Why is Point Grey so Undervalued? with Jon Lumer and Charlie Veaudry | VREP #86

 

Jon Lumer takes a walk with Abundant Housing Vancouver and discusses what he learned about Vancouver’s upscale Point Grey neighbourhood.

Also, the guys interview Okanagan Realtor Charlie Veaudry, revealing some intriguing parallels with the Vancouver market.

 

Episode Summary

 

Jon Lumer

On Abundant Housing Vancouver and what’s happening in NW Point Grey:

Abundant Housing Vancouver is a group that advocates for more density and re-zoning. It’s the Vancouver version of San Francisco Bay Area Renters’ Federation. They offer walking tours of NW Point Grey. The area has beautiful architecture and old character homes.

Many Vancouver areas seem like they could have more density, but this area especially does. It is small at 151 acres (as a comparison, the West End has 504 acres), but with a population of only 402 people. This equates to 0.38 acres per person, or 16,362 square feet. The West End works out to about 0.01 acres of land per person, or 465 square feet. If the density was the same as the West End, you’d have 14,000 people in NW Point Grey—but it’s RS1 zoning—so, you can build a laneway home or have legal suites.

On if the housing crisis will be solved by changing NW Point Grey and what that looks like:

We will not be kicking people out overnight. Though Abundant Housing Vancouver imagines this like another West End, with more life, etc., this is not the idea. The zoning is currently RS1 with minimum lot sizes of about 18,000 square feet. Even if you don’t need this much land, you cannot subdivide.

On if the City changed zoning for NW Point Grey:

If they signalled their intent or openness to this idea, a developer could likely buy the lots and apply for re-zoning. The value of the land would likely spike, which would benefit current residents. Although property tax would go up, there’s an argument that taxes there are artificially low right now.

On the issue: North Point Grey Road is, in some sense, artificially undervalued. Vancouver is under-built and very few lots are actually built to their best use. This is why Abundant Housing Vancouver is focusing on this.

Yes, but they’re comparing it to East Vancouver’s lot sizes, etc., which seems out of whack. When the zoning restricts organic change that might otherwise happen, there’s reason for question.

On how many houses were vacant—prior to the City implementing the empty homes tax this year, the zoning made it easy for them to be holding properties.

It’s hard to say. Some homes are, by design, hard to see from the road. Former Prime Minister John Turner’s family owns three lots, which are unoccupied. Two fires occurred in 2016, one of which was arson. They are not all occupied, one is for sale.

On whether it might be easier to change the zoning in a place like Point Grey (as it was in the Cambie corridor), as compared to other areas of the city.

There would be a lot of pushback. The people who live there want to maintain the character, exclusivity, and prestige of the area. This is likely a classic case of “not in my backyard”; however, other groups of people need housing and there should be some sort of accommodation.

Charlie Veaudry

About Charlie:

Charlie has been practicing real estate in the Vernon market for about 10 years. He moved to Vernon with his family from Toronto in 1990, and has enjoyed introducing people to Vernon. He bought 15 acres and lived off the grid; he built most of his home himself with his wife.

On the Vernon and general Okanagan market:

It’s been very interesting. Sales are tailing off as compared to last year. There just isn’t enough inventory to service the number of buyers. There is upward pressure on prices but not enough inventory. Sellers are reluctant to put their home on the market because they’re concerned about where they’re going to live. It’s a leap of faith. It’s much better to purchase before they sell, if possible perhaps with bridge financing, to make for a calmer process.

On where the bulk of buyers are coming from:

From the local region. People are downsizing, young families are moving up, or they’re first-time homebuyers. Probably 55-60% of buyers are local. Overall, 85% are from BC and 15-20% are from the Lower Mainland. More buyers used to come from Alberta, but from 2014-2016 there was a shift from about 15-20% to 8%.

On who from the Lower Mainland is looking to buy in the Okanagan:

They’re watching prices rise; they know about the natural beauty of the area and that infrastructure is increasing and is more accommodating. They decide to get in now and lock into the value without paying more five years from now. They may buy a home to rent out or use for recreation, then sell it in five years and buy another property when they’re ready to move. The demographic is mostly people 50-60 years old.

On price increases in the market and if now is a good time to buy in the Okanagan:

There is a 5 to 7-year cycle that repeats over and over, where prices rise and the market strengthens, and then another 5 to 7 years where it calms down and recovers. Each peak and valley is higher than the previous peak and valley. If you look at this since 1980, it turns into an average increase of 8% compounded per year. In a micro-view, we could approach the end of the 5 to 7-year cycle we’ve seen since 2011/2012. Other indicators include the rising interest rates that impact buyers’ thoughts and trends. Also, the change in government may indicate a change in direction of the economy. Sales should likely tail off. If the inventory climbs and there are fewer buyers, we’ll see downward pressure in prices (the changes of which won’t be as dramatic as the increases were).

On low vacancy rates and need for more homes, and if there is a push to increase density:

Right now, Vernon has the highest number of multi-family building permits being applied for. Many multi-family complexes are going up in Vernon and Kelowna. There is a strong economy and people keep coming.

On the character of Vernon changing with the population growth:

There have been no big changes, but more of the same that Charlie’s seen in the 27 years he’s lived there. It’s a challenge for government to maintain infrastructure and other requirements for a growing population (especially as there is limited space). New zoning and variances to single-family lots, for instance, are occurring in the town centre. Making it affordable means encouraging development.

On what he’s hearing about Vancouver:

Lots. The media and many people say the market is on fire and a slowdown is not in sight. Anything under $1,000,000 is flying off the shelves.

On the best buy for investing in the Okanagan:

Well-priced, multi-family dwellings are easy to manage and of good value. There are still some opportunities that offer positive cash flow, though most people are willing to forgo this. If you rent it out and hold it long enough, it will turn positive. Another area is commercial real estate—there is higher than average inventory as compared to residential, so there are better deals. It is also much easier to manage, as involvement would generally be during weekdays.

On the fire season this year:

It was all about the intensity and the duration—they had never had a season that long with so much smoke. It went from early July for 60 days, well into September. The fires impact real estate purchases because insurance companies are not thrilled about providing coverage!

To reach Charlie:
www.charlieveaudry.com

Talk to the Experts

Be the first to write a comment.

Your feedback