Category: Housing

My response to Susan Dextras

Today the New West Record printed a response to the Yes In New West story that ran a couple of weeks ago. It was written by Susan Dextras, a New Westminster resident, who has been outspoken about the proposal in the draft Official Community Plan to change the land use designation (note: not zoning) of the block that she lives on from single family houses to rowhouses and townhouses.

Her letter was fairly NIMBY and since she addressed my family directly, I’m responding to her points.

My husband and I are long time residents of New Westminster since 1984. When we first arrived in the Lower Mainland, there was no affordable housing in Metro Vancouver, so we looked in New Westminster and found the property where we have resided and raised our family for the last 32 years. We plan to continue living in our home for many years to come and we have no intention of selling to a developer or anyone else in the next 25 years.

In 1984 the average price for a single family home in Greater Vancouver was $116,444, and the average total family income was $30,070, which is a ratio of just under 4. In 2014 the average price for a single family home in Metro Vancouver was about $1,400,000 and the median family income was $76,040, which is a ratio of over 18. Since 2014 the housing prices have grown even more, yet incomes have not kept up.

There was affordable housing available in Metro Vancouver. House prices were not huge multipliers of income like they are today.

I would note that Mrs. Dextras’ husband holds a BEng in Civil Engineering, which he obtained in 1976. Civil Engineering is a fairly advanced field of work and pays well, so the odds are quite good that the Dextras family had an above average income in 1984. For Mrs. Dextras to say that “there was no affordable housing” is a stretch.

I would also note that the Dextrases (is that how you pluralize it?) managed to have enough money to tear down the 1903 house they purchased and build a new one in 1990. People who complain about housing not being affordable don’t generally build their own house six years into a mortgage.

Oh, and she says that she has no intention of selling to a developer. Great! Then don’t! Nobody’s forcing you to. Just like how you shouldn’t be forcing your views on your neighbours, over half of which didn’t sign your petition, by the way.

So my advice to Mr. and Mrs. Cavanagh and young couples like them would be to search for affordable housing in the outlying municipalities of the Lower Mainland where land is cheaper and more available, much like we did when we first arrived here. And yes, there will be a commute to and from work but it is what most people have to deal with to be able to afford housing of any kind in our expensive city. Such is life.

Basically what Mrs. Dextras is saying here is “we don’t want anybody young or poor to move into our city”. It reeks of classism. She also seems to be in favour of people not spending time with their families. Mrs. Dextras, I like my family. I like spending time with them. For you to say “just suck it up an commute” is offensive. You might not like spending time with your family, but I like mine and I would rather spend my time with them instead of commuting.

Mrs. Dextras also seems to be proposing that our traffic get worse. Instead of being able to live close to where you work, you should have to live out Langley, Abbotsford, Mission, or Chilliwack and drive through New Westminster to get to your job, right? One of the best solutions for traffic is reducing the need to drive to and from work, and Mrs. Dextras seems to think that maybe more traffic on our streets is a good thing. More pollution is a good thing. Greater dependence on oil is a good thing. Right, Mrs. Dextras?

When we became aware in September of this year of the City’s Draft Future Land Use Map which was sent by Canada Post to the households in our neighborhood, we were astounded to see that the City Planners had arbitrarily colored our 5th – 6th Street Corridor (from 10th Av. To 6th Ave.) “orange” to designate that our streets had been changed from RS1- Single Family Detached zoning to Residential Townhouse zoning – without our consent.

I’ve been told that you’ve been told numerous times that you’re wrong about this. Well, here’s one more time:

YOU ARE WRONG.

The zoning isn’t changing. After the OCP is implemented your property will still be zoned RS-1. The land use designation may change to townhouses, but that is not rezoning! What that means is that if someone wants to rezone their property, the densest it could go is to townhouses. They wouldn’t be able to rezone it to a condo tower (at least, not without a huge fight).

