Land Lift: How Vancouver Zoning Policy Creates Teardowns
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by Richard Morrison
- January 15, 2020
- Lifestyle
- 0
Vancouver is known for its high property values, but what some may not realize is that much of the value is artificially created through zoning policies. In this article, we will discuss the phenomenon of “land lift” and how it is driving up the prices of properties in Vancouver, specifically the Oakridge neighborhood. We will also examine the effectiveness of the city’s Community Amenity Contributions (CACs) in capturing the increase in land value and whether they are still having the desired effect.
Must-Know Highlights
“Land lift” is the increase in property value that occurs when a lot is rezoned to allow for more units. This is because the value of the land increases when it can be developed into a larger building with more units, rather than just a single-family home. Essentially, when the city rezones a property to allow for more density, its value can increase many times over, practically overnight.
Land lift is a significant issue in Vancouver, as it drives up the prices of properties in areas with rezoning potential.
Understanding the Function of CACs
The City of Vancouver recognizes the impact of land lift and uses Community Amenity Contributions to capture a portion of it. CACs are monetary or in-kind contributions that developers provide to the city in exchange for rezoning that allows them to build denser housing. The contributions help fund public amenities such as community centers, daycare centers, and affordable housing. In theory, CACs also suppress land lift by imposing a substantial additional cost on any prospective developer looking to acquire land.
The Yaletown Case Study: CACs in Action
Patrick Condon, an urban design professor at UBC’s School of Architecture and Landscape Architecture, cited the redevelopment of Yaletown in the 1980s and ’90s as an example of the city’s approach working as intended. He said that CACs were instrumental in equipping Yaletown with the necessary infrastructure, including community centers, daycare centers, housing for the poor, and the seawall and all the park infrastructure.
The Oakridge Scenario: Analyzing CACs’ Impact
However, the effectiveness of CACs in the current environment is up for debate. Condon believes that the city has dropped or loosened its commitment to capturing the 80 percent of land lift that it did when Yaletown was being rezoned. Properties in the Oakridge neighborhood and Cambie neighbourhood with city-identified rezoning potential are being offered for several times what they “should” be worth in their current state. For example, a $10.5-million teardown on West 41st Avenue near Oakridge mall is just one of many Vancouver properties on the market for several times what they “should” be worth in their current state.
Addressing the Speculation Issue in Real Estate
Condon believes that the problem with land lift is a political one. The city needs to get better at “disciplining the land market” by enforcing an environment of high CAC costs that make land speculation less viable. The problem is that when developers see the potential for higher-density development, they speculate that the land will be worth much more in the future, and the land prices skyrocket. This makes it challenging for the city to capture a significant portion of the land lift through CACs.
Conclusion
Land lift is a significant issue in Vancouver, as it drives up the prices of properties in areas with rezoning potential. CACs are designed to capture a portion of the increase in land value, but their effectiveness is up for debate. It remains to be seen whether the city can effectively discipline the land market to make land speculation less viable and reduce the impact of land lift on property prices.
Strawhomes’ take
Listen up, folks! There’s been a lot of talk about land lift and its impact on the Vancouver real estate market. But what if I told you that builders and the city are just trying to make the city more affordable by building more real estate?
It might sound crazy, but hear me out. The truth is, Vancouver is facing a housing crisis, and building more housing units is one way to address it.
Now, I know what you’re thinking. “But wait, won’t building more housing just drive up prices even more?” Well, that’s where land lift comes in. When a lot is rezoned to accommodate more units, its value can increase many times over, overnight.
But the real argument in favor of building more housing to make Vancouver more affordable is actually quite straightforward. By building more housing units, there is more supply on the market. And when there’s more supply, prices tend to come down. It’s simple supply and demand, folks!
So, while it’s true that builders may have to pay more for the land, the real benefit of building more housing is that it increases supply, which ultimately puts downward pressure on prices. And in a city like Vancouver, where housing costs and closing costs have become prohibitively expensive for many people, we need all the downward pressure we can get.
The reality is that Vancouver desperately needs more housing to lower housing costs. And if builders and the city can work together to increase the supply of housing units, that’s a step in the right direction. Sure, builders may pay more for the land, but that’s the cost of doing business. And if it means more affordable housing for the people who need it most, it’s a small price to pay.
FAQs
Here are some answers to frequently asked questions about land lift and its impact on Vancouver’s real estate market.
- What’s the deal with land lift and property prices in Vancouver?
Well, land lift is when a lot is rezoned to accommodate more units, and its value can increase many times over, basically overnight. This causes property prices to skyrocket in areas with rezoning potential, which can be a real challenge for homebuyers, particularly those looking for affordable housing options. - What are CACs, and how do they work? CACs, or Community Amenity Contributions, are like a golden ticket for developers. They’re monetary or in-kind contributions that developers provide to the city in exchange for rezoning that allows them to build denser housing. These contributions help fund public amenities such as community centers, daycare centers, and affordable housing.
- Are CACs effective in capturing land lift? That’s up for debate! While CACs are designed to capture a portion of the increase in land value, some experts believe that the city isn’t doing enough to capture the majority of land lift through CACs.
- So, what’s the solution to the problem of land lift in Vancouver? The city needs to get tough and discipline the land market by making land speculation less attractive. One way to do this is by enforcing high CAC costs that make it less viable for developers to buy up land and hold onto it until its value increases.
- Is there anything good about land lift for homeowners? Well, if you own property in an area with rezoning potential, you could potentially sell it for a much higher price than its current tax assessment value. So, I guess that’s one way to look at it!
In summary, land lift is a phenomenon that causes property prices to skyrocket in areas with rezoning potential in Vancouver. CACs are like a golden ticket for developers, but their effectiveness in capturing land lift is up for debate. The city needs to discipline the land market to make land speculation less attractive, but homeowners could potentially benefit from increased property values.
The impact of land lift on property prices in Vancouver is significant, and it affects not only the real estate market but also the ability to create affordable housing in the city. The problem is that land lift makes it challenging for homebuyers, particularly those who are looking for affordable housing options, to purchase a property.
Furthermore, the issue of land lift and the effectiveness of CACs in capturing the increase in land value is a contentious topic. While some experts believe that CACs are essential in capturing land lift, others argue that the city needs to discipline the land market to reduce the impact of speculation on land prices.
The solution to this problem is not straightforward, as it requires balancing the need for affordable housing with the challenges of regulating the land market. The city needs to strike a delicate balance that allows for growth and development while ensuring that the interests of residents and prospective homebuyers are not overlooked.
Sources:
https://news.ubc.ca/2023/03/15/ubc-in-the-news-873/
https://twitter.com/pmcondon2/status/1636093662542299136
Ready to turn your real estate dreams into reality? Contact Richard Morrison, Vancouver’s top realtor with 20+ years of experience. As a Medallion Club member and RE/MAX Hall of Fame award winning agent, he’s the expert you need on your side. Whether buying, selling, or investing, Richard’s personalized approach and deep market insights ensure a successful transaction. Reach out to Richard today at (778) 900-2235 and make your real estate journey seamless and rewarding.
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