Affordable housing expected to be key campaign issue, says Price

Post by Gord Price in

28 comments

olympicvillage.jpg
Vancouver's Olympic Village held out hope for more affordable housing

What will be the toughest issue in the upcoming civic election? The issue that all candidates will pay lip service to, will criticize their opponents for not effectively addressing, but for which they will have little to contribute – save for bromides, vague promises and calls for senior government action?

Housing, of course. Affordable housing in particular.

Within the City of Vancouver’s jurisdiction and boundaries, there’s not much hope for those who are too poor to afford the median prices of market housing but too rich to be eligible for social housing. Yet to seriously add sufficient supply, politicians would have to do the unspeakable, which is to change the character of stable neighbourhoods to effectively lower the value of the existing housing stock.

Here’s the problem. Over the last half century, from Champlain Heights to Coal Harbour, we have built much of our new housing on “empty” land where we didn’t have to impose on existing communities – a minimum of 2,868 units per year, the average number the city has been accommodating for the last 35 years.

Needless to say, they have not been equitably distributed in the 22 neighbourhoods that make up Vancouver. Downtown, not including the West End, has taken the most: 676 units on average, rising to more than 1,300 a year in the last decade. (The lowest: Shaughnessy. Average number per year? Three.)

It was enough to keep the pressure off – and yet still resulted in some of the most expensive housing in Canada. But now we’re holding on to the little industrial land we have left – and the pressure is being felt in both the rising cost of the existing housing stock and the resistance in neighbourhoods to accommodating even the traditional increases.

Take the West End.

Almost every building higher than five storeys was built in just over a decade in the 1960s when the housing stock quintupled. All those highrises with thousands of one-bedroom apartments absorbed a generation of singles in the new service economy of post-war Vancouver. Rents were affordable.

But now, in the “traditional” West End, the number of new units per year has dropped to about 87 – half that if new towers on Burrard are omitted. The old West End has the growth rate of Dunbar – and it’s still considered too much by those opposing new development.

Rates-of-change bylaws have slowed growth to practically zero. Demolition and replacement of old low-rise apartments with higher densities, considered politically suicidal, is effectively discouraged. Both left- and right-wings of council are promising more “community consultation” – which is code for more process and less product. Yet the affordability crunch remains acute in one of the only cities in the western world seemingly immune from the Great Recession.

So what are the likely outcomes?

Densities will go up anywhere they can be squeezed in – along arterial roads like Cambie and Kingsway, in back lanes and in secondary suites. Helpful, but not likely in the numbers sufficient to ease housing costs.

Growth and affordability will go elsewhere – particularly along the transit corridors feeding Vancouver. Fortunately, Burnaby, Surrey and Richmond seem prepared to accommodate growth for Vancouver’s sake.

Finally: in-crowding. More people in the same floor space. That’s what happened in Vancouver from the 1930s to the 1950s, resulting in the decaying housing stock that was cleared out in places like the West End for a new generation of highrises. There are already some early signs of this.

It’s few people’s preferred solution, but it’s likely to happen by default – without any politician having to articulate the unspeakable.

- Post by Gord Price. Price is Director of the City Program at Simon Fraser University. He also writes, teaches and consults on urban development and planning. He served six terms as Councillor for the City of Vancouver, from 1986 to 2002, as well as on the board of the Greater Vancouver Regional District (now Metro) and TransLink, the regional transportation authority. Be sure to visit Price's blog PriceTags by clicking here.

28 Comments

Everybody wants free help. Housing prices are dictated by demand. If you want to pay less than market price, then I have to subsidize you. But already I pay enough in taxes. We just told the Province to add a few Billion to their already tough to handle deficit. And this morning, CBC Vancouver is pressing for many more millions from Victoria for the Evergreen Line and new psych services at VGH. These are the same CBC people who have never had to produce a dollar of corporate revenue in their working lives. It all comes from the taxpayer. Well it is going to have to stop or seriously slow down for a few years until provincial revenues recover

No Bobh, prices are shaped by the interaction of supply and demand. There are many zoning, regulation and tax policies that impact demand, and that is the point of Gordon Price's post. I would like to see a lot more infill housing and I would like it to be possible to sell and not just to rent this housing. Let's get rid of requirements that housing and offices provide parking. Let the market work to provide parking solutions. But housing has to go together with jobs. We should integrate housing, retail and light industry rather than trying to segregate them. That kind of urban fabric will be more resilient and sustainable and will better align with emerging models of local and on-demand production.