Let me give you an example of the difference between land use and zoning. Queen’s Park is a lovely park in the middle of the city. It has an arena, a baseball diamond, some tennis courts, a nice rose garden, a really good playground, a petting zoo, and wonderful trails. It’s a park. It’s also zoned RS-1. Now do you see the difference between land use and zoning?

If Mayor Cote and the City Councillors take the time to walk down 5th Street, they will see a lovely eclectic collection of old and new homes, all well maintained, some with manicured gardens where neighbors meet for special events and family gatherings.

If Mayor Cote and the City Councillors take the time to walk down my street, they will see a lovely eclectic collection of old and new homes, townhouses and low-rise apartment buildings, all well maintained, some with manicured gardens. We had a street party right in front of my house this year, and another one right around the corner. There are Christmas lights everywhere, and people are always out walking on the sidewalks. Kids play in their front yards, whether they be in front of single family homes or apartment buildings. It’s a vibrant and diverse community, and it should be held up as a model community for the rest of New Westminster.

This is NOT a neighborhood which should be rezoned by the City and then offered to a developer who would then systematically over the next 20 years, demolish each house and begin construction on 450 townhouse units in our 15 acre Corridor.

That’s not how rezoning works, and that’s not how this process works. Again, just to make this clear, the OCP process is not rezoning. Nobody is offering developers anything. There are no bulldozers coming for you. Stop with the paranoia.

What the OCP process means that should one of your neighbours decide to sell their house, someone can buy it. And then maybe their neighbour sells their house, and that same someone buys that one too. Now they own two neighbouring properties. At that point, the landowner can apply for a rezoning. Only after that gets approved would there be any hint of demolition.

In fact, this is exactly the case of the block of houses up for sale along Eighth Avenue at Cumberland Street. One man bought one of those houses decades ago. Then the neighbouring house came up for sale, and he bought that. Let one of his kids live in it. He did that for four or five of the houses there, and members of his family were living in each house. And now the families have grown up, started moving away, and the gentleman has decided to try to sell all of the properties at once so that the adjoining lots can be rezoned to townhouses, making more affordable housing for young families to move into. His view is that young families should be able to enjoy New Westminster and afford to live here, and he’s trying to help that by trying to increase the number of family-friendly townhouses in New Westminster.

It’s a shame that you can’t see that, Mrs. Dextras. It’s a shame that you got lucky on the land lottery and are now so selfish that you can’t bear to see a few younger families move into your neighbourhood.

And all of this done to meet the City of New Westminster’s OCP agenda, which ultimately was initiated by Mayor Cote and council … to satisfy Metro Vancouver’s regional growth strategy and its need for more densification. However, Metro Vancouver’s strategy is “only guidelines and not the rule of law,” as Chief Justice Sharma of the Supreme Court of B.C. has outlined in her decision of the (Metro Vancouver vs. the City of Langley) court case in 2014.

Here’s a tip for readers at home: if someone who isn’t a lawyer starts talking about court decisions, they’ve usually misinterpreted that decision. In this case, she not only gets the defendant wrong (it was actually the Township of Langley, not the City of Langley) but the entire jist of the case. Metro Vancouver was trying to get the Township of Langley to not develop a “University District” because it didn’t fit into Metro Vancouver’s regional growth strategy. The Township of Langley argued that they were operating under the old plan. And yes, the judge did say that the regional growth strategy is “guidelines expressing policy” and that Metro Vancouver “does not have superiority over land use management within the boundaries of a municipality.” But Metro Vancouver isn’t telling New Westminster how to manage its land use within New Westminster. The whole point of the OCP is that New Westminster is telling New Westminster how to manage its land use within New Westminster. Is New Westminster supposed to take New Westminster to court to try to get New Westminster to not manage its land use?

(Astute readers will note that I’m someone who isn’t a lawyer and I’m talking about a court decision, but my information comes from this news story and you can go read it and determine for yourself if my synopsis makes sense instead of Mrs. Dextras’ throwaway line with no backstory.)

