Those who argue that condo developers have gamed the entire housing market to their advantage should study the Maddox. Like many other developments which slowly reveal their folly, its advertising grew increasingly desperate with the framing of each additional floor. Newspaper spreads of gradually expanding size would warn of final opportunities to buy, culminating in a massive banner down the side of the structure in finishing. An easy joke in Vancouver, not unique to the Maddox, is to flip the third letter of this banner to “T”. The fashionable cafe promised in mock-ups has instead opened as a sales office.
In retrospect, it is not difficult to understand why the Maddox has not been the luxury investment bonanza that developers perhaps imagined it to be. It is situated on a lot adjacent to the Howe Street onramp of the Granville Bridge, precisely where eager homeward-bound commuters press their gas pedal to the floor. Running along the other edge of the block, Drake Street feeds reckless turns onto said Howe Street onramp, generating squeals of agitated tires. The immediate neighbourhood lacks typical Yaletown sheen, boxed on one side by a tired Quality Inn and the other by the Granville strip. It is no surprise that investors took second and third looks, while upwardly mobile home owners found it priced beyond their reach.
The real question, then, is whether Maddox list prices have come down from simple action of supply and demand. In such cases, developers sometimes buy remaining units to simulate a sell-out, to rent and unload on the market later. But the Maddox is not alone. Surely the skyrocketing price of single-family detached homes in Vancouver is due to fixed or falling supply and insatiable demand. It is worth noting that condo prices in Vancouver are instead flat, or even falling, while supply is unusually high:
Since the economic slump of 2009, condo starts have been on the rise, and above the 20-year average ratio of starts-to-population growth. Developments were going up almost as if it were 2007 again.
“This left the inventory of completed but unsold apartment condominiums very high by the past decade’s standards,” says the Genworth/Conference Board of Canada report, which provided those numbers.
With the slump in prices, sales have recently picked up. The benchmark price of an apartment decreased 1.1 per cent from August, 2012, to $366,100 in August this year, according to the Real Estate Board of Greater Vancouver. Sales last month went up 40 per cent over August, 2012.
In light of these numbers, I find it disingenuous to argue that supply has no effect on housing affordability in the open market. While subsidized housing is a part of the solution — which the City and Province are variously culpable for ignoring — private development should also be understood as important. I fear this message is becoming lost in the current debate.