Is it such a problem and if it is can it really be solved without paying a price higher than the reward? As the previous article implies, the city of Vancouver is now simply an administrative zone of the super city of Metro Vancouver. When a city grows, as for good or bad Metro Vancouver is growing, it's not at all strange that this should mostly occur in the periphery rather than the core.

That isn't to say that I'm happy about many of the changes that have occurred here but maybe they are the result of dynamics that cannot be dealt with by anything except a building programme on a scale that would badly diminish the things that still make this a good place to live.

I happen to prefer living in dense and diverse environments. That said, I think one can make an argument that excessive density works against sustainability. A truly sustainable city would have net positive primary productivity and a lot of biodiversity. This requires a lot of vegetation. Covering up gardens with infill housing could be seen as working against this. But I think there are other ways to pump up productivity (green roofs, permeable pavement, vertical gardens) so I am still a proponent of density as, in addition to its other benefits, it fosters the living environment I prefer.

The idea that markets work independently of social and ecological context is false. Markets operate inside societies and ecologies and not external to them. And that has always been the case.

I do believe it is a problem and one that will undermine our long-term economic viability of not dealt with. Of course there are two ways to address affordability - reduce housing costs or increase incomes.

I have stopped trying to attract professional and design staff to Vancouver. We now hire the best people we can and pay them as much as we can no matter where they live. We do not pay more beacuase a person happens to live in an expensive area or vice versa. In the past, people tended to move to Vancouver when we offered them a job here because it is such a fantastic place to live (and having chosen to live in Vancouver twice, once in 1988 and once in 2009 I believe it is one of the best places to live). Now they look at housing costs and live elsewhere. These are very capable people in well paid jobs, the kinds of people we want (I think) to attract to Vancouver.

Vancouver is also pricing itself outof the market for people doing cutting edge creative work. Artists, musicians, writers, people at the edge of creative culture feed the community of ideas that I and other people like me need in order to work. As that community dries up we are tempted to go elsewhere. And young people are almost certain to do so. Drain the cutting edge arts out of a city and you will destroy its economic potential.

I think Steven raises an interesting question regarding "maximum density." At what point does "increasing density" result in decreasing "quality of life"? In a regional sense the West End is already pulling its weight in terms of density, so changes to the neighbourhood (and further increases in density) should be carefully considered to avoid damaging what is currently working well. This map showing 2006 density numbers has some interesting patterns:

http://vancouver.ca/commsvcs/planning/census/2006/popdensity.pdf

Steven, I would take your comments one step further... if we don't start making it economically viable for businesses like yours to stay in the city, not only will we not be able to attract employees - there will be no jobs to attract them to!

Vancouver is becoming a wealth based city right before our eyes. Affordable housing is only part of the problem.

What I'm questioning is why we expect accommodation in the centre (Vancouver) of a desirable city (Metro Vancouver) to be 'affordable'. This certainly isn't the case elsewhere, try buying or renting a house in Kensington, the First Arondissement or Lower Manhattan.

Cheap city centre housing is typically cheap only because it is bad housing or in a bad area, it exists on a large scale only in hollowed out cities such as Detroit.
Yes, you can provide public subsidies of one sort or another, but this is for a fortunate minority as there is a limit to what the public finances can stand. Yes, you can allow developers to flood the market, but the consequences (economic and environmental) will not, to my mind, be pretty.

In a way I'm playing the devil's advocate, this isn't something I'm happy about. Like most parents I'd much rather that my children had the prospects of an affordable home in the Vancouver of not too long ago than be a house millionaire. However we can't turn back the clock.

