With all the excitement around Canada’s first victory in the World Cup June 18 at BC Place, not too many people paid attention to an announcement just before the game about housing. Prime Minister Mark Carney (in town to watch the game) and Premier David Eby announced $5 billion in spending on housing, transit, health care and other infrastructure. The housing angle is significant. The two levels of government are investing $3.2 billion, mostly on municipal infrastructure. This will temporarily remove part of the barrier
to home ownership: the extremely high development cost charges that developers pay upfront and then add to the cost of a new home. Carney also mentioned the possibility of buying 2,500 unsold condos, but no details were given. It is no secret that new homes aren’t selling. It’s no surprise, given the many barriers – DCCs, but also interest rates, other taxes, the high cost of land, inflation, the highly uncertain B.C. economy and many other question marks, including AI and certainty of title. Surrey
has put a lot of its energy into promoting highrises in the city centre area. However, current interest in actually buying and living in such units is low. Many of them are just 600 square-feet or slightly larger, and remain unsold. This has a ripple effect on development and construction. Concrete towers require pre-sale financing in order to get off the ground. These funds have mainly been supplied by investors, who tie up their money for years in the hope that they can eventually sell
the units at a profit. However, that cannot be done in the current environment. Most investors now stay far away from such investments. If the tower is actually constructed, it is not easy to rent the units. Rents are dropping. The drop in international students is a major factor. Even if the project is completed, it isn’t easy to sell the units. Other ways of financing the construction are limited, and lenders are understandably nervous. Some have foreclosed. For example, on June 15 Surrey council
approved downsizing a development at 133A Street and 102A Avenue from 46 to 26 storeys. Now-Leader reporter Tom Zytaruk noted that it had initially been approved in 2023, with 516 units. It will now have 337 units. Ninety-four rental units were planned initially, and that number remains constant. However, the number of units for sale will fall dramatically, from 422 to 243. A fair number of townhouses are under construction in Surrey. Financing doesn’t generally involve pre-sales and is usually easier to obtain. But buyers
are very nervous. Townhouse prices are high, due to DCCs and the high cost of construction. Very few first-time buyers can commit to spending close to $1 million, which includes all the additional costs that go with buying a new home. They simply do not have that much money. In Ontario, the federal government has announced a similar program with the province. In that province, the HST on new homes is being removed on all new homes under $1 million. The HST is 13 per
cent. It is estimated that home buyers could save up to $130,000. B.C. does not have HST. Here the GST is being removed by Ottawa – that amounts to five per cent. All the provincial taxes (and some more are being added this fall) remain. The province has dropped the property purchase tax for first-time buyers. Savings are substantially less overall in B.C., with estimates that, at most, developers will save $40,000 per unit in DCCs. It will be up to them to pass those
savings on. It is important to note that, in the Lower Mainland at least, prices are often higher than in some areas surrounding Toronto. It would be wonderful to see housing costs fall sharply for first-time buyers. It is questionable if the B.C. approach to getting federal assistance will make much difference. Frank Bucholtz writes twice monthly on political issues for Black Press Media publications.
B.C. housing, development cost charges, Mark Carney, David Eby, BC Place, Surrey housing, unsold condos, pre-sale financing, GST removal, first-time buyers