Tracey Lindeman is a freelance journalist based in Ottawa where she writes about technology, transportation and business.
To combat the exodus of its working and middle classes, the city needs an aggressive affordable housing strategy—and fast.
In many ways, Vancouver is a perfect city.
Tucked into the southwesternmost pocket of Canada, it’s one of the only places in the country that doesn’t experience cold and snowy winters. Vancouver is a nature lover’s paradise, surrounded by the Pacific to the west, and mountains and massive provincial parks to the north and east. Just 24 miles north of the U.S. border, and with daily nonstop flights to Asia, it’s accessible too.
In the past 10 years, it’s also become one of the world’s most expensive cities to live in.
Vancouver’s geography and climate make it a heavily sought-after city, for both aspiring residents and real-estate investors from abroad. These foreign investors, the majority of whom are Chinese, have shouldered most of the blame for Vancouver’s current sky-high rents and almost nonexistent vacancy rate. Today, a tiny studio apartment in Vancouver might set renters back CAD $1,700 a month, while a three-bedroom is a monthly CAD $3,500.
More condos and taxes aimed at speculators have done little so far to make life more affordable for average Vancouverites. A major reason why is that the majority of new housing is aimed at households earning more than CAD $80,000 a year, while median household incomes sit at CAD $65,000, and at CAD $50,000 among renters. About half the population rents.
Outpriced and rent-evicted, residents are ceding their homes and moving farther out into the Metro region and elsewhere in British Columbia. At the same time, the rate of homelessness is growing and 6,620 families are actively at risk of losing their homes. “Who are we building for? What income brackets can afford these units being put up in Vancouver?” asks Andy Yan, director of The City Program at Simon Fraser University in Vancouver.
The problems may only get worse. The population of Metro Vancouver, now around 2.5 million, is expected to grow 50 percent in the next 20 years. To combat the exodus of its working and middle classes, the city needs an aggressive affordable housing strategy—and fast.
Vancouver’s tax experiment
Vancouver’s housing crunch is a perfect storm of tax loopholes, outdated policy, and a lack of clear solutions.
Many would agree Asian investors have majorly contributed to high prices and a vacancy rate that sits below 1 percent. The fact that thousands of foreign-owned homes sit empty further frustrates the issue. “There’s a lot of speculation,” says Joe Keithley, a city councilor in Burnaby, one of 21 municipalities that make up Metro Vancouver. “In Metrotown here in Burnaby, and in parts of Vancouver, at nighttime you’ll walk around and you’ll see the big apartment buildings, and there’s no lights on—because nobody’s there.”
At first, the solution to Metro Vancouver’s housing crisis seemed simple: More condos. That didn’t work because they came at price points that most Vancouverites couldn’t afford, so beginning in 2016 the city and the province of British Columbia introduced a series of punitive taxes targeted at non-resident investors: A 15 percent foreign buyers’ tax, a 1 percent empty homes tax, and a 2 percent speculation and vacancy tax.
Josh Gordon, an assistant professor in the School of Public Policy at Simon Fraser University, is a staunch defender of those taxes and their potential effects on the housing market. In a report he wrote earlier this year, he explained that the property taxes help compensate for a loophole in Canada’s federal tax code that essentially lets investors’ “satellite families” live in the country tax-free.
These taxes have proven excellent at filling up government coffers and superficially cooling off the market, but they may work against Vancouver in the long run, a study from the University of British Columbia suggests. “It is possible that higher marginal taxes on single family homes above $3 million will actually increase the price of condominiums and townhomes in the region as they become the affordable option,” wrote James Tansey, the study’s author.
Both Tansey and Yan say what’s missing is better housing policy on the supply side. “The market will create a certain type of housing, but it’s typically for those who can afford it. And those who can afford your housing may not be who you need to live in your city,” he says.
The suburbs are struggling, too
Burnaby is feeling that disparity hard these days, says councilor Keithley. Of its nearly quarter-million residents, 27 percent earn under CAD $35,000. Despite a high proportion of low-income earners, a Vancouver Sun article from 2016 noted that there were at least 106 high-rise projects in the works in the Vancouver suburb, 47 of which were more than 40 stories in height—a pace that “outstripped anything contemplated by Vancouver.”
A year later, Keithley says an area called Metrotown—a working-class, mixed-use area that used to be home to two- and three-story walk-ups—got upzoned, transforming CAD $9 million properties into CAD $50 million properties seemingly overnight. Developers swooped in with plans to build even more condo towers, transforming Metrotown’s status as one of Burnaby’s four town centers to the city’s singular downtown core. A citizens’ group said the blanket upzoning would “incentivize” the demolition of about 3,000 units and the displacement of 6,000. True to the group’s prediction, Keithley says the city allowed the developers to hurry people—many of whom were new immigrants and older folks—out of their homes without ensuring they had places to go. He likens it to the fox guarding the henhouse: “It’s horrible.”
With Burnaby rents climbing about 20 percent over the past three years, the city finally succumbed to pressure to open its first homeless shelter at the end of 2018. That came just two months after Burnaby’s 16-year mayor was defeated by a newcomer and independent who campaigned on improving the housing crunch. The new mayor promised to stop “demovictions” (demolishing older low-rise apartments for new condos), allow “gentle density” building, and expedite building permits.
Keithley, who grew up in Burnaby and who is better known as the founder and singer of political punk band D.O.A., is also new to council as its only Green Party representative. Shortly after taking office, the new council blocked Metrotown demovictions, says Keithley. However, an organization representing low- and moderate-income earners says some developers aren’t respecting the moratorium. “Because of the upzoning, there was no way to the genie back in the bottle,” says Keithley.
A task force on community housing in Burnaby is currently looking for ways to address affordability for low- and middle-income residents. It’s due to present its final report in July.
Vancouver, meanwhile, has made some moves on allowing higher-density zoning in single-family-home areas, including allowing duplexes and laneway/infill housing. However, other kinds of housing—notably more family-friendly townhouse and purpose-built rental projects—aren’t meeting annual quotas set out in the 2017 Housing Vancouver strategy, which promised to build 72,000 new homes in the next 10 years. Tansey says long delays on zoning and permits may be partly responsible for the slowness. As for the building progress that has been made, the Vancouver Sun recently reported that some developers are exploiting loopholes—such as claiming social housing status for a whole building when only a few units are actually affordable housing—to keep “social housing” rents high.
In truth, there’s only so much that taxes and building quotas can do to combat these forces. As long as speculation and foreign investment keep property values sky-high, affordability will always remain a challenge in Vancouver. That said, making foreign ownership unappealing—or even outright illegal in some instances, as New Zealand has done—won’t singlehandedly reverse the damage. That country’s housing crunch hasn’t improved much since banning foreign ownership of existing properties last year, primarily because it wasn’t accompanied by proper incentives to build affordable housing.
Tansey argues the province has a leadership role to play in creating a comprehensive framework for affordable housing across the 21 municipalities that make up Metro Vancouver’s patchwork. At the heart of any such framework is an important question: Who gets to live in Vancouver?
Addressing housing inequality for real likely require directing what types of housing get built and who gets to occupy those homes, rather than leaving it up to the market to decide. “If the solution is to create more housing, there should be an emphasis on who you’re trying to house,” he says.