Ottawa and B.C. Partner to Secure Unsold Inventory for Affordable Housing Initiatives
The federal and British Columbia governments are developing a program to purchase more than 2,200 condos in B.C. to turn into affordable housing, though the financial mechanism that will be used to make the acquisitions is still up in the air.
Nearly 4,000 newly built condos are sitting empty in the Vancouver region, according to data from Zonda Urban, as investors shy away from buying real estate that has become increasingly unprofitable.
Prime Minister Mark Carney’s government is looking for ways to unfreeze the condo markets in B.C. and in the Greater Toronto Area where preconstruction condo sales have dropped sharply.
Late last week, the federal and B.C. governments announced plans to cut the development charges that builders pay municipalities, along with a new partnership to turn 2,200-plus unsold condo units into affordable housing. But the announcement did not say the governments would acquire the condos, only that they would convert them using “innovative financing tools” from Ottawa’s newly created Crown corporation Build Canada Homes (BCH).
On Tuesday, the federal housing and infrastructure department provided a few more details, and confirmed the units will be acquired.
“Build Canada Homes and the B.C. government are working on a plan to acquire and convert more than 2,200 existing condo units into affordable homes,” Steve Cloutier, manager of media and issues management for Housing, Infrastructure and Communities Canada, said in an e-mailed statement.
He did not provide a total amount of funding that will be set aside for the purchases.
As of the first quarter this year, the average asking price for unsold, newly built condos in the Vancouver region was $910 a square foot in wood-frame buildings and $1,319 a square foot in concrete buildings, according to Zonda data. That means a 500-square-foot unit would sell for around $455,000 or $659,500, depending on the type of building.
If that is the average size of the unit purchased under the conversion program, the governments could end up spending $1-billion to $1.4-billion on the acquisitions.
The governments have not defined what they consider to be affordable, nor have they said which areas of B.C. they will target.
Some parts of Metro Vancouver are shouldering greater amounts of unsold product. In Burnaby, there were nearly 1,200 units that were newly built and sitting empty as of the first quarter of this year, according to Zonda. That represents 30 per cent of Metro Vancouver’s unsold condo inventory.
In Richmond, 13 per cent of the region’s standing inventory is unsold, and in Coquitlam and Port Moody, unsold inventory is at 12 per cent.
The federal housing department spokesperson said the conversions “would be one of the fastest and most efficient ways to increase supply” for the many B.C. residents who urgently need affordable housing.
Mr. Cloutier said BCH will be a funding partner.
“We are working closely with British Columbia on the specific financial mechanism that will be most effective in delivering affordable homes to British Columbians,” he said in the e-mailed statement.
Vancouver East NDP MP Jenny Kwan is urging Ottawa and the province to reconsider the plan.
She said the funding appears to direct substantial public resources toward supporting private developers, who made the decision to build during a period of rapidly rising prices and profits.
“While those profits accrued privately during the boom years, taxpayers are now being asked to shoulder the consequences of a cooling market,” Ms. Kwan said in a June 23 letter addressed to the federal and provincial housing ministers.
B.C. developers had been publicly urging the province to follow Ontario’s policies and expand the sales tax rebate on new homes. One developer, Wesgroup Properties, said the industry was surprised by last week’s announcement.
“We did not advocate for it. We did not ask for it,” said Beau Jarvis, Wesgroup’s chief executive. Mr. Jarvis said he wasn’t aware of anyone in his industry that was consulted on the government’s plan.
Mr. Jarvis said there is an issue with unsold condo units in the province, but he said: “I am not sure the government should be buying them. I think there are a number of policies I would have chosen before this one.”
The Carney government is supporting Ontario’s new-construction condo market by helping provide an HST rebate for new homes priced up to $1.5-million. The policy is designed to help builders get rid of their unsold inventory.
Meanwhile, the Ontario government has provided a private company with $300-million from its Building Ontario Fund so it can buy unsold condos and turn them into rentals.
This article was first reported by The Globe and Mail
