Can building lower cost units in New Westminster help Vancouver's affordability issue?
In last week’s column, I began to explore what cities like Vancouver should do to help create more affordable housing. I raised the issue of pre-zoning more stacked townhouses and row houses as a means of introducing low-cost options for first-time home buyers.
If we all agree that lowering the value of current homes is not a realistic policy option, then it’s critical we get more creative in order to increase housing affordability. However, we must first ensure our civic politicians and planners adopt three key principles:
Principle one: The City of Vancouver must work with neighbouring municipalities to solve its affordable housing crisis. In other words, we must look at the region as a whole if we want to develop cost-effective strategies.
Principle two: The fees and levies cities layer on to the final price tag of a home are increasingly becoming part of the problem.
Principle three: There are many good ideas that can be found beyond our borders.
Regarding principle one, we should be building thousands more affordable housing units near rapid transit stations conveniently located 30-40 minutes away from downtown. Constructing less expensive units near rapid transit in Coquitlam and New Westminster, where land is relatively cheaper, is a realistic way of beginning to ease the pressure within Vancouver’s boundaries.
In regard to principle two, cities must also acknowledge they are reducing affordability by layering on thousands of dollars worth of fees, levies and red tape to each new unit constructed. These charges don’t disappear after they’ve been assessed by a municipality; rather, they get passed along to the first-time home purchaser.
Lastly, following the third principle, we need to begin looking at best practices around the world to see what might work here locally. For example, why are we not implementing the concept of equity sharing as a possible solution?
Otherwise known as “shared ownership”, this model allows an individual to purchase less than a 100% share in a home, even if they can’t afford a mortgage for the whole amount. Considering that securing a down payment is one of the biggest barriers preventing young buyers from buying their first place, this could well help to address that problem.
I have no doubt the affordable housing issue will continue to be top of mind for years to come. But I also remain hopeful our civic leaders are prepared to expend some political capital to help solve it.
- Post by Daniel. You can follow us on on Twitter @CityCaucus or you can "like" us on Facebook at facebook.com/citycaucus. This column first appeared in 24 Hours Vancouver on Thursday, December 15, 2011.
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Absolutely Regional thinking is required. The world does not end at Boundary Rd.
“The fees and levies cities layer on to the final price tag of a home are increasingly becoming part of the problem.”
Expand on this? What fees should be eliminated?
I would note that in some circumstances there has to be a significant drop in price for housing to be more affordable in outlying areas, because of the added cost for transportation if you work downtown. When looking for a new place to live last spring I found I couldn’t justify the additional time and money it would cost me to live in Burnaby (despite slightly lower housing costs) when most of my activities were in Vancouver, because of the bump in transit fare due to crossing a zone boundary and the extra hours it would add to my travel times. I imagine the costs would be even greater for someone who would have to insure their vehicle for commuting to work rather than just pleasure use, or someone who crosses two zone boundaries, almost doubling the cost of the ticket. I hope we will see a new scheme for transit pricing with the introduction of turnstiles and smart cards. At present, if you cross a boundary, it doesn’t matter if you’re only traveling for a couple of stops, you still pay full fare for a two zone trip. Really doesn’t encourage using transit for short trips.
This has already been happening in the suburbs without any kind of regional strategy in place. While a regional strategy is an important component of any affordable housing equation, just funneling more out to the suburbs isn’t the answer. All that’s doing is creating economic segregation. Some of that’s inevitable but can be mitigated by good policy.
Frankly, Vancouver itself is the laggard in new development around rapid transit stations (hello, Nanaimo and 29th Avenue?) and with the recent Cambie plan the City of Vancouver is finally taking steps to remedy that. It’s patently absurd to make multibillion dollar investments in infrastructure to move people through a corridor and then to not allow the construction of denser housing solutions.
Excellent point by Jack Hope above re: densification around Nanaimo and 29th Avenue Stations. This is an absolute no-brainer that should have been addressed 20 years ago. How can Vancouver claim to be green, forward-thinking, interested in improving affordability when it hasn’t lifted a finger on this low-hanging fruit?
Great post. I think we also need to look at new forms of ownership like housing co-ops. In regards to the fees and levies, I assume that by eliminating these we transfer costs to the general city budget so that people that already own homes will be subsidizing new home development. Is that correct?
