Multiplex zoning is sowing confusion about luxury home values in Vancouver, some Realtors say.

“Nobody knows what anything’s worth anymore because they basically made every property in Vancouver a potential redevelopment,” said Andrew Carros, chief operating officer with Engel & Völkers Vancouver, a franchise with high-end listings.

Legislative changes allowing multi-unit housing on single-family lots are contributing to a buyer’s market in some luxury neighbourhoods, he said, pointing to low sales-to-active-listings ratios in October in Point Grey (0.11), Shaughnessy (0.05), Coal Harbour (0.07) and West Vancouver (0.08).

These ratios measure supply and demand, and ratios below 0.12 generally indicate downward pressure on home prices—a buyer’s market.

“They don’t know what they’re buying. What if the house next door gets sold and they put six units up there? Why am I paying X amount of money to have a single-family house but everybody’s saying that the best use of this property would be multi-family?” Carros said.

“It makes it very confusing or it basically takes a lot of confidence away from buyers.”

Kingsley Ma, area vice-president with Re/Max Canada, said “if you’re looking to pay a significant amount for a luxury home, typically those buyers are not looking for multiplex neighbours that are right beside you.”

He added : “They pay more for luxury for a particular reason, not so much to live with stratas right beside them. So in that sense, yes it does take an impact on the luxury homes.”

Realtor Jesse Dean Cook of Smeaton Cook Real Estate Group, Royal LePage Sussex said it’s unclear whether developers will take on such projects.

“That’s quite a risk for them to take in a luxurious market. Like, who’s your buyer? What’s going to be your profit profile? Are you as a developer willing to do that?” he said.

There haven’t been many multiplex development applications yet, and they are highly unlikely to replace view properties and waterfront properties, Cook said.

“For the most part, the clients that we have looking or selling, they’re not interested in a four- or sixplex on their property in a luxurious enclave,” he said.

Luxury Sales Steady

Local governments in BC were required by Bill 44 to change their zoning bylaws to broadly allow multiplexes—residential buildings with up to six units—on single-family lots.

The luxury market seems to be holding up despite the arrival of multiplexes onto the scene.

Luxury sales in the Lower Mainland, though volatile from month to month, are not far from their 10-year average while the rest of the market remains rather weak with sales across the Lower Mainland trending about 20% – 25% below the 10-year average, said Brendon Ogmundson, chief economist with the British Columbia Real Estate Association.

October sales-to-active-listings ratios for the region even indicate a seller’s market in neighbourhoods including Kitsilano (0.28), Fairview (0.32), Lynn Valley (0.21), Kerrisdale (0.22) and Central Lonsdale (0.21).

A ratio above 0.20 means it’s much more likely that prices are rising well in excess of inflation—a seller’s market, Ogmundson explained.

Carros of Engel & Völkers said the region’s buyer’s markets are predominantly the high-end luxury markets.

“That’s the market that the government wanted to go after, right?” he said.

It’s a double whammy because multiplex projects may not currently be viable due to a soft market and high permitting, construction, infrastructure and legal costs, he said. Unoccupied units may also be subject to vacancy taxes.

“It’s very hard to make a decision in Vancouver based on how the federal, provincial and city [governments] have been targeting these higher-end homes in the first place,” he said.

Vancouver’s High-End Listings Wobble as Multiplex Zoning Blurs Luxury Value by Jami Makan | BIv