Capital Ideas: Housing supply should be a priority for Victoria council and voters
When society is faced with shortages, the typical response is to produce more of that thing, not constrain it
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When society is faced with shortages, the typical response is to produce more of that thing, not constrain it
In a story published in the Capital Daily on Aug. 12, 2021, City of Victoria Coun. Geoff Young states his view of the challenge of ensuring enough rental properties are available to meet the city’s growing demand. He is correct that it is a complicated problem, but he is wrong that speeding up the process for supply is not part of the solution.
In fact, with the federal election ongoing, we believe housing supply should be front and centre in the minds of voters.
In Victoria, we have already been grappling with this for years. In June, city staff presented to council a report on housing need, which set out that latent demand for housing in the city is estimated to be between 4,500 to 6,000 units. This means that there are already 4,500 to 6,000 households living in the city that are under- or improperly housed. This could include a family of four living in a two-bedroom illegal basement suite, a low-income individual forced into a market rental where they have to pay far in excess of 30% of their income for rent, or a homeless individual without access to a deeply affordable home. The Official Community Plan (OCP), published in 2012, anticipated Victoria growing by 20,000 and reaching a population of roughly 100,000 by 2041. That amounts to the addition of approximately 670 net new residents per year, but according to the 2016 census, we are nearly doubling that pace, having added an average of 1,155 net new residents per year in the five years following the 2011 census.
The delay in building homes to meet that need is baked into the way we build: almost everything other than a single-family home requires a 10-step, often years-long approval process that concludes with a public hearing. In all of 2020, 1,516 units of housing were approved at public hearing. Of those 1,516 units approved, 544 units were below market and a small percentage of those 544 units are considered deeply affordable for those with the lowest income. Those housing supply figures do not include units that can be built without rezoning in Victoria, which almost always means a home for only a single family replacing a previously existing single-family home. The current benchmark price for such a home in Victoria, according to the Victoria Real Estate Board, is $1,089,000.
Young points to the importance of the OCP as a document to guide development decision-making and suggests that doing away completely with zoning will solve nothing. Young presents a false dichotomy in this regard: proponents of zoning reform do not suggest doing away completely with zoning and OCPs, only that the process be depolicitized and modernized to meet our present day challenges. Moreover, despite Young’s reliance on the OCP in support of his position, a review of city staff reports since January 2020 shows he has voted against 10 development applications where the planning department told city council the application was generally consistent with the OCP, illuminating that there are deeper issues holding back the supply of housing. Those 10 applications represented 270 new homes in our city, and 28 of them were below market.
Young says that a lot of people that move here want to move here because of the way it is. This, of course, excludes folks who move here out of necessity to find work, or who grow up here and eventually need to find housing of their own. Young campaigned in 2018 on “[protecting the] traditional residential neighbourhood.” It should be noted that this position is not unpopular, even while it is largely responsible for creating the scarcity that has led to the housing crisis we face today. This is particularly so in urban centres where much-needed jobs and amenities are concentrated, but wages cannot keep up with skyrocketing rents. Suggestions that people who are already attached to the city either by birth, family, employment, community, or otherwise simply “move somewhere more affordable” are not realistic as jobs continue to be concentrated in cities and rents across the country soar.
The irony of protecting traditional residential neighbourhoods is that while those neighbourhoods historically housed much of the middle class, our current housing market sees those same folks priced out of them. As a result, it is in fact the status quo that will inevitably fail to protect the traditional residential neighbourhood because only the wealthiest in our society will be able to afford to live in those mansionized neighbourhoods.
While much of the data and anecdotes paint a dismal picture for our future housing landscape, there are solutions available. What is needed is a suite of policies and regulatory reforms that address all aspects of the housing continuum, from shelter spaces to single-family homes.
Many of the solutions are set out in the recently published Canada-British Columbia Expert Panel on the Future of Housing Supply and Affordability. It identifies the public hearing process as a major roadblock for housing supply across the continuum because those hearings over-represents existing homeowners who attend the hearings in great numbers to voice their concerns over new development. Those who do not yet live in that neighbourhood, but who would benefit from the additional housing, have little or no voice in the process. Capital Daily recently highlighted the energy and organizing that occurs in response to new development in their piece about 902 Foul Bay, where opponents have gone to such lengths as tracking employees down at their homes, creating websites and funding legal challenges to thwart progress.