Steven, you make a leap by adding “subsidize” to your statement. I think more, the fees, whether it be DCCs, CACs, HST, BP fees, DP fees, off site civil, etc included on new home are disproportionate to what they actually “consume” or add to the existing infrastructure (I am looking at all levels of government not just Municipal). Right now, it feels more like new homes subsidize existing homes. I think there needs to be more of a balance between the two.
The other “cost” born by new homes is the cost of funds. Unnecessary delays by the City in the development and building approval process increase the carrying cost on any project which ultimately ends up in the sticker price. If you want to look at low hanging fruit, this is an easy place to start.
Require anyone buying property to produce at least two years of Canadian tax returns and if income doesn’t jive with buying a Million Dollar plus property work with Revenue Canada and the RCMP to find out why.
@ Brilliant
You have pointed out a very big elephant in the room…
I agree with you, and I think many others do as well!!
This ship has sailed on curbing foreign investment in Vancouver Real Estate as a means to control housing prices. To do so, as Daniel has pointed out would have a horrendous effect on the local population.
If we buy the argument that foreign investors are responsible for the run up in housing prices in Vancouver West side, then we need to look at the % of total unit that represents. Let’s be aggressive and say it is as much as 15% f the total units sold in GVRD/year. That 15% will have pulled up the value of the 85% of “locals”. Now we effectively change the rules which will drive down the value of the 15% . The result, the 85% will follow suit having a greater impact on the “local” population. So in simple terms, you corrected the 15% while hurting the 85%. Final question, who do you think is more likely to survive the injury?
The issue at hand is how do we solve the affordable housing issue after pandora’s box has been opened not before.
@Paul-You incorrectly assume the 85% of all bought in the last 5-8 years. Also if you have bought a “home” as opposed to an investment you are not “harmed” if the value goes down. Your argument sounds like that put forward by the real estate pimps who have a vested interest in plumping prices.
2 years of tax returns would prove what? Perhaps you inherited cash, perhaps there is multiple owners on a property (bank tells me that is becoming more common).
Here’s an idea – tell Vancouver home owners to not accept an offer on their house unless the buyer is already listed in the Vancouver phone book?
The 15%/85% idea does not make any sense to me either.
Let’s get off this foreign ownership ban as a solution. It sounds good on paper but will never happen.
Next.
OK so George has to have a little chuckle here…I need to be more clear in my Kudos to Brilliant…
It appears that everyone assumed that I was referring to foreign ownership…
When in reality the other Elephant in the room is the “drug money” that is being used to buy Real Estate…lets not be naive here… seriously..
Max may have only shown a snapshot but Max is the only one that truly got it..
Good job Max!!
Sorry I meant to quantify my comment before I get hit by nay sayers
http://www.vanmag.com/News_and_Features/Does_the_Illegal_Drug_Trade_Drive_Up_Housing_Prices?page=0%2C0
Sorry George was reading the comments column and mistook Max’s comment, sorry, but ironically it fit into my conversation…good grief!
Was @Brilliant’s comment aimed at foreign investors? That was not how I read it.
@Steven no it wasn’t. I was responding to some of the other comments..
Sorry for the confusion..
@Julia-it will never happen because politicians are to spineless, not because its not a good idea. Commentators from Peter Ladner to Sandra Thomas in the Coyrier have all documented the problem and how it is making the city less livable. As to multiple owners – they should all be capable of producing tax statements. I’m not sure where this warped nition that local, provincial and federal politicians owe it to foreign nationals to provide them with housing. They don’t.
And yes George I did intend that a secondary benefit would be the weeding out of drug money. Notice that the widower of the Vietnamee woman shot yesterday had an occupation listed as “businessman”?! I’d be curious to know who wrote that mortgage.
Any explanation as to what fees should be eliminated?
I figured as much Brilliant it was actually Julia’s comment I responded to.. you and I were actually both thinking about Ms.Wu
Julia, are you saying foreign ownership isn’t a big part of the problem, or that we should forget about trying to solve that problem?
This being the Christmas party season, its the best time of year to exchange real estate stories and if one accepts them, they come together to form a picture of an unprecedeneted distortion of our housing market occuring.
