The current council of Qualicum Beach have listed "housing" as a key focus area for their term in office. Their goal is to ensure residents have access to housing alternatives that meet a diversity of needs, lifestyles and income levels. The provincial Bill 44 housing initiative, requiring all municipalities to increase density of up to 4 homes per existing single family lot, aligns well with their goals.
Pressed by provincial government imposed timelines, the town passed the required amended zoning bylaw on June 24th 2024. One of the nuisances in the new zoning bylaw is that R1 homes are permitted to have 4 dwelling units per parcel but stratification is limited to 2 units per parcel. This effectively means that a developer would have to retain 3 of the units as rentals or he could sell the 4 units to maximum of two parties. Given the affordability challenges in our town, it is unlikely that new young buyers whom the town is trying to attract, would have the capital and borrowing power to get the mortgage required to purchase a home to live in plus an additional home to rent out.
By contrast R2 zoned properties are also permitted to have 4 dwelling units per parcel but stratification is not limited so the developer can build the 4 units and sell them as individual homes which younger buyers may actually have a chance at meeting the mortgage requirements.
R2 zoned lots are generally within the "Village Neighbourhood " boundaries of the official community plan (OCP) where the town has encouraged residential densification for many years. The Village Neighbourhood boundaries were last expanded in 2011 and now encompasses an area that is generally within a 5 minute walk to the perimeter of the commercial area.
The Town's Director of Planning ( Mr. L. Sales) confirmed the intention of limiting the number of strata units outside the Village Neighbourhood was to encourage homes with suites, duplexes and other combinations where the form and character is more similar to the suburban character typical of these neighbourhoods. For R1 properties, where this strata limitation is not suited, a zoning amendment application is always an option.
Limited opportunity for profit for the developer
Mr. Jeff Toews, a local mortgage professional recently appeared before council to highlight that current zoning rules will not appeal to developers, nor result in additional affordable market housing. Using an infill example of an older single family home being replaced into two single family homes, using a very conservative construction estimate of $300 per foot, he concluded that each home would have to sell at $1,245,000 for the developer to breakeven. Assuming my (and others) more realistic $400 per square foot construction costs, the home would have to sell at $1,445,000 for the developer to breakeven. Add a minimum builders profit of 15% and you now have a house that sells for $1,661,750.
From a buyers perspective that means 20% down payment ($332,335) and a mortgage of $1,329,415. That mortgage comes with a payment of $7168 plus property taxes . Far from affordable market housing and not a risk many developers would take for a potential 15% return.
Impact of development in the town
I think we can conclude that we have not yet solved the affordability issues in the town of Qualicum Beach. The recently released housing needs assessment, completed by Deliotte, forecasts a need of 726 new homes within the next 5 years. It further highlights that the majority (404 homes) will need 3 or 4 bedrooms. With the current strata limitations and high cost of construction, we are likely to see a continuation of minor infill housing in the R1 zones where one older home is replaced by two expensive new homes perhaps with a suite or a separate garden suite.
The typical buyers will be those with substantial equity from a previous home and /or significant stable incomes not necessarily generated from business located in QB, as there are very few employers in town. It is important to note that most homeowners do not wish to be landlords, so the addition of a suite may not be a significant enticement to buy if the suite adds significantly to the cost of the new home.
The Village Neighbourhood will likely continue to attract some investors to build small 4 plexes both for rental purposes and to be sold as strata's. This is really just a continuation of the current trends we are already seeing in our town. The key with these properties for the town, is to ensure that on site parking is provided for every suite so that our commercial core parking remains available for transient clientele of the businesses. Not withstanding that these homes are an easy walk into town, it is not realistic to expect that these residents will not own a car and that they wont have visitors with cars.
Challenges going forward
In 2023, the Town issued construction permits for a total of 101 new homes comprising of 18 single family homes, 15 suites, plus 68 apartments. 2024 Year to date (October 31st 2024), only 24 construction permits were issued comprising of 8 new single family homes, 11 garages/ garden suites and 1 five suite larger building. At this rate the town will not meet the projected housing needs identified in the report and may well find themselves on the provincial governments non performing list. At this point it is not clear whether there will be any negative consequences in terms of access to government grants but likely, sometime in the near future, municipalities with the highest growth rates will get preferential access to grant money for infrastructure projects.
I see opportunities in the upcoming OCP review to address further zoning improvements that include options for much smaller lot configurations to accommodate prefab homes and larger parcels to permit more townhouse style developments to attract a broader demographic. We also need to be receptive to larger scale (but not necessarily taller) projects in the town core such as the Commons Property to incorporate underground parking, underground amenity rooms and a variety of apartment sizes and styles.
Given our existing demographic, we should also be identifying specific sites for assisted living facilities. Making these facilities readily available to older residents allows them to stay in town, while selling their homes to a new generation of buyers.
Marie Noel
December 21 2024
We welcome your comments and feedback.
You can email us at qualicumbeachinsights@gmail.com
Resources/links
Jeff Toews presentation Dec 11 2024 Qualicum Beach - Document Center