Why housing in Vancouver is about 2X as expensive as Edmonton
Some rough calculations
From a Reddit thread, talking about Edmonton vs. Vancouver. In Edmonton, it's possible to buy land and deliver housing in the same calendar year (!!). The following discussion assumes that enough height and density is allowed for land to be about 30% of the total cost.
The city permitting in BC is also ridiculously expensive, like almost 20% on the bill, on top of the higher profits developers HAVE TO take in BC because of getting the run-around and having to sit on loans for years at a time potentially.
All of this results in only luxury housing developers really building in BC, because that's the only market in which people can actually afford to buy the finished product.
If it's a 1 year project instead of 3, their margin can be 1/3rd and they’re still coming out at the same level, that's not even considering the lack of risk here with projects going through, so realistically you could even push it to 1/4 of the margin. Then you also stack the interest difference, and that knocks off another solid 10% off the total price, and cut land into 1/3rd of the price that's generally 30% of the total land + build costs.
Ultimately the actual final project costs are like 75-80% of what they are in Vancouver. Then price of permitting + margins. In Vancouver they'll take 27-30% margin on top of everything, here they can do 10-15%, and city costs are 5% versus 15-20%.
.775 - final project costs in Edmonton are 75-80% of Vancouver
1.125 / 1.285 - 10-15% margin from doing a 1-year project, vs. 27-30% margin to do a 3-year project
1.05 / 1.175 - city permitting costs of 5% vs. 15-20%
.775 * (1.125 / 1.285) * (1.05 / 1.175) is about 0.6
This developer would make more money in Edmonton than in Vancouver, while taking less risk, and offering housing for almost bang on 60% of what it is in Vancouver. And ALMOST ALL of it is actually due to policy decisions on part of province + municipality.
A followup comment:
You can get a new build 2 bedroom wood condo here for around 400k, and similar size will be 1 million in the Vancouver area.
It cannot be overstated how much the ability to get things done quickly matters in terms of keeping things affordable and having the market actually be able to respond to demand.
Of course these are extremely rough calculations. But I think it’s a reasonable target for Vancouver to be aiming at.