If foreign ownership is a problem, and no one has been able to show this but it sure seems reasonable to think it is a contributing facotr, then it is likely to fade from the picture over the next decade as the Chinese economy normalizes. Remember the panic in the 80s and early 90s about Japan? Pressure from other parts of the cash economy are harder to predict. A long-term screw up in the financial system, which remains possible, could drive more and more people out of the formal economy. Are there any studies of what percentage of Vancouver’s economy is outside the formal economy? Anyway, most of this is far beyond the control of the municiap government (my understanding anyway) and we should think of ways that we can address affordability at the local and regional level: simpler processes as city hall (focused on outcomes not process); more alternatives – in design, owenersip, financing, living arrangements; better transit that lets people move around the city and between regional hubs that fits real working hours (does anyone still work 9 to 5).
Steven:
There was a somewhat recent news doc. showing 64 million empty apartments in China and yet, the common worker there could not afford a place.
They also have a cap on investment ownership – 2 units.
They are required to put down 50% of the total cost as the ‘down payment’. So if you have a $300K unit, the buyer is required to put down $150K and then pay the balance off over the next 3 years.
The doc showed complete towns that were completely vacant. Malls decaying the whole nine yards.
Yes, classic bubble, and then there are the demographic trends in China. Purchases of Vancouver real estate by overseas Chinese buyers will likely dry up over the next decade. There may even be something of a pull back. So this problem will likely be solving itself by the time we agree on a way to solve it.
“You incorrectly assume the 85% of all bought in the last 5-8 years. Also if you have bought a “home” as opposed to an investment you are not “harmed” if the value goes down.”
Actually, if you read my post, that isn’t what I said. I said 85% of “units sold in GVRD/year”.
If you own you are at greater risk not less. If your house has devalued significantly when you have to remortgage, you won’t be able to without a significant equity top up. Investors can simply walk away from a bad investment in that instance. My point, impacting a small minority would still harm the majority.
As an aside, you would also impact anyone with a HELOC which are typically the non-sellers in the market.
As for the “pimp” comment, you sound like a moron who really isn’t interested in solutions. You are happier simply whining.
And what happens to Canadians in that decade Stephen? We just get to twist in the wind and bow down??
Where do Canadians go while we wait out this ‘maybe’ trend out?
I had to laugh at the news release surrounding Vision’s idea of affordable housing as promoted and defended my Kerry Jang.
221 – 290 sq feet in the heart of the DTES for $850. I didn’t have much respect for Kerry Jang previous, but those that voted him him should hang their heads in shame. The man is a completely clueless money grubbing idiot.
And I wonder, all units are rented, what was the average income of those that took spaces? Jang is saying they were designed for those at the $10-$12 hour rate, which is still riding at 70+ % of someone’s income. But if I am reading the report correctly, they filled up fast. And as these are city subsidized, I would like to know the average annual wage of the renters.
Did they go to people in need or people who 1) saw an advantage and 2) saw an income opportunity.
Stephen, here is a question that has been nagging me for a bit – are you Canadian or American? You seem to do a lot of work in the Americas.
Max I absolutely second your comment.
Steven, you’ve been spreading your little game in here for far too long, really now, you either cut it short, or you know, better join your friends at Vancouver Observer, you know, that Solomon toilet paper.
I found this to be an interesting perspective on many different levels,because Im very leery about this rush to density everyone keeps talking about. http://www.youtube.com/watch?v=sbILUuqs4SM&feature=player_embedded I dont see why its the responsibility of the city and taxpayers to provide affordable housing to healthy capable people,our focus should be on social housing for the elderly and for those that are truly in need,and we are having a hard time now to even meet their needs.
@gman If you are talking about use of tax dollars I agree with you. Tax dollars should not be spent on affordable housing, only social housing and homelessness. I think there is even some consensus on that. But could there be other ways to allow the market to provide more afforable housing solutions? Are regulation and zoning getting in the way? Are narrow concepts of property ownerships hindering?
Hi Max
Born Barrie Ontario, son of a Canadian officer whose family came to Canada around 1904 to avoid the situation in Europe and a mother whose family came to Canada in the 1840s. Grew up in Montreal. Moved to Vancouver in 1988 from Tokyo. Lived in Boston 2007 to 2009. Have investments in companies in Vancouver, Asia, the US. Currently run a company with its center of gravity in Cambridge MA and some engineering in Burnaby.
