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Laneway houses increase density and rental supply, although Vancouver homeowners who live near one could see their property values decrease, particularly in affluent areas.

A new study by the University of British Columbia’s Sauder School of Business found that homes on Vancouver’s westside within 100 metres of a laneway house saw sale prices drop an average of 2.8 per cent. Meanwhile, properties immediately next door to a new home with a laneway house sold for 3.8 per cent less than those with only a garage.

And the richer the neighbourhood the bigger the dip, with wealthier areas seeing a 4.7 per cent drop in value. On the flip side, proximity to laneway houses had little to no impact on property values in East Vancouver.

The study pointed to privacy issues as the biggest reason for the declining property values, since most laneway houses look over adjacent backyards. Other factors include congested street parking due to increased density and buyers’ reluctance to live near renters.

“We tend to understand our backyards as being private spaces because our neighbours can’t look into them very effectively,” said UBC associate professor and study co-author Tsur Somerville. “So, when the second floor of the neighbour’s laneway is looking straight into the back of my house and into my backyard, that’s where we find the negative effects. That’s what we’re really picking up.”

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In 2009 the City of Vancouver rezoned 95 per cent of single-family lots to allow for the construction of laneway houses. The UBC study examined sales records between 2009 and 2017, a period that saw a total of 2,913 laneway houses constructed.

According to the study, more than two-thirds of the laneway houses created during that span saw single-family houses demolished to build new structures. Nearly one-third of new single-family properties built after 2009 had a laneway house, while only 1.5 per cent of those built before 2020 added a laneway.

“The very low take-up rates among existing homes indicates that the number of owners willing to pay the incremental cost of construction for existing homes, which may be as high as $500,000, is quite small,” reads the study.

And while laneway units were initially introduced to increase affordable housing options and provide spaces for family members to age in place, the vast majority of them generate income for homeowners without any ties to familial renters.

“Builders claim that property owners who add a laneway to an existing unit do so with the intention to provide the unit to a family member or to create the option for themselves to downsize without leaving a neighbourhood as they age,” the study said. “However, in a city survey, 85 per cent of responding laneway occupants said they rent from a landlord as opposed to friends or family.”

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