Attack On Suites An Answer To Condo Crisis?

By Brad Richert. You wouldn’t know about it by reading local media, but Langley’s condo market has been suffering since 2008 with some homes experiencing colossal losses (upwards of -20%), especially if you bought brand new around that time. The benchmark apartment in May 2008 in Walnut Grove was selling for $273,500. That same benchmark now sells for $222,500 (which is an improvement since the lowpoint of $202,900 in January 2012). If you don’t believe me that we are in a condo crisis, ask someone trying to sell a condo.

So far Langley’s answer to this has been to develop more condos. Don’t believe me? Drive up 208th Street. As long as those DCC’s are flowing in, it doesn’t really seem to matter who loses substantial amounts of equity in a span of a few years. Most Council members don’t fit the demographic of those living in condos, nor in neighbourhoods affected by them (How many Councillors live in Willoughby or Walnut Grove?). I’ve written about this before, directly to Council and indirectly through local media. Council knows about it, but until we have a majority in those seats that are willing to do more than rubber stamp development permits, don’t expect too many proactive solutions.

Yet, there may be some recent action, however potentially faulted, unfair, and borderline malicious, that may inadvertently help solve the condo crisis, as well as temper Langley’s increasing single family home values. As you can tell by my title, I am referring to Langley’s recent attack on secondary suites. Starting with the growth of Willoughby, the Township officially recognized secondary suites about 10 years ago (I can’t find the original bylaw on the Township website anymore). But in May 2013 Council took a proactive measure to tax legally registered suites. At the time, there were under 1200 legal suites in the Township. While the Township called it a service fee, it wasn’t as if legal suites were going to be given all the added benefits that they tax seemed to be a service for (ie. no additional garbage can collection, no additional parking spaces). They also were not going to utilize a “usage” based system, such as that in Surrey, so you are penalized not on how much services you use, but solely based on the fact that you have a suite. So let’s call a spade a spade – it’s a tax.

Yet this left out the 10-12,000 illegal/unauthorized suites in the Township. You can’t tax something that “doesn’t exist” on record. So the only recourse for the Township to make things “fair” was to start finally enforcing a rule that has been on the books for years. So the Township promised/threatened that they would start fining households with illegal suites up to $500 per day until the suite was taken out. By December 2013, it was reported to Councillor Richter that only 50 files had been opened on suspected illegal suites. Yet in the last month or so, I’ve been hearing more and more panicked homeowners and even more panicked tenants as the Township seems to be following through on its threat.

Anecdotally, we’re hearing of an increase of people both losing their mortgage helper – previously a safe bet – and tenants losing a home and looking for something to buy. When I first heard about the new bylaw and the promise to enforce it, my first thought was that tenants would simply go find a legal suite to move into, but with such a limited supply, it appears that some are just getting off the rental/ownership fence altogether or choosing other options.

Which brings me to my thoughts on the silver lining in what I still believe to be poor treatment of households with secondary suites and an unintentional case of social engineering. There is no doubt that Langley is being pushed into urbanization – both by the lack of land available and by the amount of dollars to be made. But the saturation of the condo market is troublesome. Density may be the future but the people of Langley aren’t buying into it. Even though apartment condo starts outpace new single family housing starts 1.5:1, single family home sales outpace apartment condos 8:1. So we’re building less single family homes, but people are still buying them at an extremely active rate. So much so that we saw benchmark prices for single family homes jump 5.7% between March 2013 & March 2014 (that means a $500,000 home in 2013 is now worth $528,500).

But what happens now when many of those people who relied on mortgage helpers can no longer purchase those homes? And what happens when we have an influx of renters now thinking about purchasing a home? Well, the first question has an obvious answer. Instead of the $650,000 home with an unauthorized suite, the buyer might instead purchase a $500,000 home without a suite, or they find a way to pay the extra money for a property with a legal suite. Considering the amount of homes with unauthorized suites in the Township, could we see an overall slowdown of price increases? Considering that homes in Walnut Grove were selling at an extremely hot 40%+ sales to listing rate over this Spring in a neighbourhood with one of the worst ration of legal:illegal suites (in 2013, only 4 Walnut Grove homes with legal suites sold; 67 with illegal suites sold the same year), it’s a realistic thought. How many of these home buyers in Walnut Grove are made aware of this bylaw and the escalation of enforcement?

What about the renters? A full-scale bylaw assault won’t see a lot of conversions in most neighbourhoods (probably Willoughby excepted – most of the newer homes with unauthorized suites could easily be converted). Most homes in Aldergrove, Brookswood, Murrayville, Fort Langley and rural areas could never convert their unauthorized suites to legal suites without major or even impossible renovations. So escalation of bylaw enforcement will see a displacement of tenants. As previously mentioned, anecdotal evidence from many Realtors are already seeing these displaced tenants purchasing new homes.

[Homes Sold with Legal:Illegal Suites (2013)
Aldergrove: 3:34
Brookswood 2:36
Fort Langley 4:10
Murrayville 8:29
Walnut Grove 4:67
Willoughby 95:86
Rural 7:47]

My assumption is that most renters are likely going to be entry level buyers. If we had a significant amount of tenants purchasing attached homes, we could see a slowdown and even reversal of the equity loss in the condo market. Just 50 more sales this year over last year in the resale apartment condo market would represent a 23% increase in sales in the Township of Langley. With only 10-15% of condos selling each month, this could potentially turn supply and demand at least into a steady balanced market (maybe even back to the 2008 sellers market we experienced). Obviously many of these tenants may be lured into new developments, which would spur even more development in areas like Willoughby.

Yet many renters don’t have the option of home ownership (even if they wanted to) or getting into the lowest end entry level condos may not be inspiring. So what are there options? Now, they could risk heading to another illegal suite, but that might be covered by the definition of insanity. I would imagine some will attempt to look for a legal suite, but how many will actually go through the trouble of such due diligence with so few out there? Well, some will. I would imagine that this could also add to the increased value of properties with legal suites. But I can bet you, through anecdotal evidence, that Langley may lose these residents altogether to nearby Clayton/Cloverdale.

Surrey realized the failure of the strong-arm bylaw attack last decade and instead went down the road of allowing unauthorized suites to pay a tax. This is essentially turning a blind eye to the building code & comes with all sorts of its own problems (witness Clayton’s obvious problems). However, the tax man is happy and services are being paid for. The point is, tenants are “safe” from being evicted again and they just need to give up a decent parking spot.

I doubt those who have put the bylaws in place intentionally set out to solve a condo crisis or to manufacture a housing affordability shift. Perhaps the proactive enforcement of secondary suite infractions may not have the effect mentioned above, but any number of these outcomes is possible depending on how forceful the Township of Langley is with enforcement.

Brad Richert

Brad Richert

*Disclosure – the preceding represents the views of Brad Richert, REALTOR, and not of Macdonald Realty and/or any of its subsidiaries

Brad Richert can be found selling real estate throughout the Fraser Valley. His articles can be found on the Today Media Network. If you would like to contact Brad, you can reach him at


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