I agree that affordability is a huge problem. I feel it personally as I would like my son and his family (I am a grandfather) to be able to live reasonably close to where I live. I am also concerned as I often want to attract talented people to Vancouver and housing prices now make that almost impossible. And this is for businesses where most people earn six figures so the comment that someone made that we should just pay more is not very helpful. We no longer try to hire in Vancouver.
But, there are limits to what the city government can do and to what it should do.
Listened to your link. They seem to miss the point. They are arguing that people do not want to live in urban areas and that they are happy to move out to suburbs. If that is true, why do so many people seem to want to live urban lifestyles in Vancouver? They are actually making the mistake they accuse others of making, they assume that other people want to live the same lifstyle as they do. If that was true the Vancouver affordabilty problem would never have arisen.
@Paul-Not surprisingly you missed my point. The market would have to plunge by a huge amount to burn anyone who bought more than 5-8 years ago.
Sorry if the property pimps comment hit a nerve. Any ties to the real estate industry you want to disclose?
Steven I think you missed the point,its about quality of life.You seem to think the answer to all our problems is to build more towers what your missing is if you have a young family a three bedroom apt. costs as much as a house and that doesnt give you a yard for a garden and a place to set up a swingset or a garage and a place to park the boat.You can buy a house in Surrey or Maple Ridge for the price of a one bedroom in Vancouver.Unless I missed some big announcement I haven’t heard of any great influx of business or manufacturing to the city,but I have heard about reverse commuters.People have a choice to either be mortgage poor and live in an apt. in a very expensive city or buy an affordable house in the burbs and still be able to take the kids to Disneyland once a year.If your lucky enough to be able to buy in the city,well then kudos to you.The city is expensive and more density wont change that one bit,it will only disrupt the quality of life for those that are able to live here now.
You might be able to get more land in Surrey or wherever but you’re also going to have to buy a car and all the associated costs among other things you wouldn’t have to buy living in a more urban setting.
It’s nowhere near as simple as house costs x in vancouver and y in Surrey therefore Surrey is cheaper. You have to look bigger picture.
Boo I would say the majority of families in the city own cars and if they dont its because their mortgage poor.I cant see anyone taking their kids to the ski hill or the lake or camping in the summer on the bus.But if your only referring to commuting to work they do have transit in Surrey. So you have choices,you can live in a decent house in the burbs with the opportunity to pay it off,which will only add to your quality of life,or live in a box in the city that you might never pay off.I wonder what your kids would choose, after all isnt that what we live for.
Ahh the ‘think of the children’ card. lol
You want to go to the cabin or ski hill? Rent a car. Sure a hell of a lot cheaper than owning one.
“you can live in a decent house in the burbs with the opportunity to pay it off,which will only add to your quality of life,or live in a box in the city that you might never pay off.”
A 500k ‘box’ in the city and a 500k house in the burbs is still 500k. I don’t know how that would relate to your ability to pay for it.
I guess I consider sitting in traffic for an hour plus every day a pretty crappy quality of life. But maybe that’s just me. I want my kids to be able to walk to the corner store, park, school. A lot of suburbia isn’t like that. I’d rather pay more to have that option rather than have to drive everywhere, drive my kids everywhere and pay out the ass for it all in the name of some more bedrooms and a strip of lawn to call my own.
Boo you assume that they would have to work in Vancouver as if it was the center of the universe secondly you assume you can buy a decent three bedroom apt.in the city for $500,000 that you would want to raise a family in.And you further assume there are no parks or corner stores in surrey,you really need to get out more.Now I will assume you don’t have kids.
Stop accusing me of assuming and ask me some questions.
I grew up in Surrey. I know exactly what it’s like. It’s changing, but it is still predominantly suburban. You have to drive.
I don’t assume everyone works in Vancouver. Everyone works everywhere and lives everywhere, we’ve all seen the map with the 21st century commute.
Boo now you are assuming I would stop something because you told me to.But you wanted a question,well then did your parents drive you to school every day or did you and your friends walk or ride your bikes or take the bus? The reason I ask is when I bring up the school icons on MLS.ca it would appear there is a school within five or six blocks almost anywhere in surrey.And the same goes for a corner store,I cant imagine a bunch of kids not being able to get to one if they had a few coins burning a hole in their pockets?
When you bring up the school icons on mls?
Wow, don’t hurt yourself doing all that research and then telling me I don’t know what I’m talking about.
boohoo,your adorable.
