After sustained, monumental efforts on the housing crisis during which billions of dollars were committed, the entire zoning system was rewritten and local governments were issued punitive hurry-up orders, it was disconcerting to see three little numbers tucked away in the budget.
There was a 9.2 per cent decrease in housing starts last year.
The value of residential building permits declined 8.3 per cent last year.
The number of units in those permits dropped 10.8 per cent.
The analysis puts the best possible face on that dismal performance. It shows that the annual numbers fluctuate and notes that the 45,828 official starts are higher than the historical average (by 10 per cent).
The historical average is a notably low bar for comparisons. The historical average is partly what got us into this crisis.
The outlook for housing starts has “softened slightly,” but the forecast is for it to rise slightly and hit 49,900 by 2027.
But it is striking that the NDP’s all-front attack for a sustained period of time on the highest-priority problem in B.C. can’t show better results.
Elevated interest rates, labour shortages and increasing construction costs are blamed for the weak performance.
But the depth of the NDP commitments, the huge cost and the duration of the big housing push should be producing much better numbers than the above three.
There are more encouraging housing statistics elsewhere in the budget. The Housing Ministry has blasted out hundreds of news releases in the past few years heralding affordable new homes in the works here, there and everywhere.
But it comes down to the fact that you can’t build houses if you can’t hire builders. And you can’t force the private sector to build if the financing doesn’t work.
Premier David Eby said the private sector does most of the building and it’s been hit by a perfect storm of interest rate and material cost hikes and labour issues.
“When you put those things all together, many projects that were planned to go ahead have been put on hold …”
Those “dramatically” escalating input costs are a core focus of the housing ministry, he said.
It’s only day two of the U.S.’s economic attack on Canada and the impacts are still being assessed. Safe to say it’s nothing but bad news for the housing market, though.
The housing numbers in the budget are a long way from the picture Housing Minister Ravi Kahlon has been painting.
“People are seeing more homes being built in their communities,” he said midway through 2023. It was a record year for starts and “we are on pace to meet or exceed that level in 2024.”
He put the value of the overall housing push at $19 billion over the long term. Apart from funding, the government also enacted laws to overrule local zoning and set specific targets municipalities have to meet.
In November 2023, the government set a confident course for the coming year, hailing “transformative action on housing.”
Eby said then the government was getting more homes built faster and the stage was set to continue the push, with a target of up to 290,000 new homes over 10 years.
A specific BC Builds program was unveiled in 2024 with a $198-million budget.
Tuesday’s budget promises $318 million more over three years and access to $2 billion in provincial financing.
Conservative Party of B.C. finance critic Peter Milobar cited the drop in housing starts and building permits while criticizing the NDP efforts. He said: “The government keeps patting itself on the back that we will have 46,000 home starts.”
When the NDP took power in 2017, there were 44,000 new home starts.
“If they think an extra 2,000 homes per year when you’re adding … about 100,000 people a year — it isn’t exactly tackling the housing problem ….”
Population growth is expected to drop significantly and even turn into a decrease due to a federal immigration clampdown.
Supply isn’t the only factor driving the housing crisis and other drivers are more encouraging.
But the vaunted push to “build more homes faster” is not producing the expected numbers, and there’s no reason to expect the trade war will improve things.
