Canada Mortgage and Housing Corp.’s (CMHC) annual housing outlook conference was a low-key affair this year, despite reports of strong fundamentals in a volatile market.
The CMHC is forecasting 15,000 starts for the Vancouver metropolitan area in 2011, up 7% from its forecast of 14,000 starts this year. Starts will be mitigated by the presence of close to 3,000 completed but unabsorbed units on the market, said Robyn Adamache, CMHC’s senior market analyst for Metro Vancouver.
“We are looking at well below what demographic demand would suggest,” Adamache remarked.
On the other hand, with a 15-month supply of product available, assuming no presales, she didn’t consider the situation too unusual.
What garnered attention from many speakers was the question of affordability. While topping the country in the realm of home prices and rental rates, Vancouver also boasts a relatively high number of buyers placing more than 20% down on home purchases, Adamache said, citing TD Bank Financial Group analyses. The conundrum of affordability led keynote speaker Bob Rennie to push for the recognition of two segments to the Vancouver market – one dominated by investors, which will never be affordable by conventional measures, and the segment where conventional measures remain in force.
“[More than] 60% of all sales west of Granville Street are to mainland China,” Rennie said, suggesting that they’re not relevant to calculations of what average homebuyers dependent on their income are likely to buy. They’re simply out of reach, and the statistics should be, too, when bean counters are crunching the numbers.
“I think we should start building some fences around communities and isolate them if they have nothing to do with local incomes and affordability,” Rennie said.
“We have to understand housing stock that is being built for local incomes, local buyers, local culture and tolerances, and then understand housing being built for external forces not reliant solely on local incomes.”
With apologies to the Byrds (and perhaps lyricists Pete Seeger and the author of Ecclesiastes), the Arthur Erickson tower once advertised as “Vancouver’s Turn” will soon be in season again.
Reiterating his commitment to getting an Erickson tower on Vancouver’s skyline, Rennie told the CMHC housing outlook conference on November 10 that he expected the project to relaunch in fall 2011 or spring 2012.
Acknowledging that Holborn Group returned “close to $20 million in deposits” on its planned Ritz-Carlton tower at 1133 West Georgia Street when financial markets collapsed in the fall 2008, Rennie explained that the project has been rejigged to reflect the new financial realities and tighter financing conditions developers now have to meet.
While the project was more than half sold – and at an average price of $2,300 a square foot – Rennie said the turmoil roiling financial markets left financiers skeptical that would-be buyers would complete on the sales when it completed.
Moreover, the high price left little room for the price drops that occurred at other developments.
“Our strength became our weakness,” Rennie said.
A change of season in financial markets has given the project a new twist.
“The hotel will be rebranded – no more Ritz-Carlton – there’s been a complete re-evaluation of the suite sizes, replacing the 124 luxury condominiums with approximately 220 luxury city suites, replacing those three to four units a floor with seven units a floor.”
Loblaw Companies Ltd. is quietly ramping up investment in the Lower Mainland, making over its existing holdings and adding new stores.
The latest project is a joint venture with Anthem Properties Group that will see a 40,000-square-foot grocery store anchoring a $100 million development at 17th and Lonsdale in North Vancouver, now home to an Extra Foods store. Christened “Local on Lonsdale,” the proposed project includes 175 residential units.
The project joins other investments in B.C., including redevelopment of the former Office Depot site in the 300-block of West Broadway for a No Frills location, as well as the opening of the Joe Fresh clothing store on Granville Street a few doors down from Holt Renfrew, a sister company to Loblaw through the Weston clan, which controls both.