@ Brilliant – no I didn’t miss your point and no the prices don’t need to move that far too create issues. People often buy or refi on the margin which leaves them exposed when rates rise or PV decline. Right now rates have nowhere to go but up – granted we have probably a year on that and PV is not set to appreciate in any real terms for the foreseeable future. This one of the reasons that the Finance Minster keeps tightening the mortgage lending rules and is looking to do it again in 2012. Markets aren’t rationale all the time so if you try to force it down, you may not be able to stop it at the exact point you want.
With respect to the pimp comment, it isn’t a function of hitting a work nerve, rather it shouldn’t be that hard to be respectful when responding to one another. I do work in the development industry but it doesn’t mean I support the high prices we are seeing in Vancouver. I would like to see some control and lower numbers that track more with the income structure of the local population. Higher retail prices typically means higher residual land values which limits the number of developers able to fund the development. The result of less competition doesn’t usually benefit the consumer. However, CofV isn’t incentivized to deal with the issue because they make a great deal of money off land appreciation – aka CACs. For our developments, we try to deliver as many of the units below $300,000 which means we don’t build in Vancouver. We tend to follow the transit corridors out to places like Burnaby, Coquitlam and Surrey.
gman, I don’t think density has to equal apartment towers. You can have density and urban gardens with very few high rises. Infill housing, converting parking into green space and living space, there are lots of options. I personally very much prefer to live in dense, even very dense places. I like to be able to walk everywhere I need to go, I know how to do pretty intense urban gardening, my family has one car and if it was my decision we would not even have that but would use one of the new services on the odd occaision when we need a car. I have no problem with people living out in Mape Ridge if they prefer the space, and am happy to pay taxes for transit. I would happily triple the taxes I pay to support transit and would like to see some of them go to a system that connects Surrey to Maple Ridge etc.
Steven thats the problem with you,you want people to adopt your collectivist opinions and in the same breath tell us you would be happy to live in density and lose your car.Well Steven go for it,sell your car and move to the west end or yaletown now.You may not have a problem paying triple the taxes you pay now but you dont seem to care about those who cant.It seems somewhat hypocritical for you to promote this social engineering when you yourself are unwilling to take the plunge.Some say its the governments job to create problems so it appears they are solving them,well vision has decided to us the eco scare and housing scare to do this and you have fallen for it hook line and sinker.Maybe Steven just maybe people are capable of making their own decisions without the government holding their hands,thats why we have courts Steven,so you cant screw your neighbors or they will sue you.Governments are necessary for some things but not too many.
I live in Kits, would like to add a laneway house, use a car less than once each week. I do all my shopping on foot and cycle or cab to business meetings. I am hoping more density in the area I live will bring in even more and better restaurants, a decent fish monger, a bookstore, some art galleries, more transit …
Does it occur to you that massive investment in infrastructure for cars is itself social engineering and has had some pretty ugly consequences? You want the government to subsidize your life style and to enforce laws that force other people to share your choices. If I want to build a laneway house, with my own money, why should I have to include parking for it? As a taxpayer, why shouldn’t some of my tax dollars go to cycling infrastructure? Why should my children and grandchildren have to cover the costs of our pollution?
I am also in favour of progressive taxes. People who have done well out of the current system should also contribute more. Not everyone can or should pay more tax. But if we need more investment in transit I am happy to pay my share.
WOW Steven nice spin,nowhere have I said I want the government to subsidize my life at all,and I have never said I want them to enforce laws to support my lifestyle,what I refer to are tort laws that I myself can use to protect myself.And if you think roads are somehow subsidized thats not true,I pay the same tax as everyone else and even if a person doesn’t own a car everything they eat or wear comes on a truck on those very roads,the ones you ride your bike on.I want the city to keep the water flowing and my trash picked up and not to much more.Of course there are other issues they can be involved with like social housing and parks and inspections on building codes,policing and such.
And you say your in favor of a progressive tax,so what your saying if a person works hard and is successful they should be penalized,that sounds a lot like redistribution of wealth which does nothing to promote innovation or hard work and will certainly drive business to other jurisdictions.
You also say you want more density so you can enjoy more amenities,but in order to do that you have to tear something down first.Now who decides whose house goes and whose house stays?Thats why I’m also in favor of a ward system,I want my guy to live in my neighborhood and to fight for us or he wont be in his job for long.
