By Auli Parviainen
Published: Feb. 25, 2012.
Recently, BC’s Finance Minister Kevin Falcon announced a $10,000 First-Time New Home Buyers’ Bonus, a temporary refundable tax credit for first-time buyers who purchase newly-built homes.
Citing the difficulties of saving up for a down payment, Minister Falcon encouraged us to “think what a difference this will make.” Why not, I thought, let’s review the BC housing market and ponder the impact of this tax rebate in terms of real affordability.
In the last decade BC residents have seen doubling home prices or more while their family incomes have remained practically the same.
The average homeowner now spends almost 55 per cent of their gross household income on housing costs as opposed to meeting the Canada Mortgage and Housing Corporation (CMHC) definition of affordability as no more than 30 per cent spent on housing.
Since British Columbians live in some of the most expensive real estate in North America, the challenge for housing affordability is tremendous reaching far beyond the most impacted first homebuyer that minister Falcon aims to assist.
The situation is not much improved for tenants, whose incomes have also not kept up with rental pricing in a marketplace introducing relatively low volumes of new rental housing stock, possibly due to restrictive tax policies.
While I believe we should review our assumed cultural expectation of home ownership I am not sure that the rental market has much improved affordability in store.
Recently HAS: Housing Affordability Symposium , the second ground-breaking initiative by Canadian Home Builders’ Association of BC and BC Housing, again brought together industry and all levels of government to collaborate and address the barriers to market housing affordability.
Embracing the solutions-oriented approach, the agenda featured presenters from across the country with practical and effective applications in the areas of community planning, regulatory environment, maximizing housing stock and economics. Compelling key themes emerged from the stakeholder conversations, namely the importance of densification and the connection to transit with mitigating climate change, economics and fear of change and cultural expectations.
The UBC Centre for Urban Economics and Real Estate Director Tsur Somerville highlighted one of the greatest challenges British Columbia and specifically Lower Mainland face in terms of affordability. Pointing to the “Big Guy” Somerville humorously noted the geography of the region causing a lack of developable land compared to that of Toronto and Calgary for instance.
In combination with BC’s attractiveness for newcomers and the subsequent ever-increasing demand, we will always be expensive comparatively speaking. However, Somerville stated that we can ensure we don’t make it worse and allow affordability to those most in need.
Somerville’s comments echoed the consensus that maximizing our scarce land resource by building density is critical for affordability. Vancouver Island community Langford has demonstrated commitment to affordable housing by their progressive community planning and zoning strategies. Langford’s policy aims to allow for diverse housing type availability, to ensure inclusivity and not segregation, to include both market and non-market (subsidized) options and to incorporate diversity of tenures thus both ownership and rental stock.
The community has accomplished much by allowing via zoning fee simple lots as small as 2400 sq. ft, fee simple townhouses, micro cottages, secondary suites (in some cases mandatory), carriage houses and flex units in some apartment and townhouse zones. Similarly, Vernon has shifted development away from greenfield hillsides and focused instead to redevelopment and densification in the City Centre and existing neighbourhood centres.
While introducing more affordability and diversity of housing stock, both communities have also managed the balancing act between meeting community needs/wants and development industry’s goals for marketable product and profitability.
Density arguably also does more for mitigating climate change than the much-venerated green building practices. Albeit both are important, a shift toward higher densities will lessen environmental impacts, contain urban sprawl and critically, allow for efficient mixed-use neighbourhoods and effective, less impactful transit options.
Surrey’s Community Planning Manager Don Luymes did note the cost challenge of providing mass transit in existing neighbourhoods and thus further emphasized the need for progressive planning now to combat that challenge in the future. Based on research proximity to transit and shopping/services consistently rate 2 and 3 after price in apartment selections, which indicates market demand exists for affordable, more dense, compact and diverse neighbourhoods.
Given our stagnant incomes, it has become practically impossible for many to access financing and save for a down payment. One of the more “radical” solutions comes from Options for Homes President Michel Labbe, who questiones why our most basic need for housing provides a profit benefit to such a small group of people. This non-profit has developed thousands of affordable housing units via shared equity solutions.
Bypassing traditional developer profit, slick marketing expenses and unnecessary luxury amenities, Options eagerly showcases a type of co-op model, which allows each owner to only own the portion of the unit they can afford, the rest is financed through shared equity partners. The residents are invested and care for their buildings, and are able build equity. More importantly, these developments introduce a diversity of income levels and inclusivity and can often circumvent neighbourhood resistance to high density. It’s harder to say no when you know your neighbours.
As I sit here writing in my single-family dwelling on a large lot, I know that changes in policy and community planning can only be as successful as our ability to shift our cultural expectations and consumer driven desires in housing. A room full of senior managers from all levels of government and industry all had only one bathroom growing up.
One or two people raised their hands when asked whether they have only one bathroom now. Similarly architect/planner Michael Geller discussed our bizarrely out of context thirst for granite countertops and seamless shower enclosures whilst wanting affordability. It appears that our expectations and actual housing needs are no longer aligned and will require significant shift to reflect the new reality of our communities.
A significant barrier to affordability lies within our community planning policies, which are often unduly affected by the polarizing nature of the current development processes. The traditional process often results in oversimplification, public conflict and debacles over my rights versus the rights of the collective. Just how do we then alter the course and partner in our communities to embrace a long-term vision with emphasis on the collective good?
I would suggest that it’s time for us to reconsider our attitudes and approach to public engagement and communication. Communities like Vernon and Langford among many others have reaped good results from proactive community participation and collaborative processes inclusive of all stakeholders.
Pre-zoning practices will remove political interference and influence from the process. Progressive community planning strategies founded in a collective vision and respectful of the community needs and wants will create a proper foundation for policy execution on an on-going basis.
City of Vancouver Councillor Geoff Meggs pointed out that Vancouver is losing the battle for head offices and corporate relocations to other cities with similar amenities and recreational opportunities due to the high cost of living. Sure, we in Squamish have a great recreational lifestyle but sustainable and livable communities need more than that on offer. Affordable and diverse market housing inclusive of ownership and rental options combined with transit access is crucial to our future success.