Maximizing Future Re-Sale Potential
Vancouver is in a state of change, with increased densification, the demand for affordable housing and the migration of people to the less expensive East side. Developers have known this for years, and tend to snap up large lots with great zoning potential in good neighbourhoods in order to build their next project. However, it’s something the average buyer should consider when buying a home in East Van, get a better understanding of zoning and lot value.
Given a good location, and good zoning, developers can spend some high dollars in order to secure the lot, and so you’ll see many new builds in East Vancouver are duplexes, triplexes and fourplexes, since it lowers the cost for potential buyers and allows the developer to make the most of their return on the property. Most people are buying their East Van home with the idea that it’ll be their family home for years, but there might be some potential investment opportunity down the road that needs to be considered before you buy.
Zoning in Vancouver
The zoning of your property in Vancouver determines many things, including the type of property you can build (single family vs. multi family unit), the interior square footage and ho high the building is allowed to be. There are many different zoning districts in Vancouver, which depend on location and the feel of the surrounding neighbourhood. You can imagine that homes near transit or closer to the city are often zoned for multi-family use, and developers might favour areas where there are already other multi-family homes. Depending on the zoning, the property might be zoned for outright use (as long as zoning regulations are met, you can use it how you’d like) or conditional use (there are many more conditions that need to be met in order to get approval for different land uses).
Take a look at the City of Vancouver’s Zoning and Development Bylaws Website.
One of the big factors affecting development potential is Floor Space Ratio (FSR). This ratio is calculated by taking the floor area of the existing building on the lot and diving it by the total area of the lot. Depending on the zoning of the property, FSR maximums can vary from 0.56 to 1.45. The higher the FSR, the bigger the building you’re allowed to build on the lot and the more interest you’ll have from future Buyers looking for redevelopment potential. There is a lot to know about FSR and other re-zoning regulations, but we’re pretty familiar with the idea, so let us know if you have any questions.
Home on large lots, with great zoning in good locations are often priced quite high, and this should help to explain why. Not only do other families want a home in a good location, but developers see a lot of value in the re-development potential. One thing to keep in mind when you’re potentially bidding on a property against developers – their bottom line is very important to them, and high bids may not be feasible financially for them, however, they can often offer subject free since they typically have financing secured and won’t be living in the property so they don’t need to do much due diligence when it comes to the existing building.
We’re starting to see a lot more land assemblies as well, especially in areas that have been rezoned with new community plans (Grandview and Marpole are good examples). Make sure you review the City of Vancouver website to determine what potential your property has if it’s sold with your neighbours, as that can affect your value and the likelihood of a developer knocking on your door.
The City of Vancouver is often changing the city’s bylaws to react to the changing needs of the city and it’s neighbourhoods (especially with new political parties being voted in). Keeping an eye on the future will help you make the most of your property’s potential value down the road.
Contact us for more details, and to find out more about zoning and lot value.