Therefore, the city is not legally bound to follow Metro’s strategy and should not be using it as an excuse to rezone, devalue and eventually dismantle our existing private property neighbourhoods in the name of creating more affordable housing in the future for someone else’s benefit.

New Westminster is not rezoning your property. Pay attention.

But I guess we just have different views about the future of our city. I see a city that embraces newcomers of all kinds. I see a city that’s welcoming to young people, to immigrants, to people who aren’t as well off as others. I see a dynamic and evolving city. And I think Mrs. Dextras wants to wrap the city in Saran Wrap and keep it the way it is forever, to the detriment of future generations.

And that’s a shame.

My ‘Yes In New West’ address to New Westminster Council

On 7 November 2016 a group of New Westminster residents called ‘Yes In New West‘ spoke before City Council to ask that they add more ‘missing middle’ housing — duplexes, triplexes, quadplexes, townhouses, and rowhouses — in New Westminster as part of its Official Community Plan. Here’s what I had to say:

My name is Brad Cavanagh. I have been a resident of New Westminster for nearly seven years. I am a member of Yes in New West, and I am here to speak to you regarding housing affordability and how the draft land use designation map can help future generations of New Westminster residents afford to live in our city.

New Westminster, like Metro Vancouver, has a housing affordability problem. The benchmark price for a single family house in New West is over a million dollars. To qualify for a mortgage on a million dollar house a family needs an income of at least $170,000, and that’s only if the family has saved up $200,000 for a down payment.

When I moved to New Westminster I was in my early thirties. My wife and I both held well-paying jobs, but with childcare costs we had no extra money to put aside for a down payment. We rented an apartment, then moved into a housing co-op, but home ownership was a distant dream. Condos offer very little outdoor space, and buying a single family house in New Westminster, the city we chose to move to and have grown to love, was completely impossible for us.

Luckily for us we found a townhouse for sale. It ticked all of the boxes we had on our list so we made an offer. After a stressful weekend of waiting, our offer was accepted. We scraped together a 5% down payment, signed a lot of paperwork, and are now homeowners.

Six months later the neighbouring unit sold for 20% more than we paid.

This morning there were thirteen townhouses for sale in New Westminster. Five are under construction, all in Queensborough, and three are in adult-only buildings, leaving only five available for families with children to purchase and move into today. Only one of those is listed for less than what we paid ten months ago.

For families like mine who would like a little more outdoor space than a condo can offer, the current situation is bleak: try and bid on the rare townhouse that comes up for sale and compete against a dozen other offers, or move out of New Westminster.

In 25 years this situation will be even worse if we choose to keep large areas of New Westminster designated to protect the single family house. There needs to be more of the affordable missing middle in New Westminster for families like mine to move into.

Luckily, the draft land use designation map has identified some areas of New Westminster for potential townhouse development. Some of these areas are on busy arterial streets and others are on quieter boulevards but still very close to commercial districts and transit, and all of these should be kept. City staff has identified and recommended that council designate further areas for townhouses. I strongly urge council to accept city staff’s recommendations regarding townhouses to make the missing middle more prevalent and affordable in New Westminster.

I love New Westminster. It’s a great place to raise a family. I am glad that we chose to move here, and I urge council to make the decision to increase the housing options across all neighbourhoods in New Westminster. Keep in mind that these decisions won’t just impact you or me, but also our children and grandchildren. Let’s give them more housing options so they too can grow up and raise their families in New Westminster.

I thank you for your time.

Well done, Moody Park Residents’ Association, well done.

In 1890 David McLaughlin purchased some land in New Westminster near the newly-created Moody Park. It’s rumoured that he, being a ship’s carpenter and handy with building things out of wood, built the house that still stands on that property today at 1031 Sixth Avenue. The house is typical of those of the time, in a simplified Queen Anne style with ‘Victorian’ features such as an asymmetrical floorplan, bay windows with decorative cast iron cresting, and mansard roofs.

