Is Building A Laneway House In Vancouver Worth It
Laneway houses have become increasingly popular in Vancouver, BC. These homes are usually 500 — 700 square feet and are located on pre-existing lots of main houses next to driving lanes, hence the name “laneway house”. Think of a laneway house as a super affordable Hollywood Hills beach house for the middle class.
In 2009 laneway houses were introduced into the Vancouver market. Former Mayor Sam Sullivan spearheaded laneway housing as part of the EcoDensity initiative to increase urban density in already established neighborhoods. BC Hydro, Simon Fraser University and the City of Vancouver supported the project.
Since 2009 there have been 972 permits issued with 500 laneway houses built and more to come.
Vancouver — The Most Expensive City in Canada
According to the Mercer 2014 Cost of Living Survey, Vancouver takes the top spot for the most expensive Canadian city. Although Canada has dropped to 21st place globally in terms of cost of living due to the canadian dollars fluctuation it is nevertheless a pricey place to live for locals who are not millionaires. The survey takes into account the basic necessities, this includes clothing, food, drinks, rental expense, transportation, utilities, personal care and household goods.
Being a Vancouver resident myself I know that an average night on the town with a friend can cost $100 and upward, I definitely empathize with the average resident in Van. The abbreviation for B.C. just doesn’t spell out British Columbia its definition has a broader definition for outside residents “bring cash”.
Vancouver Real Estate Market
The average price for a home in Greater Vancouver has soared to a staggering $1.36 million, an increase of $139,986 higher than the $1,221,037 figure in 2013.
To get a more accurate reading of the Vancouver real estate market we have to break down the figures into an index price. A price index is a weighted average of similar prices in the same class in a specific region during a certain time frame. Price index is a statistic usually employed in measuring the economy of a country.
The Real Estate Board of Greater Vancouver eliminated the most expensive properties in Vancouver i.e. West Vancouver and Shaughnessy to come up with a detached index price of $932,900 in February of 2014 an increase of 3.5 percent from the previous year.
Vancouver’s large asian population especially wealthy people from Hong Kong and mainland China have pushed up local real estate prices. This trend will surely continue, Metro Vancouver is a mecha that attracts well to do immigrants from China. Currently there is a backlog of 45,000 millionaires from China who have applied for immigrant status to Canada. By the looks of things prices will only continue to rise, hence the importance of looking into a laneway house to subsidize your mortgage if you own your own home.
The Benefits of a Laneway House
Prices will continue to rise in many Vancouver areas and suburbs, the real estate market gives no indication of slowing down anytime soon. For residents who own their own home and want to bring in a steady stream of income to pay off their mortgages need look no further than a laneway house.
For those homeowners who have an architectural flare the sky’s the limit when it comes to the look you desire, as long as the contractor you are working with adheres to the building codes dictated by the City of Vancouver you are good to go. Residents that are into the Green movement can construct their laneway houses of recycled and green material, making them eligible for a Green credit. There are several incentives for residents of Vancouver who are interested in Green construction. You may want to check out if you are eligible for the following:
Power Smart New Home Program, the Canadian Mortgage and Housing Corporation (CMHC): Energy Efficient Mortgage Loan Insurance Fund and the Saanich Green Building Rebate Program.
The financial advantage of a laneway house goes beyond renting it out to a tenant, having another residence on your property increases the resale value of your home putting more potential money in your pocket if you decide to sell one day.
New Westminster has caught on to the popularity of laneway houses, this phenomenon has already caught on in the City of Vancouver and North Vancouver. In my opinion I see laneway houses becoming a mainstay in the future Vancouver Real Estate market.
Additional Benefits of Laneway Homes
As a prospective buyer what have we established so far regarding the benefits of a laneway house?
- An secondary income stream to pay your mortgage
- Strata-free property you decide how much rent to charge
- Increase your Real Estate Value
- Convert your old garage into a laneway home
- Multiple people can live on the same property a benefit for extended families
- Eco-Friendly Green Credits
- Reduce urban sprawl
- Reduce your carbon footprint
- Inexpensive price compared to purchasing another condo or apartment
- The future will see more zoning by-laws passed through city hall for laneway homes
- Affordable option for young families
- Increases the livability of your neighborhood
As a Vancouver resident for some 7 years who has rented condos in Coal Harbour I would seriously consider purchasing a property that was zoned for laneway housing. Depending on the location where you live you can determine your financial future without the headache of purchasing a secondary property and paying additional land and property taxes on a second mortgage. The future trend is to maximize living space while living sustainably.
Urban densification is here to stay, Metro Vancouver’s population has continued to outpace new housing starts going back to 2011. Vancouver currently has a vacancy rate of 1.7 percent. Mr. Benjamin Tal an economist with CIBC wrote a report this year stating “an increased supply of rental units will flood the market and will lead to a wave of sales by disappointed investors with no bargaining power.” What does this mean for potential renters? The average renter will not be able to afford the high rental costs imposed upon them by owners who have to pay their mortgage. Renters are looking for smaller and more inexpensive residences and this is where laneway homes come into the picture, small domiciles that are cheaper to rent because they don’t cost the exorbitant real estate pricing of your average Vancouver Condo.
Inexpensive laneway homes equals more affordable rental units for the growing urban population, a win win for everyone.
Article by Robert Palmer