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How the Transit Vote Affects Home Buyers and Property Values M
etro Vancouverites are heading to the polls – or, in this case, their nearest post box – as mail-in voting continues for the emotionally charged Transportation and Transit Plebiscite – aka “the congestion tax”. Although the question is how to fund transit improvements, the debate has rapidly become about whether people believe TransLink should be trusted with more funds. Many issues like impact on housing affordability have been largely ignored. Even getting both sides to agree on how much the new tax would cost has proved impossible. “Yes” supporters say the 0.5 per cent sales tax will take $125 per year out of the average household’s pocket. “No” supporters say it will be more than double that amount – $258 per year.
Property Purchasing Power So what’s the tax’s impact on ability to purchase a home – especially for cash-strapped first time buyers? The new tax will reduce income and therefore borrowing power – no matter which side’s estimate is correct. “At today’s mortgage rates of 2.69 per
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cent, if we take the higher estimate of $258, it would reduce a person’s home buying power approximately $5,400,” says Mark Belling, CEO of Fifth Avenue Real Estate Marketing. He stresses, however, this is more than offset by the costs savings of living close to regular, reliable transit. For the rapidly expanding demographic of urbanites who embrace a carless lifestyle, transit also opens the possibility of an immediate bottom line benefit. “The average parking stall costs $25,000 to $30,000,” notes Robert Grimm, principal of Portrait Homes. “That could mean the difference between a studio or being able to afford a onebedroom home.”
Will New Transit Push Up House Prices? Over the long term, most industry watchers agree housing prices will continue to rise throughout Metro Vancouver due to its geographical constraints. And there are precedents to suggest they rise more rapidly when improved transit arrives. According to an Urban Analytics report commissioned by the Onni Group just
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after the Canada Line was built, land values along the Cambie Corridor rose 19 per cent in the months leading up to completion. They climbed an additional 14 per cent in the first six months of operation – a 33 per cent increase in one year.
transit nodes like Marine Gateway, Metrotown or Brentwood allows more efficient land use – which means developers have the cost savings associated with economy of scale,” he says.
The Evergreen Effect
What about Immigrant and Offshore Buyers?
Further east, where the Evergreen Line is under construction, the Tri-Cities have shown steady but more moderate price increases, according to the Real Estate Board of Greater Vancouver. The rapid spike in prices many predicted would accompany the new SkyTrain line has failed to materialize. What has occurred is a construction boom that’s highlighting neighbourhoods like Burquitlam as a more desirable place to live. Howard Steiss, principal at Texor Homes, notes many buyers are attracted to the greater bang for their buck that’s possible when transit makes commuting easier. Although the new tax would add to the cost of construction materials, David Podmore, chairman and CEO of Concert Properties, points out this may not be as severe as it appears. “The higher density we see around
Overseas and immigrant buyers consider proximity to transit a must have. “Offshore markets are light years ahead of us in the way they look at transit,” says Bill Szeto, president of Otezs Project Marketing. “In any major Asian or European city, transit is the dominant way people move around.” However, Rolf Neufeld, managing director of credit structuring with Bank of Montreal, believes the vote will have little long-term impact. “Vancouver land values are going to keep rising regardless,” he says. “And there will be some transit improvements even if the vote is no.” So while Metro Vancouver awaits the results of the transit vote, Szeto makes a final comment. “Even 15 or 20 years ago, people asked why anyone would want to live next to the SkyTrain… now they ask why wouldn’t you want to live there?”
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