Housing affordability is one of the main issues I hear about in my community. In Burnaby, over the past ten years, housing prices have soared forcing some people out of their homes and communities, and others into uncomfortably high debt, especially given rising interest rates. Sadly, Burnaby is also the only city in the Greater Vancouver Area that actually lost stock of affordable housing over the past decade.
As of mid-2018, while federal and provincials measures have cooled prices for large, single family homes, entry-level family homes and condos remain out of reach for most.
What are some innovative ways to address this problem? I’ve worked on a few, and would like to share.
- Development models. Can a city create innovative contracts that make it profitable for a real estate developer to create rental housing? This is not a new question in Vancouver. In the 1980s, the City of Vancouver worked closely with VLC (now Concert Properties) to provide a long-term management contract in exchange for purpose-built rental stock. The deal was controversial, but showed the power of policy and negotiation to try to work with developers. The role of deal structuring in creating affordable housing shouldn’t be ignored, and can make a far greater difference than the building’s bottom line price tag alone.
- Construction techniques. Houses and condos are expensive and time consuming to build. One of the reasons that developers can’t offer cheaper housing is that they would lose money , and ultimately not be able to unlock investment to build them. Meanwhile, government housing funds – funded by taxpayer dollars – simply don’t have the scale to develop affordable rental housing in the numbers required. I’ve been supporting Ed Champion, a colleague of mine from Singularity University, on applying 3D printing innovation to the construction of low-cost, high quality homes, to serve the 1.5 million people in crucial need of housing. Check out his website at IndigenousHousing.ca
- Mortgage rules. Banks and the federal government both have a role to play in setting mortgage conditions. While the Bank of Canada has tightened mortgage requirements to avoid debt overload, some creative lending institutions like Vancity have experimented with shared mortgages. There are complications to shared housing, but for would-be buyers, it could be a great way to get on the property ladder, build equity, and access housing stock that was previously out of reach (e.g. for young families seeking 2+ bedroom homes for their families).
At the highest level there are some major levers that can be pulled in a housing strategy, and each must be used carefully.
- Increasing supply: This is a must in the Greater Vancouver Area, however it can tear at the social fabric of a community and create forceful displacement of people if used too bluntly. For example, increasing the supply of luxury condos will likely not serve the population that is stressed from housing shortage in the first place.
- Lowering cost: This strategy must be complemented with technological advancement, such as the 3D printing innovation referenced above. Decreased cost should not come at the expense of decreased quality and liveability.
- Tax and finance innovation: Incentives, such as rebates and tax credits, can be changed to encourage more people to rent out spare rooms and units, and banks can play within their regulatory boundaries to offer products like Vancity’s mixer mortgages.
Solving for affordable housing is a major issue of our current generation. It is my hope that Burnaby will see the right mix of increased supply with creatively structured deals that allow the private sector and public sector to create accessible rental housing for the range of residents in my community.