Steven I have a lot of faith in people and as buildings age along 4th or kingsway or broadway they will be replaced by better buildings unless the city tries to enforce some agenda.That would only give the city the ability to pick winners and loser’s.
Our car dependent lifestyles receive massive subsidies, both direct in the form of spending on infrastructure, indirect through space allocations and the costs of an oil-dependent foriegn policy, and through externalities, costs that are not copied by the market. But people who use their cars for daily commutes and short shopping trips are choosing to force more costs on the rest of us. People assume that the status quo does not require massive subsidies but it does. I despise entitlement, and it is car drivers who are the most entitled people in our societies.
Yes, torts is one way to address this. It is certainly the preferred way in the US and we are already seeing a surge in law suits related to global warming, pollution, etc. The tobacco law suits will look like a blip compared to the litigation being prepared in the US. In Canada though we tend to rely as much on legislation as on torts. One can make good arguments for both systems.
Yes, buildings get torn down and rebuilt all the time. On my block there are now two houses left with single family occupancy (yes, mine is one and that will likely chnage in the near future). When we moved in in 1989 about half the houses were single family occupancy. Several of the houses have been extensively renovated and the number of people living on the street has roughly doubled. As we add infill housing it is likely to increase further. I think this is great, though it has put on-street parking at a premium. About 12 years ago my family had three cars (the number that can be tightly parked in front of the house) but we are now down to one and will likely go to the occaisional Car2go in the next five years. This is the form of densification (is that a word?) that seems to work pretty well in Kits. You are right that each neighbourhood should find its own solutions.
I am not sure what I feel about a ward system. It would be good to have CC do a column on this.
On progressive taxation and innovation, there are many things we could do to improve the tax system to encourage innovation, but I doubt that its progressive nature has much impact. I make more than enough money and spend every day working on innovation and creating new companies. It is how I live and the same is true of the people in my circle driven to create new technologies and build new companies around them.
Merry Christmas
Steven:
There is a decent fish monger (7 Seas on West 4th) and already great restaurants in the area.
Adding great density to the area would ruin it.
People move to Kits to get away from the congestion of the city.
As for laneway houses (personally, I think they are an ugly addition)- I guess you will rent to the first person who is car free. Selective as that is.
I disagree. I have been living here for 23 years and watched density increase together with livability. Sure there are some good restaurants in Kits, I would not live in a place where I could not walk to good restaurants, but there is lots of room for improvement. And 7 Seas is a terrible fish monger – the fish smell. I would rather cycle to Granville Island or to the place on Arbutus for fish.
In all liklihood my wife and I will move into a laneway house if we are allowed to build one and we will subdivide the house and rent it to our children.
Steven everything we consume comes by road,the vast majority of households own cars so I would say we are subsidizing ourselves.The only reason we rely on foreign oil is because we have yet to build a pipeline to the east,something by the way even Lizzy May has been in favor of for energy security.The other problem is we haven’t built an oil refinery in this country in over forty years,instead we ship crude down south and buy back the value added product,kind of like raw logs.As far as lawsuits involving climate change it wont happen because they would have to expose their junk science in a court of law,something they will never do.Instead you have the EPA doing an end around using legislation.
The stats are really shocking, the stakes are generally astronomical, it is challenging to talk about and even tougher to deal with it. Technologies, counselling, communication… they all compete with human nature. In addition to every circumstance is different.
Steve:
I’ve been in Kits since 1990 and yes, density has increased, but I do not want to live in an area that is jammed back to back with towers. For some, that is not living – it is surviving.
I chose to live in this area to get away from the congestion of the city and to have a separation from my work and home life.
And although I love my parents, there is no way I want to live in ‘their backyard’. I can’t imagine even living in the same block.
…. 7 Seas, imagine a ‘fish smell’ in a fish shop. That makes as much sense as saying McDonalds smells like fried food.
I posted that an empty lost on West 4th is set to be developed….and I had the wrong lot.
The lot is across the street and currently holds 2 older rental buildings. From the outside, they do not look to be in disrepair, the yards are always kept up.
They are being taken down and condos with retail are replacing it.
I wonder what happens to all those people currently living in these places….
You need to select someone who knows you well and who you trust, this is commonly a partner or a close member of the family.