Despite Young’s contention that allowing higher density will only drive up land values, which is likely true in the current spot rezoning scheme used by the city, the fundamentals of a modern-day economy tell us that when there is excess demand for a good or a service, it creates scarcity, and prices will go up. That is what we are currently faced with in Victoria and much of the country in terms of housing. If you have a shortage of something in society with significant latent demand, like face masks at the beginning of a pandemic, the typical response from society is to produce more of that thing, not continue to deliberately constrain it through policy and regulation.
While up-zoning large areas of land might have the effect of increasing the land value to some degree, that analysis fails to account for the fact that the up-zoned land can now provide homes for six or seven families—a townhouse development perhaps—where that same land previously was only allowed to house one family. It would follow then that the marginal increase in land value, surely passed onto the eventual occupants, would be split several ways, making the per capita cost of housing lower. This is supported by the fact that while the median price for a single-family home in Greater Victoria in July 2021 was $1,050,000, the median price for a townhome was $705,000 and the median price for a condo was $484,950.
Approximately 68% of our residential land is currently reserved for single-family homes based on a review of current zoning maps. The city is currently attempting to remove exclusionary zoning (i.e. land restricted to single-family homes) in some areas of the city, through the Missing Middle Housing Initiative and the Villages and Corridors planning, but both proposals are set to face opposition from a number of city councillors, and will inevitably face opposition from those seeking to “protect traditional residential neighbourhoods.” Couns. Isitt, Dubow, and Young voted against moving forward with the Villages and Corridors plan in part, and Couns. Isitt, Dubow, Thornton-Joe, and Young voted against moving the Missing Middle Housing Initiative (MMHI) forward in its entirety.
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Contrary to Young’s belief that any zoning reform that results in up-zoning will surely increase land costs, the economic analysis presented to city council as part of the MMHI, completed by Coriolis Consulting Corporation, found that “with the exception of the townhouse typology in the higher value market area, the typologies we tested do not generate any estimated increase in lot value beyond current single family property value.”
It must be noted that allowing the building of diverse housing forms by itself will not help those at the lowest end of the housing continuum (at least in the short and medium term), though that should not be a reason to maintain exclusionary zoning bylaws. It just means that more measures, not less, are needed.
Land value, construction costs, and red tape—right now—are simply too high and too much for any developer, aside from the largest development companies, to reliably provide deeply affordable housing in the city. To address this, we need to mobilize all levels of government to restart large scale social housing programs we have seen in decades past. While the most recent federal government increased funding for some CMHC programs aimed at increasing the supply of affordable housing, they have still failed to earmark any new funding for full-scale social housing, aside from a last minute injection to the Rapid Housing Initiative. For those CMHC programs that did see increased funding, they did not require that the municipal approval process for them be reformed. As a result, much of that available funding has gone unspent as it is particularly non-profit developers who find challenges navigating the municipal approval process like the one we have in Victoria. To this end, the city planning department recently presented council with a plan to increase the supply of affordable housing in Victoria.
On May 14, 2021, city staff presented a report that proposes fast-tracking development applications exclusively for non-profit housing providers if they meet certain affordability requirements, design guidelines, and are generally consistent with the OCP. It was made clear to council by their staff that we currently see fewer than eight (only one in 2021 at the time of the report) such applications year after year due to the length, cost, and uncertainty of the housing approval process at the municipal level (and for that matter, most cities in Canada face this problem.) This fact should be setting off alarm bells.
This proposal, like ones before it, is set to face significant opposition by those who claim to support non-market housing, but also wish to protect the “traditional residential neighbourhood.” Young, along with Couns. Andrew and Thornton-Joe, voted against moving this affordable housing reform forward to the consultation and preliminary planning stage, while others voiced concerns but allowed it to move forward. Like the MMHI, this proposal will come back to council in the next year for another vote.
This policy and regulatory crossroads represents the real litmus test for whether someone is truly a proponent of increasing the supply of non-market, affordable housing and not just saying it for votes at election time. It is one thing to repeat ad nauseum that you support and want to see more non-market housing on the campaign trail, but another to understand what that means and what needs to occur in our housing policy framework to make it happen. At our current pace, we will continue to fall further behind housing demand across the continuum year after year.
