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Affordable housing: the big challenge for Mayor Ken Sim

The number one issue in Vancouver is still affordable housing. The big challenge for the new ABC supermajority on city council will be to tackle Vancouver’s dubious distinction of being the least affordable city in Canada.
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Photo: Chung Chow, BIV

The number one issue in Vancouver is still affordable housing. The big challenge for the new ABC supermajority on city council will be to tackle Vancouver’s dubious distinction of being the least affordable city in Canada.

Housing prices in Vancouver are completely unaffordable, even for millennials earning $100K. Despite the recent increases in Bank of Canada interest rates/mortgage rates and the subsequent decline in housing prices, they are still higher by 30-40% than pre-COVID February 2020 prices, which were already unaffordable. 

Rental prices have also soared in September 2022.  Average rents are $2589 per month for a one-bedroom apartment and $3903 per month for a two-bedroom, according to Rentals.ca. Folks have to earn $104K to afford a 1 BRM and $156K to afford a 2 BRM rental apartment.

These unaffordable housing prices are ruinous for a city and are completely out of balance with Vancouver’s employment incomes. Housing unaffordability has enormous social and economic consequences for society, such as the inability to attract talented staff, millennials still living with their parents, couples delaying having children, more multi-generational households, more unsafe households, the exodus to the suburbs, necessitating more highways and the lack of social diversity in our city.

Unfortunately, Mayor Ken Sim doesn’t really have a full-fledged housing plan yet.  

Mayor Sim’s promise to speed up housing approvals at city hall is a start, as is the plan to set up a predictable formula for developers’ community amenity contributions. But these policies do not address the affordable housing crisis. They allow for a speedier new housing supply, but not necessarily for more affordable housing supply. The two are not the same.

Outgoing NDP Mayor Kennedy Stewart followed a disastrous supply-side housing policy which focused on increasing the housing supply in the hope that it would magically become affordable. That policy failed. 

According to CMHC’s September 2022 report, the amount of housing supply currently under construction in Vancouver has hit record highs. But housing prices soared higher and higher in Vancouver, despite increased supply, driven by investor demand (foreign and domestic) for Vancouver real estate. City hall squandered the opportunity to require developments to provide significant affordable housing as part of the permit process. For example, the massive 28-acre Oakridge Park development currently under construction was required to provide only 13% of the 3,300 units to be “affordable” apartments. The rest are being sold for $2,500 per sq. ft. at offices in Dubai and Shanghai.  

Douglas Porter, BMO’s chief economist, recently wrote, “Please stop with this supply myth,” housing myth that is routinely and falsely touted by the real estate industry.

Conclusion: more housing supply alone doesn’t create affordable housing, unless that increase in housing supply is made affordable through other government policies. 

The failure of the NDP on affordable housing may be attributed to left-leaning politicians being naïve and financially inexperienced in the world of real estate finance and housing market dynamics. City hall’s naïve “density for dollars” scheme has corrupted both the city’s financial model and its city planning directions. The saving grace is that businessman Ken Sim, a UBC Sauder Business School graduate, is experienced in finance and has created two successful businesses.  This mayor is not naïve and is not beholden to anyone.

If Mayor Sim’s new city council is truly serious about affordable housing, decisive political action is required now. 

Three practical affordable housing solutions for city hall: 

  1. Unlock public land supply. “Public land for the public good” sounds like an obvious public policy goal. As a start, use public lands like the city’s $7B portfolio of city-owned land to build affordable housing. The land cost is $0. City-owned EasyPark parking lots have the potential to be redeveloped as mixed-use developments, including parking. Vancouver Public Library lands near major commercial arteries could also be redeveloped as mixed-use buildings with the library at grade and affordable housing above. Excess school board lands could be used to house teachers. 
  2. Require more than only 20-30% “affordable” housing in new developments, as currently required by city hall. When developers receive a higher residential density on their property through a rezoning application, it’s a financial gift. The current formula actually encourages developers to build 70-80% “unaffordable” luxury housing for higher profits. The current formula hasn’t created nearly enough affordable housing.
  3. Vacancy Control. Prohibit tenants from subletting their homes at higher rates than their lease and ban the use of their rental apartments for higher Airbnb rates. Prohibit landlords from increasing rents between tenancies, except for construction costs. These could be implemented immediately to prevent rental units from being commodified and converted to unaffordable housing. 

The current affordable housing crisis in Vancouver and elsewhere in Canada is a problem that is years in the making, and it will take time to turn around. 

There is no silver bullet, but focusing on the implementation of some of these measures can at least start to make a difference. 

Arny Wise is an urban planner and retired developer in Vancouver.