Housing report

Low-density areas of Metro Vancouver should be developed for new housing: report

To overcome the geographic constraints of Metro Vancouver, a new report calls for soft densification of low-density neighborhoods in the region to help improve housing affordability and supply.

To date, most of the area’s growth has come from the redevelopment of former industrial land into high-density residential uses and the concentration of growth around major transit hubs and along arterial roads. While this is the right approach, it is not enough to address housing affordability issues, especially for middle-income households.

In the report, senior economist Marc Lee of the Canadian Center for Policy Alternatives says single-family neighborhoods in the region are expected to see double or triple their current density.

Currently, most urban developable land in Metro Vancouver is zoned for low-density detached housing, with 80% of the land occupied by 35% of households.

Suggested densities in these areas for the “missing middle” would range from townhouses and multiplexes to small apartments, built on relatively small lots with minimal lot assembly and parking requirements.

To meet the necessary range of affordability needs, between 33% and 50% of the new density added should be designated as permanently affordable, either as rental housing or as affordable ownership. It would also help to ensure that property value gains from rezoning would not go “disproportionately to existing property owners”.

“Upzoning is like creating new land. While the total amount of land in the region is fixed, we can add more housing by allowing higher density buildings. Granting the right to create new public or private spaces in this way is very valuable,” the report read.

“So there’s no reason why a lot of the new residential space we create by adding density shouldn’t be affordable. Community-oriented non-market housing and alternative forms of housing, including co-ops and co-housing, should be at the heart of this construction.

The report’s suggestions essentially help make the case for the City of Vancouver’s Making Home pilot project to allow 2,000 single-family lots across the city to build up to six units — up from the current four-unit allocation. The pilot also incorporates a rental housing component or land increment value capture requirements.

Making Home was approved by Vancouver City Council in January 2022, and city staff are expected to return to City Council later in the year with the detailed policy recommendations for implementation.

The report theorizes a potential Making Home scenario, where redevelopment of a detached house on a standard lot is worth $1.5 million. To build a new 6,000 square foot structure would require $3 million in material and ancillary construction and financing costs, bringing the total cost to $4.5 million, including property acquisition.

Based on market rates between $1,000 and $1,300 per square foot, the new six- to eight-unit structure could be worth between $5.7 million and $7.4 million. Using the Making Home framework, two or three units attached to a covenant on title would be sold at a discount, while the remaining units could be sold at market prices. A municipal government land value capture rate of between $200 and $400 per reclassified square foot would raise between $640,000 and $1.28 million to fund the city’s affordable housing program.

Vancouver is already practicing soft densification in single-family neighborhoods by allowing laneways and second suites, and more recently duplexes. But there have been documented reports of duplex units each selling for roughly the same price as the single-family home that previously existed on the lot.

The report also suggests the provincial government needs to play a bigger role in using its authority to break the deadlock of municipal government and red tape associated with building new housing. Other recommended policies include making existing public land available to non-profit housing developers and creating progressive property taxation, with greater taxation of owners of multiple properties and shifting taxation towards land rather than towards buildings and structures.