Urban Housing Prices Reveal Urban Shift

 

A new survey in the United States revealed that only 12% of future home buyers wanted to purchase a home in the suburban-fringe. A decade ago, it is quite possible that the number would have been reversed with over 80% wanting a large suburban home.  Certainly, house prices were more expensive on a per square foot basis than in mature urban markets.

We have more than survey evidence of what people say.  You can see it in the housing prices–what they are doing (where they are putting their money).

In the US, housing prices in higher density, older urban areas have begun to rise. From the New York Times

Today, the most expensive housing is in the high-density, pedestrian-friendly neighborhoods of the center city and inner suburbs. Some of the most expensive neighborhoods in their metropolitan areas are Capitol Hill in Seattle; Virginia Highland in Atlanta; German Village in Columbus, Ohio, and Logan Circle in Washington. Considered slums as recently as 30 years ago, they have been transformed

Meanwhile in some suburban fringe locations it is hard to give away a McMansion–or they are being used as low-cost (!) student housing.

In Canada, you could see the shift in urban vs suburban housing prices beginning in about 2003.  Urban prices began to rise more quickly than suburban ones.  What began as a trickle of people choosing a more urban lifestyle has become a flood, with various consequences and responses from residents, city halls and builders.

In Toronto there has been a massive push to add housing supply downtown–in the form of condominiums (there are more under construction in Toronto than anywhere else in the world).  This actually improved affordability for switching from rental to ownership in Toronto between 2006 and 2010.

In Vancouver city itself (the urban core)  the most significant evidence comes in the pricing of ground oriented housing.  In neighbourhoods with good transit, walkable and close to downtown prices have tripled (that is risen 200%) for detached homes in about 7 years.  Officially, the stats for East Vancouver say prices are up 41% in 5 years and on the west side 71% in 5 years.  Meanwhile in the suburbs, prices are up only 14% in 5 years.

In Calgary, a city that once sold itself on offering less-expensive, suburban-style housing than Vancouver or Toronto now promotes its urban-ness.  Condos are sprouting up on the fringe of downtown, particularly in the Beltline and areas immediately south.  And money is being pumped into museums and the arts (it is cowboy country no more).

The challenge going forward for all cities in North America will likely be to ensure enough amenities (parks and recreation) and services (including transit) are available to a much larger population than a given geography has ever held before.

3 comments

  1. DB says:

    Wendy,

    Great post, though Calgary’s had museums and arts (a thriving theatre scene in particular) for some time now.

    You note that the challenge going forward is to ensure enough amenities. I’d observe that one of the challenges, particularly for parks and recreation, is that provincial enabling legislation (BC LGA, AB MGA) typically limits the ability of municipalities to charge for anything but roads and pipes. Land for new parks, yes (which makes sense on the fringe) but not improvements or rehabilitation to suit the more intensive use of public space by a denser community. Of course this wasn’t an issue in 1974 when the MLAs for Whitecourt, Lloydminster, or Cariboo North drafted the LGA/MGA, but this is a major constraint today. Vancouver bluffs its way through with ‘voluntary’ amenity contributions in exchange for lifting ridiculously low-intensity zoning (this is what Michael Geller’s always on about, with merit), but most municipalities don’t want to risk this approach.

    So great article; wanted to point out the challenges municipalities face in funding those amenities that are key in ensuring that communities become more vibrant and liveable, and not just denser.

  2. JoVE says:

    I wonder if there is also a demographic element to this. Are those ppl who bought in the suburbs 20 years ago now moving into condos in the city once their children have left home? Also do the lower prices in the suburbs end up making them the default option for first time buyers, even those who would prefer to live in urban areas? I have no idea really but both are situations I’ve come across anecdotally and seem worth a bit of investigation.

  3. Wendy Waters says:

    Hi DB,

    Thanks for the comment and I agree with you about the challenges involved in finding funds. I know Calgary is pushing for a 1% HST (adding a 1% tax to the GST) just in Calgary to pay for these. I think it is an idea worth looking into–except I worry that it might push retail into the hinterlands as people travel to shop to avoid paying 1% (nevermind the cost of gasoline!)

    Vancouver`s method has some merit in that those moving into the area (home buyers) and / or those profiting end up contributing to the costs of amenities. But it also serves to push up already high housing costs.

    JoVE – yes, you’re right. One of the US-based articles I started with described boomers and their kids (millennials) as all wanting the same thing, urban living. I’ll probably write on this later but a question I have is how many boomers will actually make that move (as opposed to say that they will). Yes, we’ll notice it because there are so many boomers, but on a percentage basis it might be a less noteworthy shift. In my east Vancouver neighbourhood, from chatting with realtors, occasionally it is suburban empty nesters buying, but maybe 1/10 or 1/15 buyers; the rest tend to be young families.