The city of Vancouver says demand for laneway houses continues to grow, with 348 permits to build the rental dwellings issued in 2013.
Vancouver requires that laneway houses be rentals, and cannot be run by the Strata Corporation, in a bid to create more affordable rental options in the city.
More than 1,000 laneway house permits have been issued in Vancouver since they became legal in 2009. That year there were just 18 permits issued.
But by 2012 a record 350 permits had been granted, up from 192 in 2010 and 229 in 2011.
Michael Lyons, vice-president of marketing for Smallworks, a builder of laneway homes in Vancouver, says at least half his customers are building the small houses at the back of their lots for the next generation.
He says it's tough for young people in Vancouver because many of them can't afford to buy something in the neighbourhood where they grew up.
The cost to build a laneway home, according to Lyons, is usually between $250,000 and $270,000. That price includes preconstruction costs of $11,500, excavation and site work of $30,000 to $35,000 and another $175,000-$200,000 for the construction.
Laneway housing, also known as granny flats, coach or carriage houses and "fonzi suites," are usually one-and-a-half or two stories high, and typically built above or next to detached garages in narrow lots or laneways.The small homes were initially devised as mortgage helpers, or affordable suites for aging parents, young families and students, as part of Vancouver's eco-density plan.
Laneway homes are only one way the city is adding density. Last month, the city approved a new 31-unit non-market rental housing project above a new fire hall in southeast Vancouver. In November, council approved the development of low-income housing above a new library in Strathcona. Both projects are in partnership with the YWCA.
Laneway housing is just one part of a series of consumer-driven housing trends that is changing the provincial residential construction sector, according to the Canadian Home Builders' Association of B.C. That includes strong demand for smaller, cheaper units, dense housing along transit lines, and residential space in shopping complexes.