It’s also remained relatively untouched over its 125-year lifetime, with the only major renovation being the addition of a workshop by McLaughlin himself in 1915.

David McLaughlin House at 1031 Sixth Avenue, New Westminster
David McLaughlin House at 1031 Sixth Avenue, New Westminster

So when the current owner wanted to expand living space for his family, he applied for a demolition permit to build a larger house on the site. As the house is on the City of New Westminster’s Heritage Register the permit was immediately put on hold pending the issuance of a building permit that authorizes the construction of a building to replace the building that is being demolished (City of New Westminster Heritage Procedures Bylaw No. 7606, 2013). This brought the pending demolition to the city’s attention, and council directed city staff to determine how the heritage house could be saved.

The owner of the property then agreed to enter a Heritage Revitalization Agreement (HRA), and had plans developed that would move the heritage house to the rear of the lot and raise it by 11 inches to allow for a new foundation and crawl space, and adding a new house at the front of the lot. The new house would be approximately 2160 square feet (footprint of 887 square feet), with the heritage house being approximately 1500 square feet (footprint of 800 square feet). These plans are found in the March 14, 2016 Council meeting minutes.

These plans didn’t meet all of the criteria for a standard HRA, as the heritage house would become “subordinate” to the new house. Also, it’s roughly twice the size of what a standard laneway house would be and it wouldn’t visually address the lane behind the property. Despite these shortcomings, city staff recommended that the HRA continue through the process as it would protect the historically significant house.

The application was then reviewed by the Moody Park Residents’ Association at a meeting on March 31, 2016. At this meeting, and I quote from the New Westminster Council meeting agenda from April 18, 2016:

Concerns were expressed about the size (height and massing) of the historic house, its setback from the lane, the over view into the neighbours’ rear yards from the historic house, and allowing two houses on one property with its accompanying higher density. Many were concerned that this proposal would set a precedent for future laneway houses. Some expressed concern about the lack of off-street parking and others about the low visibility of the heritage house from the street if it were relocated to the rear of the lot.

The Moody Park Residents’ Association then voted against the application.

Because of this lack of support from the neighbourhood, the owner is withdrawing the HRA and is renewing his request for a demolition permit, which New Westminster Council granted.

New Westminster residents have been crying out about heritage houses being torn town in our city for years now. People always complain when an old house is torn down to have a larger house be built in its place. So when it comes time to preserve a historically significant house, one that was built before 1900, you would think that people would jump at the chance. Unfortunately the NIMBYs in Moody Park don’t seem to care about preserving the history in our city. They would rather complain that the house already on the property is too high and would overlook their back yards more than it already does, even though the house would be positioned such that walls with fewer windows would have faced the closest properties. They would rather complain about a lack of off-street parking because they might lose one or two on-street parking spots. They would rather complain about low visibility of the historic house, even though the alternative is demolishing the historic house.

I highly suspect that the major driver behind this is the ongoing Official Community Plan consultations. A few months ago the president of the MPRA got a bunch of Moody Park residents’ hackles up when he sent out an email and handed out pamphlets strongly implying that the city was planning to force laneway houses (or worse — QUADPLEXES AND TOWNHOUSES!) down their throats after the OCP had finished. This resulted in a huge amount of pushback from Moody Park residents against the entire densification story that’s hitting Metro Vancouver lately, and this is seen here as well. I quote again: “Many were concerned that this proposal would set a precedent for future laneway houses.” I would love to check the MPRA’s minutes for this meeting but unfortunately they’re stuck in 1991 and don’t have a website.

So instead of preserving a house that was built 125 years ago by moving it and adding a single house to the neighbourhood, Moody Park Residents’ Association members would rather see that historical house be demolished.

van-der-beek-slow-clap

Buy vs. Rent: New Westminster Townhouse Edition

“Should I buy or should I rent” articles are all the rage these days. The New York Times has their rent vs. buy calculator, a professor at McMaster University assigns a “rent vs buy” task to his students, and Mr. Money Moustache had a good rant that focused on Toronto and Ottawa.

