What would make Vancouver a better place to live?
Thinking ahead to the next municipal election season, I have begun to ruminate on key issues facing the city. I have been asking myself what would make Vancouver a better place to live, work and play? Lately I find myself overwhelmed by stories of young(ish) professionals who are leaving the city – often in their thirties, driven by the desire to purchase a home that is affordable for them and their families. They are grantmakers, green building specialists, filmmakers, and socially progressive bankers. All smart, caring folks, emerging in their respective fields. All are assets to Vancouver.
Mostly they love the city but can’t afford to live here, even working at good jobs and earning good incomes. Sadly, the lowest rung on the home ownership ladder is too big a step. Or with children, the lowest rung (typically the one bedroom apartment) is not workable. I wonder, is this cohort the ‘lost generation’ – talented, skilled, thoughtful people that are bidding adieu to the city, and taking with them their energy, skills and unique potential contributions.
Affordable home ownership is normally seen as an issue that affects just individuals. The idea being that if you work hard you will achieve the dream of homeownership. And lets admit it, homeownership is a cornerstone in many Canadian’s financial plans, that at a point later life we will have paid off our house and will have lower costs of living. Given that most Canadians don’t have pension plans, homeownership is even more important.
Yet it’s not simply individuals that are affected when homeownership is inaccessible. Essential workers can no longer afford to purchase in the city – many ambulance drivers, nurses, firefighters and police officers move to find housing outside the city. So if/when there is an emergency these people are a distance away, separated by bridges and tunnels.
Vancouver Economic Development Commission sees affordable housing as a challenge for our economy. It’s hard to attract new businesses because our housing prices make Vancouver a less desirable a location for their prospective employees. Urban theorists like Richard Florida talk about the creative class (knowledge workers and people in the creative industries) and how the vibrancy of cities and their economies are driven by this group. Housing here isn’t accessible for our young creative, cultural types, so they choose to leave. These are not the only folks who can’t afford to be in Vancouver, but the fact that they can’t effects us all.
It's time to dedicate some of our collective resources to creating what I would call ‘attainable’ housing. In other cities they call this workers or workforce housing. This translates into making homes affordable to people who work in the city. Workforce housing does not replace the need for housing for the homeless or affordable rental. It’s a missing piece in our housing continuum, one that isn’t really talked about, or clearly identified, but is increasingly needed.
There are a number of models out there. Among them are community land trusts, community-based group and homeowners pay a small fee to lease the land. This brings down the cost of housing, and through the trust the homes are kept affordable over the long term. This model that has been used successfully in the U.S.
In Toronto, a non-profit group called Options for Homes is able to sell units at below market prices because they don’t charge a typical developer profit. They do charge a small second mortgage on each unit, which is then aggregated to create a pool of funds that allows for the ongoing creation of new units. Six hundred families are about to move into their own homes, in an Options project that is just being completed.
As a resort community, Whistler has long struggled to provide affordable housing or people who worked in the community. Fifteen years ago, the city took a long-term view and began, working with developers who contributed to a housing fund or build affordable units, as a condition of development approvals. This was a requirement of their development approval, in effect, a way that they were expected to give back to the community. The municipality recently announced that they now have sufficient affordable housing to meet local demand, a task that I am sure must have seemed impossible to address in a meaningful way 15 years ago.
We have working models and a real success story from our northerly neighbour - Whistler. Now is the time for Vancouver to take this on. So if I had one wish as a Vancouverite – it would be that the election focus on how we build a city that is inclusive for all, that strives to ensure that the people who work and contribute to our city get to live here too.
(12) Comments
Thanks for the thoughtful piece. However, I think that you have not really described the problem and supported it with objective evidence. (I know people were moving out of the city for the same reasons in the 70s. I see lots of people in their 20s and 30s on Main Street, the Drive, Yaletown. Perhaps the census will validate your case about out migration.)
As for your reference to homes as financial assets, we have a serious contest of interests. Those who have already bought into the market certainly do not want the market values to soften - and erode their income security. Competing interests is at the heart of public policy. And the interests of these parties have been pursued more through tax policy that urbam planning. The preferred tax treatment for primary residences, especially when these properties are sought by off-shore buyers, makes them quite attractive investments. Indeed, the tax expenditures in support of home ownership are huge.
On a different front, there is a distinction to be made between the affordability of home ownership and the affordability of housing. Many of the experiments in other places notably present 'renting' as the principal 'affordability' option (through leased land, market rental accomodation, and non-market rentals). The decline of the rental housing stock in Vancouver is likely a signifcant factor in the affordability of home ownership. In many other cities (and here in the past), the presence of viable rental housing substitutes moderated house prices. Rental housing is likely to be a bigger factor in addressing the issue of affordability that will be community land trusts or communal ownership arrangements.
And lastly, we may have to reappraise our wants and our needs. Vancouverites, and North Amercans generally, have rather grand ideas about what kind of homes they need. In many other urban centres people live in much smaller spaces and accept the offsetting amenities of being central, well serviced, and car-free.
