By the time it completes, Terrace House will be another symbol of extreme wealth in what was, not so long ago, Vancouver's highly affordable downtown peninsula.
The Coal Harbour building will only hold 20 homes, and many of them will take up an entire floor. The remarkable building will be the world's tallest timber frame hybrid, designed by famed Japanese architect Shigeru Ban, with each terrace designed by Cornelia Oberlander. The renderings show that the occupants will enjoy the best that Vancouver has to offer, with floor-to-ceiling views of skyline and mountains. It will join the city's growing group of prestige buildings, with prices starting at $3-million. That puts the price per square foot at more than $2,500 – another project that is far beyond the reach of the city's income-earning citizen.
Coal Harbour has become the shopping destination for global wealth for the past several years, which means a lot of the condos there are empty or underused (about one quarter of them, according to one study).
But not until the city opened up large swaths of the greater downtown area and the West End to hefty density increases did the whole area become a major magnet for investors and speculators, many of them offshore.
The West End had long been a highly liveable, diverse neighbourhood, filled with affordable rentals for long-term tenants, and well-loved independent stores. Now, the small condo buildings, old rental walk-ups and shops are feeling the pressure to move out. The possibility of a new rental building being added there any time soon is slim, says Jason Turcotte, vice-president of development for Cressey Development Group.
Mr. Turcotte is in favour of luxury condo towers, even though he concedes they are not built for a local market. But he believes they serve a purpose.
"If it goes away altogether, that willingness to allow global capital to come into our city and invest – which frankly, does make up a large portion of those types of projects – then those types of projects will disappear," he says. "They aren't going to get replaced with a small, modest rental building, because the land has escalated so far that it would have to go backwards so much to make those viable, and I think we're beyond that."
Mr. Turcotte believes Vancouver needs a great deal of rental housing – but in areas of the city with lower land costs.
Vancouver's new housing strategy acknowledges that the city's own policies are partly to blame for the current housing crisis. The idea behind the West End community plan was to boost supply in order to bring prices down, but it achieved the exact opposite.
The Cambie Corridor's detached houses were rezoned for multifamily units. The result is a high-end neighbourhood with townhouses that sell for millions of dollars, unaffordable for many who live in a region where the median household income is $72,662.
The city acknowledges that luxury housing serves no purpose for local incomes – and, in fact, fuels overall prices – but nobody is talking about a moratorium on luxury housing. Instead, there is talk about "the right supply."
Dan Garrison, the city's associate director of housing policy, admits a bold, new strategy isn't going to be easy. "The models we've been using for development haven't resulted in all of the outcomes that we would like to see … We know that we have delivered a lot of strata condominium units over the last decade that haven't been affordable to a lot of folks, and appear to have attracted some speculative investment."
As a result, the city is shifting to more rental, Mr. Garrison says, referring to part of an ambitious 10-year plan to create 72,000 housing units, half of which will be geared to incomes of less than $80,000.
After years of failing to take action on speculative buying, everyone agrees it's a move in the right direction.
"The good news is that this new program finally admits that supply is not the only answer," says Patrick Condon, professor of urban design at the University of B.C.'s school of architecture and landscape architecture. "And I think it is the first time they've recognized land speculation as the biggest driver for increased housing costs, and how the actions of the city can induce land speculation.
"What happened on Cambie Corridor is a classic example of city policy, which is good on one hand – 'let's put density around transit' – but bad on the other, because that signals for people to speculate like crazy on the land."
The downside of the housing strategy is that the solutions weigh heavily on more supply. Any meaningful effort to address speculative buying (such as a tax) will depend on the support of the province, and no promises have been made yet.
"The bad stuff is that they seem still, for the most part, to be dependent on the market to deliver housing and to solve these problems," Prof. Condon says. "There's all this money in the world sloshing around with no good place to go … and one of the places [the wealthy] are interested in putting it is in Vancouver real estate. To depend on the market to supply Vancouver housing against this background of global asset inflation is unwise."
Mr. Turcotte believes that if the city follows through with its commitment to provide 20,000 long-term rental units, it could cool the condo market. If there is enough rental supply, then investors won't find it so easy to rent out their condo units for top dollar. "If you could address the massive shortage of rental housing it will filter through – fundamentally, that's the piece."
A not-so-surprising part of the strategy includes the rezoning of single-family neighbourhoods for greater density. But there's little to indicate that multifamily housing on the west side will return the area to a level of affordability for local incomes.
The thinking is simply that a duplex or townhouse is cheaper than a detached house. But if that duplex still costs $2-million, will it make any difference? In the east-side neighbourhood of Norquay, new row houses have been priced at $1.3-million.
Mr. Garrison believes creative rezoning could encourage affordable-housing types.
"If we do leave zoning and everything else the way it is, what will get built are largely condominiums that are already zoned."
Does it mean we'll see affordable housing on the depopulated west side, which not so long ago was filled with families? Not quite.
"I'm saying we'll see some rental housing on the west side of the city," he says.
It's unlikely that west-side rental will be affordable. And so, we become a city where the wealth divide grows bigger and more distinct. We'll have a half-empty resort type urban core and increasingly concentrated low-to-middle-income areas on the fringes.
Prof. Condon used to argue that increased density of single-family zones would lead to affordability, but that was years ago. With inflated land prices year over year, he doesn't think even multiplex housing would suffice.
Instead, he's for skimming off some of that global cash that's pouring into the Vancouver market and using it to subsidize housing for locals.
"There is no way the market can deliver housing, no matter how much supply you put out there for our wage earners in our city. The only way I can think of is to put a much larger tax on new development, in order to get money to support more publicly supported housing in the form of outright city ownership perhaps, or land trusts, or give money over to non-government organizations – who cares, as long as we get some new housing on the market that is non-market."
One point of view shared by everyone interviewed is that we're not about to return to the Vancouver of a decade ago, where housing might have been pricey, but it wasn't impossible for a professional couple to buy a house.
"We are not going to turn this problem around and correct it," Mr. Turcotte says. "The challenge we have is just stemming the tide. Forget trying to go backwards. We need at least to stop it from continuing to run away from us. But we at least have the opportunity to catch up."