If Metro Vancouver population projections are anywhere near accurate then you will be swimming against an awfully big tide to reverse this trend.

It is true that a lot of creative activity has moved off Manhatten to Brooklyn and Long Island City. But at least one has a lot of transit options to get from them to downtown - good cycle routes, lots of subways. In Vancouver Burnaby and Richmond are also expensive. And there are two sides to affordability - cost of housing and salaries. It is not necessarily that housing prices are too high (though I think they are), it is that we do not have a good balance between salaries and housing costs.

In general I think that social housing can only be a very small part of the answer. I also think this issue will sort itself out over time (though not necessarily in a happy way for Vancouver).

I don't think there are any easy answers here and I am sure there is no one silver bullet. Some combinaiton of more density (I tend to agree that the West End is dense enough but where I live in Kits could be denser). By separating parking ownership from housing ownership one can make it easier for people who don't need to own cars to buy homes. We probably need new forms of housing co-ops and perhaps other ways for people to own and rent - looking for some design innovation here.

The big question is, how do you integrate lower cost subsidized housing into such a top end loaded market that is primarily driven by off shore capitol? Increasing density is a good angle however this needs to be tempered by the ability of infrastructure to integrate the increased population base.

The other concern is how will large #'s of subsidized housing affect the existing land values? Whether we like it or not we live in a city of NIMBY's.

The Olympic village leaves a lot of questions as to the ability of government to be successful in the development business. While the social housing site on Main by 33rd sits empty. The development business is very complex and always contains a certain amount of risk, these are better left to private financed companies rather than governments. There will be many more complaints arising from this sketchy project for many years to come.

The former Little Mountain Housing Coop stood there for more than 50 years. Built for the members of the Canadian Army forces and other veterans of war ...
What times!
Incredibly it was demolished under the indifferent watch of this corrupt Vision Vancouver majority and Mayor Robertson.
And for what? To grow weeds and wheat?
Demolished during a time where housing was/ is scarce.
If this was not a CRIME I don't know what is. I think I am not too much out of line. Someone needs to pay on the Nov 19th... not only for this but for everything else.
Amen!

Blah, blah, blah, blah.

Come on.

Stop the piffle. Talk about the elephant in the room.

I am told by an Asian realtor that 60% of the SOLD condo stock sits empty in this city. 60 percent!

Right now, this town is being built for speculators. Period. Nothing more, nothing less.

Money is flowing in from offshore, trying to find a nice, easy place to land.

Bienvenue a Canada! Welcome to Vancouver! Look%2

What role does the city play in co-op housing and what role should it play? It would be interesting to get the NPA and Vision response on that question.

I think we all (or most of us) agree that the city should not be directly involved in development. Where possible land should be sold on the market in small pieces so that many different approaches to development can go forward.

Offshore and local black market money obviously impact housing prices, but it is not clear to me that the city can do much about this.

TWOOD

You're absolutely right, I first became aware of this phenomenon many years ago on Granville Island at night, looking at the scarcely lit towers on the other side of False Creek.

I know that many European cities have local ordinances forbidding the keeping of residential property empty. Why not try that here? If our respect for private property rights, whatever the cost to society, is too deep then how about serious escalation of property tax for empty homes? Of course wealthy speculators and their lawyers would immediately be trying to wriggle through loopholes, but in response a special enforcement department could be self financing and bring revenue to the city as well as releasing square footage to the housing stock.

Of course the realtor / developer complex would at once be out weeping, wailing and gnashing their teeth but it would be nice to think that, for once, our political class could stand up to their paymasters.

Who knows, maybe I'm wrong about affordability and this could be the magic bullet!

David H and Winter raise a very valid point, but one you can be assured Vision and the NPA will not touch with a ten foot pole. COPE should address it, given that demographic will never be supporters of theirs, but leftist political correctness guarantees they will not. Look at the insanity of replacing 1950's spilt levels in Oakridge with McMansions. The city should be encouraging subdivision of those surburban size lots. You can preserve single family housing but do it in a denser form.

