Developers Are REFUSING Density in Surrey — And It Says Everything About the Market

The Province of British Columbia has made one thing very clear:Cities must densify.Through legislation like Bill 44, municipalities across the province are being pushed to allow multi-unit housing on what were once single-family lots—what’s now being called the “missing middle.”But here’s the real question nobody seems to be asking:What happens when nobody wants to build it… and nobody wants to buy it?Because that’s exactly what’s starting to play out in Surrey.

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A Developer Just Pushed Back — Hard

A major developer, Qualico (known locally as Foxridge), is moving forward with a subdivision in South Surrey—but with a twist.Instead of maximizing density, they’re doing the opposite.They are proposing to register a restrictive covenant on title that would limit each lot to:

• One single-family home
• One legal basement suite

👉 No duplexes
👉 No triplexes
👉 No fourplexesEven though provincial legislation would allow it.

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What Is a Restrictive Covenant (And Why It Matters)

A restrictive covenant is a legal rule attached to the land—not just the current owner.It stays on title indefinitely unless all property owners agree to remove it in the future.That means:This subdivision could permanently block densification—even if policy allows it.And that’s a big deal.

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Why Would a Developer Limit Their Own Profit?

At first glance, this makes no sense.More density = more units = more profit… right?Not in this case.Here’s what’s actually happening:👉 Developers build what sells
👉 Buyers are still choosing single-family living
👉 Neighbours are strongly opposing densitySo instead of forcing a product the market doesn’t want, this developer is making a calculated decision:Build what people will actually buy.

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The Reality: The Market Is Rejecting the “Missing Middle”

On paper, multiplex housing sounds like a solution:

• More affordability
• More supply
• More efficient land use

But in practice?It’s running into three major problems:

1. Buyers Don’t Want It (Yet)

Most buyers still prefer:

• Detached homes
• Townhomes with structure and parking
• Functional layouts

A fourplex on a tiny lot with limited parking?That’s a tough sell.

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2. Neighbourhood Pushback Is Real

Even with provincial mandates, local resistance hasn’t gone away.Existing homeowners:

• Don’t want increased density
• Don’t want parking issues
• Don’t want neighbourhood character changed

And that pressure still matters at the municipal level.

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3. Developers Take the Risk

At the end of the day:Developers carry the financial risk.If a product doesn’t sell, they don’t get bailed out—they take the loss.So if multiplex units are sitting or underperforming, developers will pivot quickly.

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Important Distinction: This Isn’t the City’s Decision

There’s a key misunderstanding here.The City of Surrey is not forcing this restriction.In fact:

• The province is pushing for more density
• The city would likely allow it

👉 This is entirely the developer’s choiceAnd that’s what makes this story so telling.

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This Isn’t New — It’s Just Happening Again

Restrictive covenants and community control over development aren’t new concepts.Historically, across Surrey and nearby areas like North Delta:

• Neighbours have worked together to limit home sizes
• Zoning has been adjusted to prevent overbuilding
• Communities have shaped development outcomes

This is just a modern version of the same idea—except now it’s happening in response to forced densification policies.

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The Big Question: Can You Force a Market to Change?

This situation highlights a major disconnect:👉 Governments can mandate zoning
👉 Cities can approve densityBut…They cannot force people to buy something they don’t want.And they can’t force developers to build products that don’t sell.

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What This Means for the Future of Housing

If this trend continues, a few things are likely:

• Multiplex adoption will be slower than expected
• Developers will prioritize low-risk, proven products
• Single-family demand will remain stronger than policymakers expect
• Some densification policies may need to be revisited

There’s also the possibility the province steps in to override these types of restrictions—but that comes with its own challenges.

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My Take

This isn’t about greed.This is about market reality.The “missing middle” might work in theory—but right now, in markets like Surrey, it’s clear:Buyers aren’t fully on board.And until they are, developers will continue to do what they’ve always done:👉 Build what sells
👉 Avoid what doesn’tEven if that means going directly against government policy.

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Final Thought

Single-family homes—with the option of a basement suite—are still the most desirable product for many buyers.That hasn’t changed.And until it does, efforts to rapidly densify neighbourhoods may continue to face resistance—not just from homeowners, but from the very developers expected to build them.

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Written by:
Steve Karrasch PREC
Karrasch Real Properties Team
Macdonald Realty