Outside of the municipal level, but still inextricably linked to it, are policy solutions within the purview of the federal and provincial governments. The federal government is responsible for the funding of many housing programs across the country, and provincial governments control the laws and regulations that municipal governments act on. Now on the eve of a federal election, the major parties have recently released their platforms on housing, though none truly acknowledge the full scale of the housing affordability problem.
The Conservative Party of Canada (CPC) was first out of the gate with identifying one important tool for change at the federal level, now implemented in the platforms of other parties. They propose tying federal funding for transit to increasing housing supply and diversifying housing types around funded transit areas, but their platform does not address the full continuum of housing needs in the country in an aggressive enough way. To this end, the New Democratic Party (NDP) proposes building 500,000 affordable units and providing less incentives aimed at increasing homeownership demand compared to the other two major parties. The linking of federal funding to housing reforms is similar to actions recently taken by Joe Biden, who has made federal funding to cities contingent on ending exclusionary zoning practices. Perhaps a hybrid of the CPC and NDP platforms, without the demand measures proposed by the CPC, would represent a more complete housing platform that might begin to alleviate the housing affordability crisis. Since their initial platform announcement, the NDP has adopted the approach of linking federal funding to housing reform at the local level.
Unfortunately, most of the parties (including the NDP but to a much lesser extent) continue to promote numerous demand measures in their housing platforms, like cutting the costs of mortgage insurance, which is meant to help protect against the type of housing bubble we saw explode in 2008. While they are proposing a number of supply measures as well, the Liberal Party of Canada is proposing to spend approximately $7 billion over the next four years to boost demand. Canadians are already overleveraged because of historically low interest rates and there exists no shortage of demand from homebuyers in our country. The problem we face is that the pool of homebuyers cannot find homes to purchase outside of scarce and expensive single-family homes. Bidding wars are a result of excess demand, so funneling even more resources towards fueling demand makes no sense. Those demand side measures will only worsen the affordability crisis, but it will likely attract votes because it does not disrupt the capital gains of existing homeowners.
No party has explicitly acknowledged out loud what solving the housing crisis in our country really means. More aggressive supply side measures, like those before city council, might in the long run stabilize home prices, but with that comes a cooling of home prices for existing homeowners.
The vision being offered here is not to see cities like ours covered with towers in every corner or to disregard documents and guidelines like the OCP. Rather, it is simply to make it more feasible for housing providers to build a wider range of housing forms, collectively called the Missing Middle, that includes townhouses, triplexes, low-rise apartments, and mid-rise apartments in areas of the city where they are currently illegal to build without an onerous and contentious rezoning process. Our zoning regulation bylaws themselves in many cases are inconsistent with what our OCP calls for in terms of density; even in an area where the OCP suggests four storeys is appropriate, the land in that area might still be presently zoned for single-family homes only. The zoning status quo incentivizes an imbalance in density where right now we see high-rise condos going up around downtown and single-family housing most everywhere else. Careful changes, like those proposed right now in Victoria, will put us on the path towards affordability, a more equal and just society, a more livable city, and will result in less incentive to construct high-rise housing in a concentrated area of the city.
The available paths forward leave two choices for voters in upcoming federal and municipal elections: you either support affordable housing for all, and thus a likely stabilization of home prices for existing homeowners in the long run, or you oppose affordable housing for all, because it may decrease the future capital gains for existing homeowners. Any candidate claiming to support and protect both at the same time should be asked how they intend to increase affordability without stabilizing current home prices and without protecting the “traditional residential neighbourhood” as it currently exists. The first principle of housing policy should be to provide homes for living, not to continue to enrich those fortunate enough to have bought a home at the right time.
Jeremy Schmidt is a contributor to Homes for Living, which describes itself as a collective of residents passionate about making Greater Victoria more affordable for homeowners and renters by advocating for regulatory reform, increasing transparency, and drawing attention to housing matters at the municipal level.
CORRECTION: This article has been updated to clarify that federal government funding for social housing has not meaningfully increased in recent years.