I want to get something off my chest: attempts to keep the price of urban land down are not necessarily good. Many people in local politics place a high priority on keeping land prices down. For example, the new Vancouver councillor who opposed a church building apartments on their own land:

Land values displace people. This will increase land values.

…and then used that same reason to vote against apartments at a major train station:

I’m worried that filtering will take too long, that land value increases will lead to displacement…

Vancouver’s planning staff share these concerns and try to keep land values down when changing zoning. For example, the recent multiplex policy was designed to avoid raising land values:

Proposed density bonus contribution requirements & rates (are) set to… limit any potential land value escalation

That makes sense; if land value is lower then homes are more affordable, right?

WRONG (if you keep land values down by stopping development)

Land Prices Are Not Housing Prices

The main way people save on housing costs in cities is by using less land. For example, imagine the following uses on a 4000 sqft lot:

It is generally much cheaper to buy 800 square feet of land than it is to buy 4000. But where this gets interesting is that those denser uses may cause higher land prices. Let’s walk through how:

1. Say that 4000 sqft lot is zoned to only allow a single-family home. Richie McRicherson is willing to pay $1M so he can build a house on that land. The land sells for 1 MILLION DOLLARS.
2. Now, suppose the land is zoned to allow a duplex. 2 households who each have $600k pool their money together and outbid Richie. The land sells for 1.2 MILLION DOLLARS.
3. Finally, suppose the land is zoned to allow a 5-unit condo building. 5 households who each have $400k pool their money and outbid both Richie and the duplex buyers. The land sells for 2 MILLION DOLLARS.

It is really important to note that even though allowing more homes drove land prices up, households are paying less for land.

OK that’s the theory; what about in practice?

It can be hard to observe this in real life, because dense city centres tend to be pretty expensive. That’s a complicated topic that’s beyond the scope of this blog post, but there are places where it’s easy to see this specific phenomenon in Vancouver with a map of land values. For example:

North West Point Grey

This is one of the most expensive neighbourhoods in Vancouver, by design. Apartments are forbidden everywhere, only houses are allowed. And city planning rules require each house to use up much more land west of Blanca Street:

This is exactly what we were talking about. When the city lets people use less land per home, land prices go up and home prices go down. To be clear, $3M still isn’t cheap; we should go a lot further.

Shaughnessy

It’s a similar story in Shaughnessy, historically Vancouver’s most exclusive neighbourhood:

South of 16th we zone for mansions on very large lots (making the land relatively cheap), and north of 16th we allow apartments and condo buildings (making the land relatively expensive). If you know Vancouver at all, you know that those apartments are a lot cheaper than the $10M+ Shaughnessy mansions!

Takeaway

It’s important to distinguish between the cost of land per square foot and the cost of land per home. Limiting density does work to drive the former down, but at a terrible cost: it stops people of modest means from pooling their resources to outbid someone much richer.

Here’s a pandemic project that I think turned out pretty well:

In 1954, Vancouver’s planning department put together a remarkable hand-coloured map showing the age of every building in the city. Thankfully for us, the Vancouver Archives made scans of the map available in impressively high resolution:

If you try to do any kind of analysis of Vancouver’s urban planning, you quickly run into a problem:

Vancouver has a lot of zoning districts. 895 of them, to be exact¹. That works out to roughly 1 zoning district for every 740 residents; I hope you weren’t planning on reading every one.

For a long time, my mental model of urban planning was basically “there are written rules about what you can build, and to build something you just follow the rules.” Unfortunately, this is not an accurate way to think about Vancouver.

I get alerts for new rezoning+development applications (using a small tool I wrote), and this little snippet shows up over and over:

…the application is “conditional” so it may be permitted. However, it requires the decision of the Director of Planning.

You can see this on virtually any type of housing proposed in Vancouver, here’s a selection:

I’ve been tracking rezoning+development applications for about a year and a half, and my data set has 599 items with the words “Director of Planning”.

OK, but… why? Doesn’t the Director of Planning have better things to do than approve individual houses and small apartment buildings?

I’ll defer that question to a senior planner at the City of Vancouver:

A few years ago, this short piece by former Vancouver councillor Gordon Price made a big impression on me.

The Canadian Institute of Planners had decided to celebrate Vancouver’s West End neighbourhood by giving it their 2015 “Great Neighbourhood” award. Price noted that this is ironic given that during its most recent development boom, the modern West End was widely regarded as a terrible planning decision:

…this neighbourhood of old converted single-family homes was largely bulldozed to create the Great Neighbourhood of today. The West End, during the boom era of highrise construction in the 1960s, was considered a concrete jungle – what most Vancouverites didn’t want anywhere near them: everyone’s best bad example of urban redevelopment.

Impossible to do that today. Imagine taking a square mile anywhere south of 16th Avenue and rezoning it for the kind of development that characterizes the West End.

This really surprised me as someone who moved to Vancouver in the 2000s. Nearly everyone loves the West End now! It’s got a lot of relatively affordable rental apartments, it’s close to all kinds of natural amenities, and it’s a short walk from downtown.

Fast-forward to late 2017, and I’m digging through old newspapers at the VPL for Abundant Housing Vancouver. When I get to the 1960s, I find out that Price is right: many people really hated the modern West End when it was being built. Here are just some of the articles I found.