As to the West End, I believe Gordon and the NPA went through that battle of trying to upzone all those woodframe walk-ups and probably still have the scars to prove it. Why don't we approve highrises in their place as long as they guarantee replacing the same number of rental units albeit with smaller square footage and on the lower floors? Having rental and market housing in one building is done in New York, why not here?

I disagree with you about the ten foot pole. They wouldn't touch it with a remote controlled robot from 500 yards.

And yet, suppose a candidate or party, committed to;

a) Setting up an investigation by the bureaucracy, using existing data, to determine the true level of non occupation in Vancouver. To report by January 2012, and should the level prove to be as high as suspected;

b) Putting the city's legal department to work determining feasible methods of compelling the release to occupation of long term unoccupied residential property. To report by March 2012 with a view to implementation within one year of the election.

c) To meanwhile consult with other municipalities and levels of government on this matter.

d) To meanwhile introduce a new tax band for unoccupied residential property in the coming year of double the standard rate, to double that the following year and to double again in the third year, giving an eightfold increase over the term of the administration.

Well, I can dream. To touch this you'd need to to be controlling said robot, holding said pole, from an underground concrete bunker while wearing lead underpants.

The Vision halo started tilting almost as soon as they took office, with Sadhu's hiring. We now have unfettered speculation fueled by VV's boot-licking zoning behaviour and an unhappy city due to their rigid rush to ruralize the regional core.Their underlying assumption for development is endless population growth resulting in a greater-fool-theory rush to be the last one out before the bubble bursts. When it does, and offshore investors realize they've been chumped, maybe, just maybe, housing prices will return to some semblance of a reasonable ratio to income.

Interesting discussion, but you're ignoring a basic reality. Here's roughly how the development costs of housing break down at the present time in Vancouver:

Land -- +/-$150 /sf
Construction -- wood frame, low end high rise $225 to higher end $275++
Soft Costs including financing, fees, permits, overhead, taxes, etc. -- @ 15% of the above = $56 /sf to $64 /sf.
Profit -- @ 15% of total = $65 /sf to $73.

TOTAL = $496 /sf to $562++

A 600 sf unit @ $500 = $300,000, assuming 90% financing @ 5% the mortgage payments = $725 /sf = $1630 + $100 taxes + $250 fees or management = $1,980 / month BREAK-EVEN TOTAL = $3.30 / sf. The average rents on Vancouver are $1.50 to $2 / sf (due to many older buildings built at much lower costs years ago + rent controls).

You can see the problem, and that is why the STIR programme is a complete failure. Even with its massive taxpayer funded subsidies of between $80,000 and $120,000 / unit the developers still are charging $3 /sf!

Let's assume the City or someone else puts the land in for free (there is no free because that free = another taxpayer subsidy) so the costs at the lower end = $310 x 600 = $186,000 @ 100% x 5% = $1,125 + $100 +$250 = $1,475 / month BREAK-EVEN = $2.50 /sf. And this is with no profit for the building / unit owners.

So, there is no easy answer, including taking building down and replacing them with new units because these new units cost between $2.50 and $3.30 /sf.

One answer is that many owners are renting their units at below cost. I am subsidizing my rental unit $300 / month. We have a very serious problem on our hands.

There won't be anything you can do about housing affordability as long as people decide property is an investment. As long as people buy housing with the intention of selling it for more later on, you will have an ever-increasing market, because there will always be someone to buy into the dream, even if it's only an overseas speculator with less opportunity at home. You'll never legislate that out of existence.

What needs to be done is to take the profit motive out of housing by taxing the snot out of the capital gain. Don't remove it entirely, but tax most of it so that the impetus for making a profit simply because you happen to have gotten there first and are parking on your spot, is removed.

After all, what choice do your kids have? They weren't born earlier than you, so they won't have a chance to live here where (most of) you likely grew up.

