- by CREPA Webmaster
Finding way to include for-profit developers in building more-affordable rental units is where there will be opportunities for industry.
Finding a way to include for-profit developers in the building of more-affordable rental units for minimum, low-wage and regular workers is where there could be opportunities for the industry, according to Anne McMullin, CEO and president of the Urban Development Institute.
“No matter how much money the province and the feds come up with, we’re not going to build enough rental or social housing (with that alone),” said McMullin, who addressed Postmedia News’s editorial board Wednesday.
“It has to be done in part with the building community and the building community will build market condos and market rentals. But it can also build below-market rentals and social housing, by leveraging the land, and going higher (with more density in certain buildings) so there is a profit, legitimate profit, to subsidize (buyers with) a mix of income levels.”
Her comments came as developers face the prospect of significantly fewer housing starts in the coming years and as the City of Vancouver acknowledged in a wide-ranging housing update this week that developers have recently added almost 2,000 purpose-built rentals, but all of these were affordable to people making more than $50,000 a year.
Reliance Properties president and UDI chair Jon Stovell said this is in spite of a growing number of would-be homebuyers getting snarled by federal rules on mortgage stress-testing who are instead turning to the rental market.
Developers not only take longer and make less profit if they build rental condos, but are also grappling with more market uncertainty. They have been vocal about the impact of the demand-side measures brought in by the province to cool speculation in the housing market but the lack of incentives to encourage more supply.
As well, some municipalities, in response to neighbourhood groups and political pressure to curb development and speculation, have been pressing pause on previously accepted assumptions about the size and nature of projects that will be allowed. And this has bankers and lenders, and pension funds, who had been used to financing based on plans long-established for land in certain areas, getting nervous, said Beau Jarvis, executive vice-president at Wesgroup Properties.
“It’s profound,” said Jarvis. “Banks have an evolved system that municipalities don’t understand. And now, it’s shaking confidence in how we underwrite real estate and development.”
“It used to be FOMO (fear-of-missing-out),” said McMullin. “Now it’s a fear of uncertainty.”
With so many factors in play, Jarvis said he and other developers are “pulling back on residential projects and thinking, ‘Why would I do this?’ I can move into doing industrial or commercial projects or I can take my capital to Seattle.”
Credit from Vancouver Sun