That last article kicked off a Twitter discussion between me and a couple of other New Westies. Twitter, being a 140-character medium, is ill-suited for prolonged discussion, so I decided to write a blog post about renting vs buying in New Westminster.

And here it is!

The Setup and Assumptions

I’m going to be starting off with a townhouse, since that’s what I live in and am most familiar with. Specifically, a two-bedroom one-bathroom townhouse, preferably two levels, and roughly 900 square feet. It should be close to transit and shopping. Both the renter and owner will have to purchase insurance to cover contents loss and other liabilities. Any utilities will not be included, because I am assuming that what the renter pays for, say, internet access, the owner will pay the same rate.

If the renter ends up spending less money per month than the owner, any extra money will go into a savings fund that earns interest. Same deal if the owner ends up spending less money than the renter.

Both renter and owner will be staying in their unit for 25 years. When renters move it’s likely they’ll end up paying more rent than what the standard increase would be, but when owners move they have to pay all kinds of fees and taxes. I don’t want to get into all of that mess, so I’m keeping it simple.

Thus the numbers I will be looking at are, for the renter:

  • rent
  • renters insurance
  • return on savings investment

And for the owner:

  • mortgage
  • strata owner insurance
  • property tax
  • strata fees
  • property value
  • return on savings investment

I am making the following assumptions on how these numbers change over time:

  • rent increases at 3.5% per year. British Columbia has a maximum allowable rent increase, and this is the average increase over the past 11 years.
  • insurance premiums for both the renter and the owner increase at 2.5% per year. Over the past 20 years the inflation rate in Canada has been about 2%, but I bumped this up a tad.
  • the mortgage is fixed at 5% over 25 years. While this might seem high in today’s world of 1.49% 18-month mortgages, the historical mortgage rate is actually rather high (as high as 21% in 1981!).
  • the down payment on the mortgage will be 5%.
  • property tax stays fixed. I based this assumption on one thing: Twitter. I asked and had a few answers saying that it’s either gone up a very small amount or gone down a bit, so I averaged this out to “no raise in property tax”. I don’t really understand mil rates enough to argue why this is the case, though.
  • strata fees stay fixed. I have no idea how accurate this is, but I know that stratas can and do raise and lower the fees, and can occasionally levy special assessments to repair common property. I’m assuming that the strata knows what they’re doing and is putting money into a Contingency Reserve to fund repairs so levies are not necessary.
  • savings return is 6.5%. I’m pulling this from the Canadian Couch Potato Tangerine Investment Funds Model Portfolio, specifically the Equity Growth fund, which has a 6.5% 20-year annualized return. No taxes will be charged on any interest gains, as this fund is available as a Tax Free Investment Fund.
  • annual property value increases by 1% per year. This is probably going to be my most controversial assumption, but most of the uproar about housing prices skyrocketing in Metro Vancouver have been focused on single-family detached homes. They’ve been going up like crazy. Condos and townhouses? Not so much. In fact, condo values were flat for a few years before 2014, when they were up about two per cent in 2015. And if you load up that page, scroll down to the chart near the bottom, and load up New Westminster, you’ll see that a representative three-bedroom townhouse went down in value by 4.8% between 2014 and 2015.

What does the renter pay?

Now, I live in a housing co-op, and they typically have lower housing charges than market rental rate. However, my housing co-op entered a financial agreement with the [Canada Mortgage and Housing Corporation])http://www.cmhc-schl.gc.ca/en/co/buho/) such that our housing charges are pegged to the average market rate for similar units in the area. That means I can use my numbers as representative for the rental market rate for our area. For a 2br 1ba townhouse in 2015, that’s $1210 per month.