And this unusual bubble in real estate since 1950 has been aided and abetted by a population increase and a rejigging of the wealth system to permit people to use vast amounts of credit to increase their own personal wealth in a way that formerly only dictators of small African countries were able to do. Thus were tey able to bid up the price of poroperty in a way their parents could never had dreamed of doing with their own limited means, limited by te fruits of their own labour.

No, it's time to reinstitute a heavy capital gains tax on residential property, and reduce taxes on other things that are good, like business and personal income and apartment rental income. Property being scarce, it's a requirement according to basic economics. One should never be permitted to control the scarcity of a societal good simply by parking your ass on it.

You can imagine the next phase, can't you? Yup, capital gains for speculators who don't live in the city? Double. At least.

Sorry, everyone. My previous post, didn't. Here it is is full. yes, David Hadaway, we have a BIG problem.

Blah, blah, blah, blah.

Come on.

Stop the piffle. Talk about the elephant in the room.

I am told by an Asian realtor that 60% of the SOLD condo stock sits empty in this city. 60 percent!

Right now, this town is being built for speculators. Period. Nothing more, nothing less.

Money is flowing in from offshore, trying to find a nice, easy place to land.

Bienvenue a Canada! Welcome to Vancouver! Look, I can bend over and say it in BOTH of our official languages! Rules?! We don' need no stinkin' real estate rules?! You're gonna screw up the 'free market', boy, if you have rules!

But hey, nobody told us that the free market would screw US up.

Everything we were ever told---that Expo '86 and the Olympics were going to bring jobs, and good economic times---came true, but only for the developers.

We have been gulled.
We have been sleeping.
We don't have a plan.

Our betters made it better, alright,-- for their favoured friends.

Not for the great majority of us. Not for our children, or our grandchildren who now have the enviable, but sad duty, to take their talents elesewhere. All the weepy examples about the best place on earth, the promises, now broken, of prosperity...

Does anyone else here feel betrayed?

Like, maybe as we were watching and having orgasms over watching others play hockey games while we ourselves were playing with our smartphone apps, a great big part of the rest of the world put its collective shoulder to the wheel..and worked? And created. And took risks. And stole our intellectual property. And made stuff. And had a hunger to make things better for THEIR families, their communities, their country?

Here, why, we're just sooo darn happy to have a government job! With a wonderful defined pension, and, and, and all kinds of cool stuff! That we expect someone else to pay for, when we retire, of course.

All your navel gazing about density, and CAC's and affordability and all the other rubbish, is tiresome.

Tell me.

Why is there a steadily decreasing tax base, even as density rises?

Why are people who have a lot of money allowed to defer their property taxes, after age 55 (virtually no one can be turned away in that program).

Originally intended to protect widows and the elderly who had lived in place and who continue to as property values and assessments rise, it is now used by many as a tax dodge.

Please, tell me how we intend to pay for those things that we need (crime fighting, decent schools, our parks) or would love to have (more bike lanes, community gardens) WHEN WE ARE NOT COLLECTING ENOUGH MONEY FROM PEOPLE WHO OWN PROPERTY HERE?

Ok, I'm taking my angry ass to bed now. I can't bear to listen to all the nonsense anymore. No one wants to bite the reality sandwich in this town.

We live in Vancouver, and this means we just talk and talk and talk...

______________________________________

Looks like the City of Van IS exploring opportunities for affordable rental housing...

Wood frame construction is not $225 psf and with the incentives contained within the attached link i'm hard pressed as a citizen of Vancouver to believe affordable rents can't be achieved.

Kudos to the City on this one!

http://udi.bc.ca/sites/default/files/properties/City%20of%20Vancouver_REOI_0.pdf

I've just returned from a biz trip to Toronto.

They are building loads of new condos and apartments buildings. The city and the outskirts are awash with construction.

I saw new units advertised for $190K, 2 level lofts for $340K and these were within the city limits.

Vancouver's affordability came up a lot through general conversations.

Welcome back Max. I have friends who when traveling tell me people in Calgary and Vancouver are joking about Vancouver's chickens and wheat fields. They're not happy. It's surprising how personally connected even suburban Vancouverites are to our wonderful City.

