November 27, 2017

Will the new Housing Vancouver Strategy Improve Affordability?

This month, the City of Vancouver released its proposed Housing Vancouver Strategy (2018 – 2027), made in response to the previous strategy’s inability to address the worsening housing crisis. A public hearing is scheduled for this Wednesday, November 29th.
The plan includes for the construction of 72,000 homes − an increase of 25% to Vancouver’s current housing stock over 10 years; by comparison the 2012 plan aimed for an increase of 14% to the stock over 10 years. Further, the new plan has increased its target for social and supportive housing units by 50% over the old plan.
To put both sets of numbers in perspective, consider that in 2012 the total rental stock in Metro Vancouver was 37% of all housing stock, and the new plan will decrease that number to roughly 35% by 2027*, assuming the other cities in the metro area maintain their average contributions over the last 5 years.
At face value, the quantity of new units appears to be ambitious, but will this reduce (or reverse?) the effects of the housing crisis – and if so, for how long? The homeless rate has grown by 47% since 2011, only one year before the inception of the previous plan. Will doubling the number of new affordable units be enough?2017 11 27 Will the Housing Vancouver Strategy (2018 - 2027) Improve Affordability.jpg“More supply” is the tired trope of the development industry; are housing units the metric of success we should be measuring? “The source of the housing crisis is embedded in the commodification of property, and therefore some more direct targets might include:

  • Decreasing the number of for-profit housing units as a percentage of the overall stock (in effect, saturating the market with affordable housing units thus reducing speculation)
  • Specific methods to capture the monetary windfall gained from upzoning a property. The strategy currently outlines the use of community amenity contributions to this effect, a process which can increase the value of adjacent properties and inadvertently cause gentrification (City of Vancouver staff will bring back a policy report in early 2018 to advise on different approaches to stabilize land values)

There are three ways to sign up to speak at council on Wednesday, Nov. 29: by filling out this form, by emailing, OR by calling 604-829-4323. You will receive a confirmation from the city with more information. Sign up before Tuesday, Nov 28 @ 9:30 a.m. to get on the list.
To the readers of Price Tags, I am looking for the following data to create a more robust analysis:

    • A tally of property owned by not-for-profit interests versus private interests by year
    • A tally of rental stock versus total housing stock by year

(*) These numbers were calculated based on the Metro Vancouver Housing Data Book.

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  1. ” ▪ Decreasing the number of for-profit housing units as a percentage of the overall stock (in effect, saturating the market with affordable housing units thus reducing speculation)”
    This defines ‘affordable’ as social subsidized housing? Is this growth in taxpayer subsidized housing the only solution to what is considered as high priced?

