Housing crisis complexity defies sloganeering and quick fixes

Beware the simple solution. Beware the slogan. Beware the spin.

Our housing crisis is as complex as any medical mystery. Its diagnosis is difficult and the causes and prescriptions are nearly impossible to define and determine.

As we move into a municipal election campaign, there will be populist notions tossed about to fix housing. They smack of Make America Great Again rhetoric, and we should be careful not to swallow them.

The mantra of “supply, supply, supply” as a remedy for what ails us is a dangerous notion that building, building, building will address problematic prices. So much more needs to apply: low- or no-cost land, faster permitting, fewer fees, trust in builders, a long but cautious list of demand-side ingredients, a crackdown on cheats and fast flippers – on and on the list goes.

Candidates have to be smarter and more respectful of public intelligence than this in their pursuit and occupation of office, and they have to level that two decades of drift can’t be waved away with a wand or a hashtag.

And if there is any Merlin in our midst, she or he most likely isn’t a municipal official, anyway. The real magic, because the real power, is vested in senior levels of government.

The most pernicious myth on our hands is that we can create “affordable housing.” The pursuit of this myth has been at the heart of the municipal administration’s political success.

But affordable housing is what 30% to 35% of your income will buy, and we are well outside of that reach. Let’s agree the changing world’s economic effect on Vancouver has placed us in an era of “attainable housing” for more than a decade. And for many of us, attaining some housing has meant delaying families, working extra jobs, sharing space, putting off a vacation or avoiding any retirement planning.

Think it is possible to rezone a neighbourhood or vast city expanses to produce affordable housing? Let’s look at an expert report, little noticed when it was published last summer for Metro Vancouver, a clear clarion call for common sense.

The report came from the Coriolis Consulting Corp. and is titled Analysis of the Financial Viability of New Purpose-Built Rental Housing at Transit-Oriented Locations in Metro Vancouver.

I chose it to make the argument about the extraordinary challenge we face for two main reasons: it is an analysis about the form of housing almost everyone agrees we need in larger numbers, and it is written expressly for the decision-makers municipally. The report examines the appreciable gap between what housing costs to build and what people can afford to pay in our region.

Having read it a few times, all I say is: no wonder so many politicians aren’t running this year.

It concludes it is a fallacy that freely provided land, or exempted municipal development fees, community amenity contributions or even the elimination of developer profit can take us to the much-promised goal of this definition of affordability.

No, even all those advantages – combined – take us only part of the way, to perhaps $400 a square foot of wood-frame construction. That is $100 a square foot apart from what housing experts term “affordable” – that is, directed to those of a certain income. Direct subsidies are then needed.

The report found that, even for market-rate rental housing, there needs to be significant assistance to reduce construction costs, to focus on wood-frame building, to cross-subsidize rents with higher property taxes elsewhere, and to reduce the cost of land and capital.

“Supporting the construction of affordable rental housing is a much harder financial challenge, because the gap is so much wider,” the report says.

Forget about concrete construction: even wood-frame construction needs free land, reduced parking, reduced municipal fees and reduced financing, and little or no developer profit.

There is much more to say about this. But as we launch into a discussion as a community in a campaign, listen for the charlatans on the issue. Demand substance beneath the style and sizzle. 

Kirk LaPointe is editor-in-chief of Business in Vancouver Media Group and vice-president of Glacier Media.