Why are condo buildings priced so high?
That’s the question that has long plagued Vancouver real estate agents and condo owners.
The average Vancouver condo owner is paying $1,200 a month for a 2-bedroom condo in a three-storey building with a pool, spa, fitness centre, and rooftop deck.
And the average condo owner in the Greater Toronto Area is paying about $1.1 million a year for a three bedroom condo in an eight-storeys building with an ocean view.
But that’s not the entire story, said Jim Burt, owner of the condominium consulting firm Burt & Miller, which advises condo buyers.
“The real problem is that the average value of a condo is being set by the city and the federal government,” he said.
“It’s set to the level of what’s affordable in the surrounding community.”
The problem has become particularly acute for condos in the Lower Mainland.
The Greater Vancouver condo market, which is home to Vancouver, Surrey, and Burnaby, has been struggling for years.
The city has struggled to find the affordable condo units for low-income families and people with disabilities, as well as to build and maintain the low-rise buildings that make up the city’s high-rise neighbourhoods.
Burt said that the condo market in Vancouver is a perfect example of how affordability is becoming a bigger problem for the region.
“It’s very expensive to build, and it’s very hard to maintain,” he explained.
“That’s been a big problem in Vancouver.
It’s a lot more expensive to maintain those buildings than they were 20 years ago.”
The city has had a problem with affordable housing since 2008, when a housing shortage led to the building of more than 4,000 new rental units in Vancouver alone.
The number of people on social assistance has also increased by more than a third in the last three years, making it harder for people to afford to live in Vancouver as a result.
But the city still only has the lowest vacancy rate in Canada, at about 2 per cent.
“If you were to compare what we have now with what was possible 20 years or even 10 years ago, I think the city is doing better than most other cities,” Burt said.
The Vancouver city council has repeatedly stated that the city can’t build more affordable housing, despite the fact that there are currently about 15,000 units of rental housing in the city.
But Burt believes the city isn’t getting the affordable housing needed.
“I don’t think it’s really fair to compare Vancouver to other cities because we are not building a lot of affordable housing,” he added.
“In fact, we are building a large number of new condos.”
Burt is worried about what happens when the city starts building condos at an alarming rate.
“When you’re building a condo, the first thing that happens is you’re putting a roof over the whole building,” he pointed out.
“You’re not getting the density you’re getting from an urban centre, which means there is less space to grow your garden or the plants are going to die out.”
The condo boom is also driving up the cost of living.
The price of a typical condo is now $2,000 a month, or about four times what the average Canadian household earns.
And that price includes the annual lease payments, which the average rental apartment in Vancouver makes about $750 a month.
But it’s not just condos that are skyrocketing in price in Vancouver; the average rent for a two-bedroom rental apartment has increased by nearly 40 per cent in the past five years, according to data compiled by real estate website Zumper.
Renters are also finding it increasingly difficult to pay the $1 million monthly condo deposit that they are required to put down in order to purchase a condo.
“There are more people who are paying $700 a month,” Bunch said.
In response, the Vancouver city government has set a goal to reduce the number of condo units in the market by 30 per cent by 2025.
“We’re trying to make sure that the demand is there, the supply is there and the density is there,” Bump said.
But, Burt argues, there is still a long way to go.
“I don:t think the condo prices are getting any better, and I don’t believe the market is going to get any better,” he concluded.
“There’s a long ways to go, but we’ve made some very significant strides.”
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