What Goes into the Cost of a Typical New Home in Metro Vancouver: HAVAN report
The Homebuilders Association Vancouver (HAVAN) released its final 2021 quarterly report ‘What Goes into the Cost of a Typical New Home in Metro Vancouver?’
According to the report, consultant fees, financing, business operations, and lot servicing collectively add up to 13.9 per cent, the builder profit sits at 7.4 per cent, municipal fees and taxes come it at 10.9 per cent, with material costs at 29.7 per cent. The bulk of the cost is found in land, averaging 38.1 per cent of the total cost of the home.
Costs are based on data as of December 31, 2021, building a 2,600 square foot single-family detached home over 12 months, to BC’s building code, with an average MLS selling price of $1,750,000 including monthly financing costs of $3,917/month.
The report aims to shed light on the most expensive components of home ownership – of which land stands out, noting a sufficient supply of housing stock is the key to offsetting rising land costs, taxes and fees.
Ron Rapp, HAVAN CEO says, “there are many means to increase supply but introducing more flexible and innovative zoning regulations is essential to alter the status quo and provide for a broader range of choice and availability. “Blanket”, or “As of Right” zoning can allow for the introduction of either Accessory Dwelling Units (ADU), or other means of “gentle densification” through the Official Community Plan (OCP) or Local Areal Plan (LAP) process or amendments. This will encourage the building of duplexes, multi-plex, row homes, laneway homes, and many other forms of ADU’s to introduce gentle density that does not denigrate the existing character, streetscape, and scale of a neighbourhood.”
Streamlining and expediting zoning/development, and not fragmenting approvals on a lot by lot, project by project basis can reduce approval processes by municipalities by many months. This “pre-zoning” vs “re-zoning” can contribute to stabilizing land value and reduce financing and operating costs that trickle down to the end user, the homeowner. Blanket zoning also has the potential to limit the NIMBY impact where often a few voices resistant to change, sway decisions on good proposals that would benefit the greater community.
Making Home, Mayor Kennedy Stewart’s proposal approved by Vancouver Council focuses on introducing zoning and expedited approvals to allow 4 – 6 ADU’s on an existing single-family lot is one example of an inclusive, forward-thinking gentle densification plan, that will decrease the incremental land cost per home, while ensuring the integrity of existing neighbourhoods and communities.
Rapp notes ‘opponents of gentle densification proposals often believe it can drive up the cost of housing, however, the infographic shows that by reducing the land to home ratio the cost per home can be reduced significantly while bringing a diverse selection and availability of housing to meet the needs of the “missing middle.”’
A complete community requires a complete mix of housing stock, to serve the missing middle, and provide a variety of housing choices and opportunities to meet the demographic and housing needs for all Metro Vancouver residents.
Neighbourhoods that embrace gentle densification vs ‘keeping the status quo’ foster inclusion and ensure a stable base for people working in the city vs forcing young families and future generations to look outside of Metro Vancouver to find affordable housing.