It was interesting Bill, meetings along with a two day conference and the most common question posied to myself - Vancouver's housing market and affordability.

As for the 'chickens and wheat fields', I had dinner with several co-workers along with persons from various 'resource' sector and the Ont. Securities Commish..., we all had a good giggle over both of those.


At first, they thought I was pulling their leg.....

Sadly, not.

My apology, I have Vancouver on my brain. My 7.37 comment should read:

"I have friends who when traveling tell me people in Calgary and TORONTO are joking about Vancouver's chickens and wheat fields."

There is a reason in an architectural practice one always hAs a 2nd and even better 3rd individual checking drawings and specs before they are released.. Sadly I do not have staff here to check my comments, so I ask your occasional indulgence.

affordable housing...this is not from the "city governments" ...as long as we allow wealthy offshore chinese money to invest in our homes this realestate will always be inflated....there are whole generations of people now raising kids in small condos or townhouses....sad really....its also a whole generation who dont get to "putter" in the shop or garage with their dad etc....they all lack a certain common sense....cant even use a socket set! ....but their offshore money essentially "screws" the average family trying to make it....I am not sure if there is a "fix" if there is it certainly is not at the municipal level!


you know Jeremy the best times were spent with my Dad puttering in the garage..thanks for reminding me of that wonderful memory...

I believe there is an unfair characterization going on of residents of the West End opposed to development and densification. It is often painted that opposition to development is mainly by owners living next to a development proposal exhibiting a standard form of NIMBYism at fear of change next door.

I’m an 8 year renter in the West End and will continue to be for the foreseeable future. I find it a great place to live for many reasons.

It is a shame to see the density debate always reduced to quantitative and oversimplified terms. Most often it’s always talked about in numerical binary terms “supply and demand”, when the reality is much more complex. How about the quality of density?

If the numbers were a simple answer wouldn’t the dense neighbourhoods of Yaletown and Coal Harbour be affordable? And what is the quality of the density in those neighbourhoods? People I know who have rented in those neighbourhoods drive (or transit) to a West End safeway or other grocer because Urban Fare is out of their price range after paying Yaletown and Coal Harbour rental or mortgage prices.

It is a statistical race to stem demand with more housing supply in Vancouver, but both qualitative and quantitative aspects are glanced over in that race:

1. affordability: how is it defined and how can you call it that if it’s what the market will bear and has no guarantee of decreasing prices in the neighbourhood? http://thetyee.ca/Views/2008/02/29/EcoDensity/

2. context: The West End already has the city’s highest density, yet a high proportion of STIR proposals exist here. What about single family housing neighbourhoods and the least dense neighbourhoods? http://thetyee.ca/Views/2008/02/18/EcoDensity/

3. history: in the race, heritage designated landmarks are being torn down or turned into a façadist architectural commodity for the brand of the building that the developer is marketing. At Maxine's, the developer is receiving heritage credit for tearing down all but the façade of the historic heritage building http://www.miss604.com/2011/01/vancouver-history-maxines.html. They will then use the shell of its history to differentiate and brand another fairly generic Vancouver podium tower. Yaletown and Coal harbour didn’t have a community opposition to these issues because they were built on large swaths of vacant industrial land.

4. community: this is a big one.

a) The STIR units waive developer cost levies and (DCL) and community amenity contributions (CAC) that would directly contribute to quality of the community - amenity improvements that WOULD happen through fees if these developments weren’t under STIR. In exchange for building rentals, the city is relaxing these fees that COULD contribute to schools, the community centre, or other upgrades. Which directly relates to:

b) families? I want to raise one here. The rental units proposed at many STIR developments are less than 400 square feet! Anyone who rents in the West End will tell you finding a studio or one bedroom is not the biggest issue, but a two bedroom is a difficult feat. Does shoehorning a bunch of shoeboxes in with the condos contribute to the quality of the community residents want to have? Or just the quantity of residents it can have?

And on and on…

But in the race to take care of the quantitative the qualitative things that concern the community are being overlooked.

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