Vancouver’s Real Estate Drop: A Chance to Reset Affordability Policies

Jan. 12, 2026

The crisis could serve as catalyst if we make these seven pivots.

The long-predicted correction in Vancouver’s real estate market has arrived.

BC Assessment figures released this month confirm that residential values across the Lower Mainland have softened, with median single-family detached home assessments in Vancouver dropping about five per cent year over year, 10 per cent since 2022 and over 20 per cent in inflation-adjusted terms since the peak.

This is no mere blip. After decades of speculation-driven escalation — fuelled by global capital, low interest rates and steeply rising land values enriching private owners — the market is undergoing a real reset. Detached homes and condos alike face high inventory, stagnant sales and downward pressure on prices.

Yet the crisis could also serve as catalyst. The pain of falling values exposes deep structural flaws: an economy overly dependent on real estate as wealth creation, families priced out of neighbourhoods, and urban forms that prioritize profit over people and planet.

Drawing from principles of land economics, sustainable design and equitable urbanism — ideas I’ve explored in works like Broken City and Seven Rules for Sustainable Communities — here are seven rules suggested to help us navigate this downturn and emerge with a more just, resilient and equitable Vancouver.

Rule 1: Diversify the economy.

Vancouver has treated real estate as its primary industry for too long, turning urban land into a speculative asset rather than a community resource. With values now correcting, the city must broaden its economic base.

Invest in sectors that generate genuine productivity rather than relying on endless condo towers and foreign capital inflows. Diversification reduces boom-bust vulnerability, as seen in resource-dependent economies.

Redirect public funds from developer incentives toward a largely local and B.C.-focused “foundational economy” that is less dependent on nation-hopping capital and committed to sustaining locally rooted businesses.

We should also invest in transit and transport infrastructure that supports diverse and geographically distributed employment rather than a few city centres that attract fickle global wealth. We might then build a locally resilient economy that supports families, not just speculators.

Rule 2: Support families with non-market housing.

Even as home prices fall some, the market alone cannot deliver affordability for working families. The gap remains too wide because young families have been systematically excluded from this city as land rents soared, leaving working households paying 50 per cent or more of income on shelter.

Use this correction to scale non-market solutions: expand community land trusts, deepen public housing commitments, and enforce inclusionary zoning with real teeth. Make affordable rents real, not a mirage, permanently capped at 30 per cent of median income in non-market units, drawing from proven models like Vienna’s or Montreal’s social housing networks. In the past, non-market projects like False Creek South, stimulated originally by low-interest loans backed by governments, paid off construction costs, land leases and operating costs over time through affordable rents. We can do the same today.

Fund these startup costs through a robust tax on land value increases consequent to upzoning (the community amenity contributions tax is our local version of that). After all, when land is upzoned for more density, public funds must be invested in transit, parks and schools to support that development. It’s only fair that the public, rather than lucky land speculators, reap significant returns on the rise in land value.

Currently our most critical civic infrastructure need is for affordable housing. This rule helps restore housing as a human right, preserving social diversity and preventing the hollowing out of neighbourhoods.

Rule 3: Shift from concrete highrises to perimeter blocks.

Vancouver’s love affair with glass-and-concrete towers has inflated construction costs, energy demands and land prices while delivering poor livability. These tower forms, often built for investor flips, are inefficient and environmentally costly.

Pivot instead to perimeter-block typology, a pattern of four-to-eight-storey mid-rise structures made of wood or mass timber and enclosing green courtyards, as perfected in European cities like Berlin or Barcelona. These are faster and cheaper to build, integrate far better into existing neighbourhoods than towers, do not require disruptive and speculative land assembly, foster community connection through shared space, and integrate ground-floor retail for walkable destinations.

This shift aligns density with affordability and climate goals, making “missing middle” housing affordable again.

Rule 4: Find cheaper and better alternatives to subways.

Mega-transit projects like subways consume billions of dollars. They primarily serve narrow corridors and largely benefit landowners along their routes. These landowners currently receive a large unearned windfall from upzoning.

In a post-correction era of constrained budgets, prioritize scalable, cost-effective transportation options. These include express buses on dedicated lanes, surface light rail using existing public rights-of-way, and comprehensive cycling/pedestrian networks.

Surface transport systems such as these can move masses of people at a fraction of the cost of subways.

Where express buses and surface light rail run, upzone those corridors for medium density and capture new land value through community amenity contribution land lift taxes, as was done in Yaletown. Planners there captured 80 per cent of city-created new land value and used that money to pay for parks, community centres, daycares and affordable housing.

The result: equitable mobility that serves the many, not just prestige lines that exacerbate inequality.

Rule 5: Use this retrenchment to purchase land at fire-sale prices.

As distress sales rise, land values fall more rapidly than home prices. Governments and non-profits can act decisively. Acquire depreciated parcels for a public land bank that is immune to land speculators. Repurpose foreclosed sites for affordable housing or public spaces. Impose vacancy taxes and higher rates on idle land to discourage hoarding. By buying at low prices now, we can hold land in perpetuity for public benefit, breaking the speculation cycle and ensuring future generations inherit opportunity, not scarcity.

Rule 6: Stop subsidies for land bankers.

Vancouver’s tax system has long rewarded speculators through loopholes, such as “farm status” exemptions applied to urban lots used as makeshift dog parks or temporary community gardens. These subsidies allow owners to hold prime land at minimal cost, waiting for speculative windfalls. Eliminate them now. Implement a full land value tax on these parcels (to pay for public goods instead of enriching idle holders). Ending these giveaways forces productive use — or sale — accelerating recovery while addressing equity.

Rule 7: Buy, buy, buy buildings for co-ops.

Finally, seize distressed assets for large-scale conversion to resident-owned co-operatives, following the success of Vienna, where over 50 per cent of residents live in secure, high-quality non-market housing.

Non-profit entities can purchase buildings at discounts during the downturn, with subsequent mandates for affordability linked to average regional incomes. This decentralizes ownership, empowers residents and stabilizes communities against future volatility. Fund via progressive taxes on luxury holdings (what’s been called a “mansion tax”). Scaling co-ops and other non-market forms democratizes housing and provides a housing option not subject to inflationary spirals of the housing market, turning crisis into collective strength and exerting downward pressure on market-rate housing.

This correction hurts, but it also clarifies. Housing must serve people, not just capital. By following these rules, Vancouver can emerge not just recovered, but transformed — more equitable, sustainable and truly livable. 

Patrick Condon University of British Columbia professor emeritus Patrick M. Condon is the author of Broken City and other books.

[Top photo: The pain of falling values exposes deep structural flaws and invites bold policies to create affordability. Photo via Shutterstock.]