Thanks.
Ross - Thanks for your comments.
In terms of the potential conflicts of interest with people currently in the market, most workforce housing has some form of restriction attached to it whether its who can live there, or some means to keep it affordable over the longer time (restricting the possible lift a landowner receives). So its not competing with market directly. Workforce/attainable housing fills the gap between rental and the market - especially when the the first step to market is so significant.
Ross - thanks for your comment.
In terms of the competition with market most workforce housing is restricted in some way - who can live there, or how much 'lift' you can receive. So these units (in most jurisdictions) don't compete with market units or soften the value of other units. Instead the units allow for a transition between rental and the market. I think of them as pre-market, or helping to lower the threshold to ownership but not directly competing with market.
Heather: thanks for writing this. The neighbourhood I live in had those kind of houses...my mother-in-law was raised in one. I know lots of people are putting rentals suites in their homes in our neighbourhood but they become too expensive and are small so the small house where you can get your foot in the door as a young family makes total sense. Let's vote for the right people.
My father sold a house on the Westside of Vancouver for $200,000 20 years ago and now you can barely buy something similar there for $2 million, which is ridiculous.
20 years ago there was $300 billion dollars in the money supply and since then the Canadian banking system dumped $650 billion dollars on the Canadian economy and now there's nearly a trillion dollars. The population in Canada increased in that time by about 21%.
Most of that money was created by mortgage loans that accommodated a bidding war for housing which caused a self perpetuating bubble as more people noticed housing prices generally going up. The banks made a fortune by creating a tanker fleet load of money by tapping a few buttons on a computer ledger account. They were making too much money to say "wait a second, we're creating a bubble". But now they see some of the writing on the wall. Canada has more debt per person than the US but Canadian Bankers put their spin on it saying it's not the same.
Unfortunately for Vancouver we've taken a disproportionately large chunk of immigrants and Vancouver is out of control for housing prices.
There is negligence galore in the way society has been managed and most people can't see the systemic causes because they can only see what's in front of them. We're knee high in a crock of quicksand and we'll be up to our chest in it in several more years. If you think the central bankers know what they're doing watch Greece, Portugal, Ireland, Spain, and the States since they had a head-start on us.
Central banking theory falls into the category of crap. Canada should have regional currencies and if BC had its own floating rate currency that would have buffered against an extreme foreign money impact on Vancouver housing. If you really think a national currency is convenient, how about one global currency. One mismanaged Central Bank takes down everyone nationally or globally. Don't put all your eggs in one national or global central banker for convenience.
Last word, the Canadian Central Bank targets for a 2% annual inflation rate. The compound effect results in 100% inflation in 35 years so the goal of the Bank is to cause 100% inflation in that time. It will take no longer than 25 years based on past experience, and maybe 15 years with current conditions and the way inflation rates are fudged, which is another sad story.
My father sold a house on the Westside of Vancouver for $200,000 20 years ago and now you can barely buy something similar there for $2 million, which is ridiculous.
20 years ago there was $300 billion dollars in the money supply and since then the Canadian banking system dumped $650 billion dollars on the Canadian economy and now there's nearly a trillion dollars. The population in Canada increased in that time by about 21%.
Most of that money was created by mortgage loans that accommodated a bidding war for housing which caused a self perpetuating bubble as more people noticed housing prices generally going up. The banks made a fortune by creating a tanker fleet load of money by tapping a few buttons on a computer ledger account. They were making too much money to say "wait a second, we're creating a bubble". But now they see some of the writing on the wall. Canada has more debt per person than the US but Canadian Bankers put their spin on it saying it's not the same.
Unfortunately for Vancouver we've taken a disproportionately large chunk of immigrants and Vancouver is out of control for housing prices.
There is negligence galore in the way society has been managed and most people can't see the systemic causes because they can only see what's in front of them. We're knee high in a crock of quicksand and we'll be up to our chest in it in several more years. If you think the central bankers know what they're doing watch Greece, Portugal, Ireland, Spain, and the States since they had a head-start on us.
Central banking theory falls into the category of crap. Canada should have regional currencies and if BC had its own floating rate currency that would have buffered against an extreme foreign money impact on Vancouver housing. If you really think a national currency is convenient, how about one global currency. One mismanaged Central Bank takes down everyone nationally or globally. Don't put all your eggs in one national or global central banker for convenience.
Last word, the Canadian Central Bank targets for a 2% annual inflation rate. The compound effect results in 100% inflation in 35 years so the goal of the Bank is to cause 100% inflation in that time. It will take no longer than 25 years based on past experience, and maybe 15 years with current conditions and the way inflation rates are fudged, which is another sad story.
Ban the NHL.
Thanks Heather for an excellent overview of a problem that housing stakeholders in Vancouver are just beginning to key in on.
I wholeheartedly agree with every point you have made and would like to respond to the issues that Ross has raised, which are the same issues that get raised whenever the approaches you have referred to have been suggested to decision-makers and the market housing sector.
