Housing Crunch: Supply and demand drive changes

This week kicks off a series on housing, from prices to perception, across the Langleys.

Langley is in the middle of one of the biggest building booms in its history, yet it can’t build housing fast enough.

“Prices are rising because of the lack of supply,” said Peter Warkentin, CEO of Quadra Homes.

And local realtor Deanna Horn doesn’t anticipate the prices coming down any time soon, regardless of a recent 0.25 per cent interest rate hike by the Bank of Canada.

“I can’t see that being a big effect,” Horn said. Interest rates are still very low.

The average price of a single-family home in Langley passed $1 million earlier this year and has not retreated.

Meanwhile, prices for condos and townhouses are rising even faster, as more young buyers turn to multi-family housing as an alternative to buying a detached house.

Horn noted that previous efforts to cut down speculation in property haven’t had much of an impact.

The foreign buyers tax imposed by the previous B.C. Liberal government caused a brief blip in home sales, but didn’t affect mid-level, average houses, said Horn.

“The major impact was to larger properties,” she said. “We had maybe four or five transactions in this office that were affected.”

Getting prices down means a change in what gets built, said Horn.

“I think we need more multi-family,” she said. Smaller, less expensive single family could also be a part of that, she said.

Are Langley housing prices being driven up by speculation?

“There’s a certain amount of investment going on,” said Horn. Some people are buying properties just to re-sell later for a profit. But it’s a small amount of the total, she said.

Horn and Warkentin cite Langley’s lower prices as the reason people keep coming here, which drives up costs.

Warkentin believes that single family houses and acreages have leveled off in Langley in terms of price.

“We expect prices for condos and townhomes to continue to rise in the Fraser Valley, but they may be peaking in Vancouver and Burnaby,” Warkentin said. “Prices in Vancouver and Burnaby are so high, that it makes the Valley seem affordable by comparison.

If supply is the problem, the Langleys are trying to remedy it.

The Langleys are both in the middle of a building boom, with the bulk of that coming from multi-family housing.

Langley Township’s statistics showed that from January to June this year, 1,211 homes were built, compared to 856 in the same period last year.

Of those, 797 were condos or townhouses.

Just Quadra Homes is developing or actively constructing 1,000 condo units in Langley Township right now, Warkentin said. Several other developers are also mid-project or about to start construction.

Langley City is currently handling more than double the usual number of projects. It was also rated the easiest place to develop in the Lower Mainland in terms of red tape by a Fraser Institute report earlier this year.

The Township has also made a regulatory change that developers say will cut months off of condo and townhouse development – allowing a sales centre to be built before land is fully rezoned. If the Township council decides not to rezone, a bond takes care of the cost of removing the sales centre.

The change could cut three to four months off the time it takes to build a condo or townhouse project.

Warkentin said that as a developer, he finds both Langleys good to work with. But the logjam is a lack of staff to keep up with the number of applications for new housing.

There are also some constraints on the builders’ side.

“There’s a shortage in some trades,” said Warkentin. “Framers are hard to come by.”

Workers moving from Alberta have been adding to the local skilled trades pool.

Horn doesn’t believe there will be a crash in housing prices.

In Toronto, which had an even hotter market than Metro Vancouver, prices slid by 18.8 per cent from April to July. But they are still higher than they were a year ago.

• Watch for more articles about how Langley is responding to the housing crunch.

 

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