A search for more than band-aid housing solutions

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There was a bevy of promises made during the federal election to address the housing crisis, but scant few that addressed truly affordable housing, say some housing experts. There were the usual plans to supply more housing, and a few initiatives to dampen speculation – but there wasn’t drastic action to turn the crisis around, and there was little offered for renters, they say.

“Among the major parties, the goal is to get more people into the current housing market [rather] than to transform the housing market – I think that would be the best way to put it,” says Stewart Prest, professor in political science at Simon Fraser University.

“There is a sense that we want to try to orient the housing that will, in a way, prevent people from profiteering off it. But there’s also a sense that housing is an investment that people should be able to build wealth off of. So they aren’t trying to broadly tackle housing in a way that would change the overall pricing dynamics,” Prof. Prest says.

“They are allowing some people to have greater access to the market through, say, creating additional first-time home buying incentives, or creating a new savings account, so that for those who are already within range of buying a house, they are making it easier to get over the hump. But it’s not transformational change in terms of access.”

The federal government opted out of developing social housing in the 1990s and since then there hasn’t been the appetite to restore the old housing programs, such as subsidized co-op housing, Prof. Prest says. That’s largely because so many residents today have a vested interest in market-driven housing.

“It is this divisive issue where a portion of the country does quite well off increasing housing costs, and it means it’s harder to build a winning coalition in support of significant new reinvestment in social housing. The divisiveness of the issue makes it hard to build political consensus for action, because there are winners and losers,” Prof. Prest says.

He joked on Twitter about Vancouverites’ reactions to the revelation that Liberal candidate Taleeb Noormohamed had bought and sold more than 30 houses within a 17-year window, and how it showed divided opinion on the subject of housing.

“When we heard about Mr. Noormohamed’s house flipping issues, there were two reactions: outrage at the practice, and outrage that someone was doing it better,” he wrote.

It wasn’t too surprising then, that instead of offering fundamental solutions to a crisis, the major parties focused on how to balance equity and access, and to help first-time buyers buy in.

Leilani Farha, a former United Nations special rapporteur on the right to housing, said there could have been more in the party platforms to protect renters, particularly considering that roughly one-third of Canadians rent. One possible idea, she says, is to borrow from Denmark, where the law permits landlords to do major renovations on apartment buildings but then requires a five-year waiting period before they can raise rents.

“Could the Canada Mortgage and Housing Corporation, for example, say, ‘Okay, we will lend to you money to help you pay off your renovations, but you are not allowed to evict anyone, or, you are not allowed to raise rents for five years?’ ” she suggests.

Ms. Farha gives the parties credit for at least acknowledging that the problem goes beyond a lack of supply. She was impressed that the platforms addressed the financialization of housing. The Liberal party, for example, offered to bring in disincentives such as an anti-flipping tax to reduce speculation.

The Liberals also pledged a total of 1.4 million additional market-rate homes for the average income earner. They pledged funding to help municipalities move more efficiently through the zoning and permitting process, which can add years to the completion of a housing project.

Focusing on market supply without discussing the financial aspect of the housing system, is, however, not painting a complete picture, says one American academic. There has been a “fundamental transformation of housing” that occurred after the global economic downturn, says Renee Tapp, postdoctoral fellow at the University of Illinois Chicago. Dr. Tapp recently published a paper called Introducing the YIMBYs: Renters, housing, and supply-side politics in Los Angeles. In it, she looked at the extremely organized, pro-development Yes-In-My-Backyard movement, which has spread throughout North America, including Vancouver. The movement pushes for housing of all types, including luxury housing, based on the premise that existing housing stock will then become freed up at lower prices. She says it’s distinct from other renter advocates who generally argue against large developments and land assemblies that they see as the culprits of high prices and displacement.

“However, policy which fails to take seriously the role of finance has become politically popular by offering simple solutions to a complex problem,” she writes in her paper.