  2. It is a mystery how someone can look at housing numbers and not differentiate between attached multi-family and detached RS1, and therein housing and land. It is no wonder that the singular conclusion is being drawn that foreign money and speculation together is the quod primaria of unaffordability when the blinders are securely affixed to block out everything else.
    Where is the analysis on the natural increase in land value from urban growth? The effect of low interest rates on demand? The freezing in place of a geographically constrained land supply in a high-demand economy over a long time? The attractiveness of the Metro on demand? The willingness of people to move here even with high housing prices? Not one city in the Metro saw negative immigration even at the height of the affordability crisis in mid-2016.
    Foreigners and speculation are not the only influences on housing prices. If all foreign money and speculative activity were eliminated overnight, will not a long-term manufactured shortage in land supply and population growth still continue to influence the true value of the land component? It doesn’t make sense to claim otherwise, or worse, to dismiss these unacknowledged economic forces.
    If foreign wealth and real estate speculation were the only causes of housing price escalation then why haven’t the SDHs in Metro Vancouver and the GTA gone down in price even when sales have slowed drastically since the foreign buyer’s taxes were implemented in BC and Ontario? Could it be because they are attached to a significant piece of land that has real value?
    Why not address the real problem – using less land for more housing and creating far more diversity in housing types? There is also a shortage of rental stock, and that is reflected in the ultra-low vacancy rate and continually rising rents. Will the Supply Mythers deny that is the result of the typical supply-demand mechanisms too?
    When you look at the very informative graphics below by Mountain Math together, they tell a story that is markedly different than the Supply Myth Orators. The cementing-in-place of the massive swath of green for decades in this illustration
    leads to the obvious conclusion that limiting the supply (of land) leads to prices in excess of $3,000+++ per square metre, as illustrated in this graphic
    With millions and millions of square metres of land, it’s hard to pin all of the recent price escalations on just the Mainland Chinese and local speculators, though obviously some have tried. Something much broader and older is afoot. For the most viable and basic culprit, look to land planning influenced by demand.
    The intrusion of foreign wealth and hyperventilating speculation are the very recent icing decoration on a land restraint cake, while in-migration continues apace. All are working together to create an inhospitable environment for average and lower income earners. The city has finally opened up the big green swath of land to (hopefully careful) upzoning concurrent with policies from other jurisdictions to dampen the influence of wealth from outside our borders, and speculation. Let’s hope the other 20 Metro cities learn from this courageous Vancouver policy, and are willing to work with the fed’s new program to build affordable housing.
    There is no reason why RS1 and RS2 cannot be upzoned to du-tri-quad-plexes, rowhouses with zero lot line sideyard setbacks and low rises (especially within 400m of arterials and transit) while also protecting character and heritage homes, Elizabeth Murphy’s egregious comments notwithstanding. I am uncertain whether the new city strategy will allow flexibility (many planners are control freaks) to allow additional new units to compensate the developer / builder for appropriate renovations to heritage structures, for moving them around on an assembly of lots, and so forth. I would also promote the recycling of materials into the new construction though dismantling existing structures that have little character or are quite rundown. This also should be part of a flexible planning process that allows additional units to recoup costs.
    There is the very real possibility that the Supply Myth Whisperers will take all the credit if the elements constraining the land supply were addressed at the same time as additional foreign wealth and speculation dampers are emplaced, and while interest rates took off. However, if any of them expect full lots to sell for a quarter million again, then are clearly smoking something behind the heritage woodshed.

  3. For some reason certain posters seem to have a burning need to dismiss the impact of foreign ownership on home prices. Every city in Canada and the USA has experienced low interest rates over the last few years yet Vancouver always totters at the top of the unaffordability heap for Canada, North America and even the English -speaking world. It is not just land that makes that so. It is no secrets the largest price run-ups have been in Australia, New Zealand and Canada. Countries that have placed little restriction on foreign buyers (until recently) and are seen as safe places to park money. As we have seen with news stories about River Rock Casino, BC and Canada have laughably lax rules when it comes to money laundering. We’ve even been called out for it.
    Add more supply? Sure, like the Mirabel in the West End which is replacing affordable rental buildings with units breathlessly marketed as starting at $1.2 million? Don’t make me laugh.

    1. Dismissed? No. Included with several other elements cavalierly dismissed by Supply Mythspeakers? Yes.
      Dismissing geographical and political land supply constraints (probably as severe or worse than San Francisco) should be accompanied by an estimate of the price level decrease if foreign money and speculation were eliminated as though they were alone in the wilderness.
      Good luck with that.

    2. Mirabel in the West End isn’t replacing affordable rental buildings with units breathlessly marketed as starting at $1.2 million. It’s replacing a 1979 four storey rental building, and a 1950s 3-storey strata apartment building that was rented, but never secured. Together there were 68 units.
      What’s replacing those two buildings? 153 market condo units in 18 and 20 storeys – some of which might be rented out in future, but are far less likely to be left empty without raising some serious additional; revenue for the City through the empty property tax.
      Those will be over a podium of 68 social housing units. They will be owned by the City of Vancouver, in a separate ‘air right parcel’ and managed by a non-market housing agency with all the rents likely to be below market, some of them deeply discounted and others closer to, but under market. They will also be long-term secured, unlike the market units they’re replacing.
      So you can laugh.

      1. Great info. It seems the response to the chronic affordability deficit has finally begun, and at three levels. We await the NDP government’s promised policies.

        1. Don’t be ridiculous. And the “so called” 80% refers to residential land, not the entire land base. It is a fact of geography with restrictive zoning retained over a lifetime.

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