With a possible correction coming to the condo market, Coquitlam council is again looking to senior levels of government to help bring affordable housing to the city.
Since launching an affordable housing strategy in 2015, Coquitlam has added 937 rental housing units. However, shifts in the real estate market may force the city to refine that strategy, according to Mayor Richard Stewart, who discussed the issue at a February council meeting.
“How do we get the province and the feds to up the ante a little bit on the rental housing side?” Stewart asked.
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The city has a total of 5,200 purpose-built rental housing units in the city and another 13,472 units at various stages in Coquitlam’s development pipeline. Many of those “urgently needed” units exist because the city offered incentives to developers who were keen to build condos.
However, with a potential “cooling off” of the condo market, the city may be tasked with finding another way to persuade the development industry to build rentals, Stewart said.
“The senior levels of government have to step up,” he said.
Speaking to the Financial Post earlier this year, Vancouver real estate agent Steve Saretsky previously described the condo market as expecting lower prices for 2023.
The city’s strategy has largely revolved around allowing higher density developments – particularly around SkyTrain – to encourage a wider variety of housing with a special focus on purpose-built rental.
While the city has boosted its rental stock. However, that hasn’t always resulted in affordable housing, noted Coun. Trish Mandewo.
Mandewo noted one developing renting out three-bedroom units for $3,800 and one-bedroom units for $2,450.
“Those are the rates that we are looking at,” Mandewo said.
“I don’t see a lot of people being able to afford [those rents] . . . and they’ll never be able to own, either, paying $3,800 a month.”
Money in the bank, no money from Ottawa
Coquitlam has 57 projects at various stages of development, which, if approved, would bring another 2,128 non-market and below-market rentals to the city.
However, those projects, which also include 11,344 market rentals, are generally tethered to condo developments, noted Coun. Dennis Marsden.
“So much of our purpose-built rental is tied to multi-phase condo development. And when the market shifts – oh wait, it just did – that puts that portion of it in jeopardy,” he said.
The solution, Marsden said, is cash from Ottawa.
“We need permanent dollars, not just CMHC financing,” he said.
The situation is likely to get more acute as Canada is projected to welcome approximately 1.45 million immigrants over the next three years, noted Coun. Teri Towner.
Vancouver – despite rents that were about $740 above the national average last year – remains one of the two most popular destinations for newcomers to Canada, Towner added.
A healthy vacancy rate is generally considered to be about three percent. With a 0.5 percent vacancy rate, Coquitlam is in dire need of affordable housing, said Coun. Matt Djonlic.
“We need more of those six-storey, wood-frame, 100 percent purpose-built rentals,” Djonlic said. “We need them desperately.”
Coquitlam currently has $21.5 million in the city’s affordable housing reserve fund, with $7 million earmarked for grants to non-profit housing providers.
In 2022, the city put $3.3-million toward 164 rental units at 3100 Ozada Avenue.
The city is maxed out, according to Coun. Brent Asmundson.
“Who’s going to pay?” Asmundson asked. “It really shouldn’t be us because I think we’re doing as much as we can.”
Coquitlam added 460 rentals in 2022, including 185 non-market and below-market rentals.
The city currently has 1,395 rentals under construction, including 365 non-market units and 92 below-market units.
Across the country, the number of rental units that were affordable for low-income earners were either in single digits or “too low to report,” according to CMHC’s annual rental market report.
“This is especially true in Ontario and British Columbia,” the report added.
Monthly rents for strata units are generally between 30 and 40 percent higher than for purpose-built
Rents for newly-vacant units, regardless of the age of the building, were 43 percent higher than for occupied units.