To get an insurance value, I went to TD Insurance and got a quote for fairly basic insurance. I set the building type as “Townhouse/Row house”, the exterior as “Aluminum/vinyl/stucco/metal”, and set my contents replacement value at $75,000. Electric baseboard heating, with no fireplace or stove. One smoke detector and no alarm system. With all of this the quote for renters insurance came out to $853 per year. That’s actually nearly twice what I’m actually paying, but we’ll go with it to make comparisons with the owner fair.

Over 25 years, the renter will have paid a total of $630,583.45.

What does the owner pay?

I managed to find a fairly good match for a townhouse for sale. If you don’t want to load that up, it’s a 900 square foot 2-bedroom 1-bathroom townhouse in downtown New West for $322,000. The monthly strata fees are $255 per month. At a 5% downpayment and a 5% 25-year mortgage, that gives a monthly mortgage payment of $1779 (go do the calculation yourself with a $305,900 mortgage).

I got an insurance quote in exactly the same way as for the renter, with the same numbers (plugging in 1999 for the building build year), and I got an annual cost of $954 per year, $100 more than for a renter. That strikes me as really odd. I should mention that even though the property I’m looking at has a gas fireplace, I did not include that in the insurance quote (doing so didn’t change the quote, though).

The property tax on this townhouse is about $1800 – in 2014 it was $1810.62 and in 2015 it was $1778.54. I got these numbers from the City of New Westminster Property Inquiry site.

Over 25 years, the owner will have paid $715,760.

What does the renter gain?

With the above numbers, the renter pays less per month than the owner does until 2033. As the renter deposits this money monthly and gets the above rate of return, at the end of the 25 years the renter will have $440,359.87

What does the owner gain?

The townhouse continues to gain value, and at the end of the 25 years the townhouse will be worth $412,943.10.

From 2033 to 2040 the owner pays less per month than the renter, and deposited monthly, this money grows to a total of $39,561.99.

Who wins?

With the above assumption, the renter wins.

The renter has paid out $630,583.45 while having final assets worth $440,359.87. This leads them to a net loss of $190,223.58.

The owner has paid out $715,760 while having final assets worth $452,505.09. This leads them to a net loss of $263,254.91.

But do they really?

Well, yes and no. After 25 years the renter will need to continue to pay rent. After 25 years the owner stops paying a mortgage, freeing up nearly $1800 per month. Of course, the renter is sitting on $440k, so they could just write a cheque for that amount and buy an equivalent unit to what the owner has, which would leave the ex-renter with $27,416, which is pretty close to the cash that the owner has ($39,561).

The renter does have an advantage with liquid assets. A sudden job loss or emergency expense is easier to handle if you have some cash put aside, which is what the renter would have. Tying up you wealth in illiquid housing makes it a little more difficult (although mortgage payment protection or job loss insurance is available for a pretty small fee).

And the owner has an advantage in that they can do whatever they want with the unit (to a limit, since it’s not a detached house). New flooring? Go for it. Bathroom remodel? Go for it. You can’t do that in most rentals.

The take-away is this: for a modest townhouse in New Westminster, it doesn’t really matter if you rent or buy. The renter ended up “losing” less money than the owner did, but they both ended up in the same place in the end.

I guess it depends on who you want to throw your money at: a landlord or a bank.

One more thing…

If you want to challenge my assumptions and use numbers of your own, I’ve made my rent vs buy spreadsheet public to view. Feel free to copy it to your own spreadsheet and fiddle with the numbers. Here are some tips:

  • the percentage increases for rent, insurance, house value, and investments are located in cells C30 through C33.
  • change the values in row 2 (where applicable) and the changes should propagate through the entire document.
  • the cells you want to pay the most attention to are K28 and N28. These are the amounts “lost” by the owner and by the renter, respectively.

If you find an error in there, please do let me know and I’ll fix it right away. There’s a hairy formula for calculating the investment amount (columns N and O) that I’m pretty sure I got right, but it could be wrong. The numbers end up looking right, though.