, housing experts say.
New analysis of assessment data shows a relationship between community-planned neighbourhoods and a spike in property values, much higher than the 4-per-cent citywide average. Higher values generally mean higher rents and tenant displacement both for residential and commercial properties. And new market housing unit prices go higher, shutting out local income earners.
“It’s interesting to see that the leading neighbourhoods with property increases were ones that received community plans within the last 10 years,” says Andy Yan, director of Simon Fraser University’s city program, and who analyzed the data. “That tells you the role that city planning plays in regard to property values. These plans are not neutral. Effectively, what you have is a windfall for property owners and a hurricane for residential and commercial tenants. This type of planning, you could argue, increases the vulnerability for renters.”
A community plan is a policy document that determines future land use guidelines for a neighbourhood, such as housing, commercial districts, transit hubs, community centres, public art and parks. Vancouver has 22 neighbourhoods and several in recent years have undergone community plans, which have included rezoning for more housing density.
The city describes a community plan as having long-term and short-term goals that will result in positive change and benefit to the community, especially affordable housing. But a series of community plans that focused mostly on the east and south parts of the city in recent years appear to have achieved the opposite effect.
Mr. Yan analyzed assessments for all property types in the city, including condos, for the July, 2017, to July, 2018, period. Using specialized software, he coded the data to city of Vancouver planning areas.
“It’s not to say all properties in those neighbourhoods went up,” says Mr. Yan. “But there’s this assertion that if we go through these plans, we increase certainty and we increase density, but then that is not necessarily true. What happens first seems to be an increase in property values before you see an increase in housing units.”
Businesses were most affected. Multifamily dwellings such as condos increased an average of 10 per cent in these community-planned neighbourhoods. Industrial soared 42 per cent higher in assessed values; light industrial shot up 27 per cent; and commercial went 15 per cent higher in value. Businesses, including small retailers, would have seen rent and tax increases as a result.
The high assessments are a sign that land speculators have pushed values before building even begins. Renters and buyers looking for homes to live in end up paying the high price of speculation.
“It appears the worst thing you can do if you want to enhance affordability is to engage in a planning project for a particular neighbourhood,” says University of B.C. professor Patrick Condon, founding chair of the school’s urban design program. He also writes about housing issues for the Tyee. “Because that plan seems to lead to a clear and obvious increase in land values, which makes it that much more difficult to create affordability. As land values go up, so too does the cost of housing, usually on a per-square-foot basis.”
Prof. Condon has long argued that speculative behaviour is reducing affordability, as well as government’s reliance on development dollars to fund infrastructure such as the SkyTrain to UBC. Speculators routinely snap up properties and assemble them at the first hint of any rezoning, driving up the land price.
“Any increase in the allowable density, even a hint of it, in the form of a neighbourhood plan leads to an immediate response in the market based on a presumption of how many buildable square feet a particular parcel is going to in the future allow,” Prof. Condon says.
“By the time a developer comes in with a proposal … the inflated value has been baked into the land by speculators, often years before a developers come along and tries to develop it.”
Prof. Condon, who ran for mayor in the last election but pulled out for health reasons, says Mr. Yan’s numbers didn’t at all surprise him.
“I have been watching the consequences of the city council’s rezoning activities in area plans and spot zoning for years, and have recognized that whenever there is even a hint of opportunity to change the allowable density on a particular parcel of land, the main beneficiaries are the land owners and speculators.”
And because the city’s plans were often directed at working class neighbourhoods, the resulting increase to land values and housing prices triggered the process of gentrification, pushing existing tenants from their homes as wealthier people moved in.
“It seems patently obvious that the city has, for whatever sets of reasons, looked to the lower income areas to do local area plans, maybe with the best of intentions, feeling their efforts were going to increase affordability,” Prof. Condon says. “Unfortunately, Andy’s work provides clear evidence that their intentions may have been at cross purposes with the actual results.”
Strathcona neighbourhood, which was part of the Downtown Eastside community plan done in March, 2014, saw the biggest percentage change in total assessment value, at a 16-per-cent increase. The next biggest increase was seen in Marpole, which underwent a community plan in 2014. That neighbourhood saw values increase 14 per cent. Mount Pleasant increased 13 per cent, following a community plan done in November, 2010. The West End increased 12 per cent, after a December, 2014, community plan. Grandview-Woodland increased in value by 10 per cent, after the July, 2016, community plan. South Cambie neighbourhood values rose 9 per cent, following the three-phase Cambie Corridor Plan. The neighbourhood of Fairview, which falls under the False Creek South plan, saw an increase of 7 per cent. That plan started in 2017.
Prof. Condon and Mr. Yan agree that the city needs an immediate strategy to quash speculation, particularly as it embarks on a citywide plan that will likely mass rezone the city.
“So is there a city financial device to capture these gains, these windfalls?” Mr. Yan asks. “And that’s what we need, is a financial instrument to capture this wealth that’s being privatized by the stroke of a pen.”
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