Who is really standing in the way of affordability?
Clashing housing letters underscore the need for solutions, not scapegoats
Goodman Report
Two open letters – receiving two very different reactions – have underscored the deep rift in the current debate about how to solve Canada’s increasingly urgent housing crisis.
The first letter, signed by 27 housing observers and addressed to Prime Minister Mark Carney and Minister of Housing Gregor Robertson, was a catch-all of criticisms and contradictions, a defence of low-density zoning, and an attack on investors and market fundamentals. The fact this letter has been, for the most part, warmly received speaks volumes about the state of discourse on housing in this province.
A second letter, signed by 25 prominent BC-based developers called – cautiously – for modification of the foreign investor ban, which is just one of many regulatory constraints holding back an industry already in deep distress.
Even if you disagree that foreign buyers are the answer, the case made by the developers is economically coherent. Setting conditions that encourage investors (both foreign and domestic) to get back into the pre-sale condo market will lead to more projects that are able to meet financing requirements and move forward to construction, ultimately resulting in new homes that end up rented out to local tenants or sold to owner-occupiers over time.
Even so, developers recognized public concern about the potential for foreign investment to have an inflationary effect, so they proposed limiting that investment to new construction, leaving the ban in place for existing housing. It’s a practical suggestion to boost the number of homes financed and built, with sensible guardrails to protect, and benefit, local residents.
Premier Eby promptly dismissed that request out of hand, and the same observers took to social media to mischaracterize the request as proof the development industry is only out to protect profits and speculators.
This divisive ideology fuels fear and targets convenient scapegoats – a classic populist tactic that betrays a deep misunderstanding of economics.
For their part, central to the critics’ framework is the belief that new market supply does not create affordability and, therefore, the policies making this supply possible should be eliminated or restructured. For example, they criticize CMHC financing for market rental projects, blaming it for inflating land values and rents – a bizarre claim when these very programs have sparked a rental boom that many economists say is finally starting to help drive rents down.
They repeatedly point to the “wrong kind” of housing being built, but who should decide what is right and wrong? The developers risking their capital and livelihoods; tenants and homebuyers lining up for the chance to live in one of these homes; or a self-appointed panel of “experts”?
The other suggestions are similarly dubious, or simply redundant. The critics call for policies to guarantee “tenant protection and zero net loss of affordable units,” even though such protections are already in place in most of Metro Vancouver. They advocate for “gentle, ground-oriented density” except in transit-rich areas where they allow that towers may be acceptable. Sounds a lot like the two-year-old provincial multi-plex and Transit-Oriented Area legislation which has been roundly condemned by most of this same group.
On one recommendation, however, all parties might agree, even if they don’t arrive immediately at the same implications. The critics want to “Tie federal support to reforms that ensure new development pays its fair share (my emphasis) for growth-related amenities, transit and public services.” A fair share would be good; the development industry has been documenting for years that municipalities have been extracting far too much in the name of growth-related costs from new construction as a way of absolving other property taxpayers (voters) from picking up their fair share. An even playing field – a truly fair distribution – would make housing more affordable for people entering the market.
Here is another point on which everyone must agree: we have a national housing crisis that will require all hands to resolve. It certainly will require a healthy development industry and a significant and stable supply of both market and affordable housing. No one is going to win if the ideologues continue to put (or maintain) insurmountable obstacles in the way of new construction and ignore the opinions of those involved in building those homes.
We need housing. It’s time everyone came to the table – not with divisive criticisms or constraints, but with viable solutions that can be implemented – quickly and for everyone.