She gives the example of Blackstone private equity fund purchasing and renovating older homes as rentals, thereby removing housing from the market and increasing rents. That kind of financial accumulation has to be addressed when discussing supply as a solution.

“From a perspective that emphasizes housing as a financial asset (the financialization of housing), there seems to be much quicker and easier ways to increase the supply of housing. They boil down to moving investors out of the market. For example, banning short-term rentals and repealing tax-based investor incentives like tax credits and deductions, mortgage interest write-offs, and depreciation deductions, to name a few.”

As well, she says, the idea that new construction is the answer is a long game that might be too long. It usually takes years to build new multifamily housing, in any jurisdiction.

“I think John Maynard Keynes’s famous quote, ‘In the long run, we are all dead,’ is appropriate to consider here,” she says. “There is no guarantee when, if ever, we will reach equilibrium in the rental housing market and that, if we do, market equilibrium will be affordable.”

And major investors are aggressively moving into markets where demand is strong. Ireland, for example, has been experiencing the rise in housing costs partly owing to institutional investor activity. Ms. Farha has frequently criticized government policies that enable development and institutional investors to increase supply for profit.

Ms. Farha gives the example of the Mullen Park development outside of Dublin, in the university town of Maynooth. A 45-minute train ride from the city, the new community of 170 three- or four-bedroom townhouse would seem to be the perfect example of much-needed affordable supply. The houses went on the market for about $620,000 last spring. However, instead of selling to first-time homebuyers, an investment fund called Round Hill Capital purchased almost 80 per cent of the homes and added them to its portfolio as long-term assets – also known as rental units.

Closer to home, Core Development Group announced a plan this past summer to spend $1-billion on thousands of houses across Canada to add them to the rental market.

Tsur Somerville, University of British Columbia professor in real estate finance, argues that better tenant protections at the provincial level are needed to protect renters from power imbalances with landlords.

“When renoviction occurs to boost the rents and rent to somebody else, I consider that a tenant protection that should have been in place,” Prof. Somerville says.

However, he argues, large landlords have their place, especially if the idea is to greatly increase rental units.

“I think fundamentally what we are talking about is we’re looking for bogeymen, rather than wanting to make hard choices. Building lots of social housing is an expensive, hard choice. Allowing more supply and changing of neighbourhoods is a hard choice. There isn’t a magic-bullet solution that solves a problem in places with rapidly growing house prices, if that stuff is demand driven. We could … cut all house prices, but you’re not going to get re-elected cutting house prices 25 per cent. It would solve one problem and create a whole bunch of others, such as a major recession … bankruptcy … people all of a sudden not having retirement.

“I don’t want to freeze the world. That’s also not a solution. We all live in cities because they change.”

As renter groups such as YIMBYs and others grow in political power, the pendulum may swing more toward their concerns in future elections, says Prof. Prest, who has already seen it happening at the municipal level.

“That last municipal election was interesting because it seemed to me that it was one of the first times we’d seen more sustained focus on the issue of renters,” he says.

“We may, in a future election, see more focus on renters as the challenges become acute, because this isn’t going to go away.” he says.

Andy Yan, city program director at Simon Fraser University, says politicians would be wise to take note. Although historically homeowners were more likely to vote, there is not a strong correlation between housing tenure (renter or homeowner) and voter turnout in B.C. federal ridings, according to his 2021 preliminary analysis.

In other words, there’s nothing to indicate that renters won’t gain political power. And renters make up, on average, around half the population in B.C. Mr. Yan found that in the Vancouver-Granville riding, 52 per cent of households are renters; in Vancouver East, renter households are 60 per cent; Vancouver Quadra, 43 per cent; the West End 66 per cent; and in Surrey Centre, they account for 46 per cent of households. In the city of Victoria riding, 53 per cent of households are renters.

“Everyone talks about housing affordability but affordable, suitable, and adequate rental housing is the foundation of the housing ladder,” says Mr. Yan. “It’s the crux of the affordability crisis, and for the politician who ignores it, it will be at their electoral peril.”

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