November 16, 2018

The End of the Housing Crisis As We Knew It

Okay, the headline is clickbait.  The housing crisis is not over.  But its causes are being addressed in a substantive way.

Here’s the latest evidence on the supply side:

This is the first set of housing projects selected through the B.C. government’s $1.9-billion Building B.C.: Community Housing Fund established to construct more than 14,000 affordable rental homes for independent families and seniors.

It’s part of a larger $7 billion commitment by the B.C. government to build 114,000 affordable homes over 10 years.

Were you aware of these announcements in the last few weeks?  Did you think it was ‘a landmark investment’?  That this was an ‘historic’ commitment?  That’s how it was described in the press release.

By the standards of the last two decades, it is – a return to senior-government commitment to fund thousands of new affordable housing units.

Along with the federal government’s National Housing Strategy, Vancouver’s Housing Vancouver Strategy and the new mayor’s commitment of “25,000 new non-profit affordable rental homes over the next ten years”, there will be a continual flow of targeted units, something not seen in quantity since before the mid-1990s.

Will it be enough?  It’s never enough.  Will it be acknowledged without qualification by most housing advocates?  Nope.  (Maybe: ‘it’s a good first step.’)  Will it give hope to those who believe the housing market is now out of reach for lower income people?  Unlikely.  Cynicism is more credible than optimism.  (Which is a pretty cynical thing to say.  See how easy that is.)

It’s not that such announcements like the one above are never reported.  The Sun gave it 14 short paragraphs on a back page, and I assume it was picked up for a day in other media. But then that’s it.  There’s no repetition to the point where it shapes the larger narrative; there’s no perspective on the scale of the intervention – partly because that’s not clearly described but mostly because it’s not believed that anything will.

Advocates for more affordable housing are reluctant, even resistant, to acknowledging progress.  They fear the public and their leaders will then believe the problem has been addressed and withdraw support.  They fear criticism from more radical advocates who will belittle their support as a sell-out.  They see raising the bar as their continuing task, not settling for achievements earned.

The failure to acknowledge unqualified progress, much less success when it actually occurs, can be a dangerous symptom of a society losing confidence in itself.  Cynicism undermines collective institutions, which convinces people that government is so broken and corrupt that it justifies the demolition strategies of opposition-only politics, tribalism and authoritarianism.  (That would have been an overwrought thing to say a few years ago.  Today, not so much.)

See for yourself, PT readers.  You’re informed, and probably respected for your perspective.  Try dropping ‘landmark’ or ‘historic’ or ‘progress’ or ‘success’ in a conversation about the housing crisis. See how tough that is to do, and how sceptical if not contemptuous the response will be.

If acknowledging change on the supply side doesn’t work, then there’s always comment to be made on the demand side. Like this prediction from Michael Alexander three weeks ago:

No-brainer prediction: the price of a Vancouver house or condo will come down, starting tomorrow.

Yesterday, the Bank of Canada increased a key interest rate by 1/4 percent, to a 10-year high. It did this to keep inflation under control. Today, the Big Four banks, RBC, BMO, CIBC and TD Canada Trust, raised their prime rates by the same amount. Effective tomorrow, when you get a bank loan which is linked to the prime rate, that loan will cost you more each month.

As a result, fewer people will be able to qualify for home loans. With fewer buyers in the market, the prices being asked for homes or condos will drop.

What’s the lesson for people looking to buy a home? When interest rates are low, as they have been for a decade, home prices go up. When interest rates go up, home prices come down. So, when you buy a home, you pay the homeowner more and the bank less, or you pay the bank more and the homeowner less.

All the headlines about high home prices in Vancouver never accounted for the fact that borrowed money has been cheap.

By the way, home prices are essentially equally high in every major West Coast city. Let’s stop thinking that Vancouver is some economic island.



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  1. I understood that BC used to build rental-only apartments for decades and many were designed to be affordable. How did those programs compare with this new announcement. I feel like “landmark” or “historic” can only be justified in context of our past efforts and none of the annoucements, not even here, ever discussed that.

    It would also be useful to know how these numbers compare with the total number of units built each year, with expected immigration, and with our current stock. Is it a large percentage or a drop in the bucket? So many news papers just report the absolute numbers knowing that basically everyone reading will just see it as BIG NUMBER. Except everything governments do is necessarily dealing with big numbers, so what is the context in terms of the overall budget?

    I’m definitely paying attention to the interest rates. That will immediately shrink the funds available for purchase which should drive down prices. And then what happens to FOMO? If people start to treat houses as a place to live rather than as an investment or a lottery ticket, then what happens to prices? Definite possibilities.

  2. Talk is cheap. I’ll start to be impressed when units are actually built en masse – and over the objections of NIMBY “neighbourhood preservationists”.

  3. I don’t see current and initiatives bearing fruit in the next little while coming anywhere close to the efforts of the 1970s & 80s. It’s encouraging to see condo asking prices, certainly in outlying areas, decreasing by about 3%, but we all know this won’t cut it in terms of the overall housing affordability problem. The supply initiatives finally confirmed in the last days of the previous Vancouver Council are also real progress, but we see in Colleen Hardwick’s and the NPA initiatives that progress may indeed be elusive. We’ve still a long way to go. Wow, cynicism is easy!

  4. Until the vacancy rate is 3% there will be upward pressure on rental rates that many find unacceptable, there will be renovictions and schemes that bump renters out, If the rental market cannot take some slack then the other housing markets are probably maxed as well. How long does it take to get into non-profit, coop or other housing? Generally it takes longer than to get into rental, so until rental housing has a bit of room. the market is pinched for locals. The measure is not the number of new units built, but whether there is a little wiggle room, 3% vacancy please.

    1. Non profit Co- OP manufactured home parks on crown land would make a huge difference at little cost to the government—- Modular housing does not have to be ugly !!——– Most new modular house owners would be vacating rental properties SUPPLY— Landlords would whine that they can’t find tenants for their overpriced rental units

  5. Non profit Co- OP manufactured home parks on crown land would make a huge difference at little cost to the government—- Modular housing does not have to be ugly !!——– Most new modular house owners would be vacating rental properties SUPPLY— Landlords would whine that they can’t find tenants for their overpriced rental units

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