Mortgage rates may be down, but desirable Vancouver remains an unaffordable city for many first-time buyers. Michael Goldberg, professor emeritus for the Sauder School of Business at the University of British Columbia, has been an outspoken critic of city policies that don't address what he perceives as a problem of under-supply and serious lack of density.
Q: What's the background context for what we have now?
A: Over the years, we have chosen to not substantially increase densities. One example is Marine Gateway at Cambie and Marine Drive. There, the developer wanted quite a dense, big building, and he was able to put in lots of rental housing. The planning department didn't like the building. Too big. Then the neighbours who got into it they didn't want any development. So wherever you look, there's huge pressure, with a lot of mythical statements being made. The myths tend to be about if you put density in my neighbourhood, you are going to destroy it. In point of fact, if you don't densify, you are more likely to destroy it, because when you densify a neighbourhood you are putting in lots of capacity to bleed it of the development pressure.
Q: "Bleed it of development pressure." What does that mean exactly?
A: Let's take a neighbourhood like Kerrisdale. People would say that's a special neighbourhood, a long-standing residential neighbourhood and we have to protect it. If you freeze the zoning and don't allow any change, what happens is that the houses get too big for people and they've got to move into smaller houses. And somewhat paradoxically, by freezing the density, you prevent the neighbourhood from changing.
Q: Because people can't make the shift from the homes they raised their children to the condos where they would retire, while staying in Kerrisdale?
A: Exactly. I'm talking along 41st Avenue, parts of Arbutus - busy places where there is already excellent bus service, already commercial stuff. If you let that area grow just on the edges of Granville and 41st, you can start to put in lots of housing. And what you're doing is you are protecting the interior streets, because you are creating supply on the edges and taking pressure off the interior, which would be rezoned.
Q: What's the alternative if that doesn't happen?
A: House prices continue to go up, and then comes the thing everybody
fears: 'Oh, my kids can't afford to live in my neighbourhood!' Well, they can't. We've been seeing it for a very long time. Vancouver has not been very aggressive at rezonings, and prices are very high. To me, it's a question of leadership, that governments - and particularly this government, which I genuinely believe is committed to making housing more affordable - have got to go and make these policies that people are going to object to. That's the nature of policy-making. You have to make decisions and ask, 'Is this for the greatest good? And does this help us create, in the long term, a more livable Vancouver precisely because we are getting more density, more variety and therefore allowing more people to live here?
Q: How does it affect prices directly, having more density?
A: It increases supply. Then increase in supply allows prices to moderate. And you are also going to have more choice. My biggest complaint against the planning department is their inability or unwillingness or whatever it is to be aggressive in creating density around transit stations. Oakridge could have 20 or 30 storey buildings and you could create a whole new skyline up there. Broadway and Commercial should have a much higher density than it has. In the West End, it's meant to be dense. When I heard that people in the West End are starting to oppose density, I thought there is something fundamentally wrong with the way the city is going about making policy. That's one way they restrict supply.
Q: What's the other way?
A: The other way is more complicated and it has to do with the incredible cost and length of time it takes to get buildings approved. The reason that restricts supply is the developers take risks, that's the nature of their business. You make a development riskier with high fees and very long delays. It can take two to three years to get a property rezoned. What that does is it raises the required return and slows the rate of development, so they will wait till they can be as sure as they can be, till the timing is good. That's a more subtle way, but the outcome is just as certain.