For evidence of the problem Heather has so eloquently described, we need only look to a little statistic called the “Housing Multiple”. This is the ratio of average home price to average annual household income in any given jurisdiction. The Housing Multiple needs to be between 3 and 5 to accommodate moderate income households. Last time I looked, it was approaching 12 in Vancouver.
Non-market affordable homeownership does not compete with the market. By definition, those who choose to purchase it are doing so because there is no market alternative in the jurisdiction where they work. And the notion that it might affect market prices has not been borne out in jurisdictions where it has successfully been created (Banff, Canmore, Abbotsford, Whistler, Ucluelet, Langford). Owners of these affordable homes are also not a burden to any taxpayers, in fact they are taxpayers.
Renting is clearly an alternative to owning when you cannot afford to enter the market at the lowest rung of the ladder. But the simple approach of “let’s just create more rental” is precisely what Vancouver has been doing for a decade, and we are losing ground. Why? Demand for rental is going up faster than supply because we have the additional load of the successful workers Heather has mentioned being excluded from market ownership, where they would normally be if the Housing Multiple in Vacouver was between 3 and 5, like it used to be.
Lastly, I would suggest it is those of us who were fortunate enough to get into the market when it was affordable who are stuck on the need for large homes in large lot neighbourhoods. The workers who are struggling to afford housing would be happy with a smallish condo or townhome in Vancouver and no car. They are good at transit and car co-ops. They just need the opportunity to own a place in Vancouver that they can afford. Any place.
If City Hall would first look after the interests of the citizens of Vancouver, this city would be far more affordable. One case in point - restricting purchases of any new housing to residents first, then to foreigners. Doing this would reduce the average purchase price by 20 to 30%. Will the vision go against their developer bosses and actually do the job they were elected to do? Never have, never will. Developers are the single biggest funders of the vision party.
The City of Vancouver gets superior public transit to the rest of the City yet does everything possible to prevent access by those of us in the burbs. I get angry every time a Vancouver councillor talks about a 'downtown tax' since if you live in West Vancouver or anywhere more than a couple miles from the 2nd Narrows in North Vancouver the Lions Gate bridge is pretty much your only route out.
I went out to UBC every week in the evening for 12 years and after 7pm the bus service was virtually non-existent (ask me about a 1/2 hour wait at Granville and Hastings late at night!) so the car was pretty much mandatory.
I'd love to have decent bus service but Vancouver politicians go ballistic when anybody else gets improved services while they demand Broadway Skytrain and improved B-Line services.
Coquitlam and Surrey are also demanding better transit and have been told to get to the back of the bus.
So sorry - I'm not in favor of further public hand-outs to improve conditions in the City of Vancouver for those fortunate enough to live there.
We have a free market in housing. Anyone can buy a house. Anyone owner can sell one. Supply and demand determine the price. Unfortunately, increasing prices do not trigger a significant increase in supply. Zoning can create an increase in the supply of residential land, but there are all sorts of pressures to slow rezoning, the NIMBY effect being perhaps the most significant, so, in practice, rezoning seldom keeps up with the demand, and prices keep rising. Yes, we could reduce demand by legislating that only Canadian citizens can buy homes, or only Vancouver residents with jobs in the city, but such a constrained market would lead to all sorts of problems. So the only solution is for somebody to subsidize the purchase of land. That somebody has in the past often been the federal government, but the Tories don't want to do that any more (and the Liberals quit doing it in 1994). The province doesn't want to do that. And the city, which would love to do it, doesn't really have the tax base.
So, I'm sorry, but I don't see a solution to this. Over time all of Vancouver is going to become what the ritzy parts of the west side have been for a long time, a place that only highly paid professionals will be able to afford. When I die if I'm still in the house in Vancouver I was fortunate enough to buy 34 years ago I'll leave a big chunk of change to my two kids who then might be able to buy a home in Surrey or Langley or maybe further out. Or maybe rent closer in.
There will be exceptions -- people lucky enough to get into non-market housing, co-ops, etc. But these won't be many. The situation is due to having a free market in housing -- capitalism, if you will. Sorry.
While interesting, I think this article ignores the influence of the CHMC and Government of Canada on the local real estate bubble: the September of 2003 elimination of the upper bound on the amount that the CHMC would insure. At that point, the risk to banks for giving oversized mortgages to what would otherwise be unqualified buyers become zero. Thus, it fueled speculative mania.
While many will blame those from mainland China, anyone who has looked into this has quickly realized that the effect of any Chinese influx has been primarily psychological. They are not the enemy, we are.
This is not a local problem to solve - the same is happening in other parts of the country, albeit to a lesser extent. The solution here is for the federal government to reign in lending standards, re-assert reasonable upper bounds on CMHC insurance, and shovel off the risk onto the banks where it belongs in the first place. The taxpayers of Canada should not be liable for the excesses of those with neither the incentive nor the insight to avoid the looming real estate disaster. Only then can the real estate market reflect true supply and demand, rather than the funhouse mirror landscape we currently have before us.