Will Vancouver Ever Be Affordable?

April 2, 2014

The two-bedroom apartment — brand-new, above ground, a block from Trout Lake — was only $1,650 a month, and Ryan Strange wasn’t slow to grab it. The software engineer, 29, makes a salary well above the median in Vancouver but had been crammed into a small apartment in Kits with his wife and toddler. He wanted to be on the East Side, closer to work in Burnaby. “But apartments in this area tended to be basement apartments or not well maintained or both.” He’d given up hope of buying in expensive Vancouver. “Just doing the basic math, it doesn’t work.”

When he moved into the attractive five-storey building — with its own inner garden and a smart exterior of brick and horizontal black-frame windows, perched on the curve of Commercial where it turns into Victoria — he didn’t know much about his new home. In fact, it’s likely that no one in the Porter is aware they are part of a Vancouver council initiative aimed at creating affordable housing in a city routinely described as one of the continent’s least affordable.

Critics of Vision Vancouver have slagged the initiative because it grants developers extra density in exchange for a promise to rent, not sell, apartments for a minimum of 60 years. And because Vision’s broader understanding of affordability has been shifting. When the party approved its 10-year housing plan in 2012, it sounded an awful lot like the idea was to build stock for people earning between $21,000 and $86,000 a year so they could afford to rent using the standard formula: 30 percent of gross income max. For those at the bottom, that meant the City kick-starting apartments that could rent for less than $600 a month.

More recently, council reports seem to suggest that any rental at any level is more affordable than buying. They happen to be right. (A two-bedroom condo in a building behind the Porter that looks almost identical is selling for $429,900, which would require a down payment of at least $21,500 and payments of about $2,100 a month. For Strange, who doesn’t have that kind of money saved and for whom $2,100 would be a stretch, it’s just out of reach.) Being right isn’t enough, though, for housing advocates who insist that $1,650 a month could never be considered affordable and that these rental buildings are just giveaways to developers. Whatever the complaints, the price doesn’t seem to be driving anyone away. When the Porter was advertised for rent last year, tenants filled the 200 units within the first month. Some think it’s a good deal. A few think it’s outrageously expensive. But there are no vacancies.

Cressey Developments calls the Porter a success. It hadn’t built rentals in Vancouver for over a decade, and president Hani Lammam says it’s the City that made this project work. It exempted the company from having to build the industrial space required by zoning, allowed it to go up a storey to five, halved the number of parking stalls, and even waived development fees — though the price of land and construction were still major drivers, as they are for any project, representing about three-quarters of costs. Still, the City did the best it could. Says Lammam: “This has been in my 20 years the most effective thing I’ve seen.” There is more like it on the way: in the Cambie Corridor developments, in the Oakridge redevelopment, and along Kingsway.

More recently, council reports seem to suggest that any rental at any level is more affordable than buying. They happen to be right.

 

Yet does anybody even know it’s happening? Or that it’s about the best any city can do, short of miraculously causing $2-million houses to sell for $800,000 or finding the billion or so dollars it would take to subsidize thousands of new apartments at 1990 Montreal rents? Vision councillor Geoff Meggs says he’d like to affix something tangible to the Porter that would explain what it’s all about. “I’ve been asking staff to put a sign on it, saying, ‘This is part of the City’s affordable-housing program.’ ” It’s a slow battle for mind share, though. We all feel aggrieved by the cost of housing. We all expect the City to somehow do something. But big surprise: it’s really hard for council to make a dent in either the reality or the perception that this place is crushingly unaffordable. “People require visual confirmation before they realize things are changing,” says Meggs. “What we’re doing is still a drop in the bucket.”

Is there a person in this town willing to accept that housing costs are not damaging Vancouver in profound ways? High costs are blamed for the decline of school populations, the flight of young adults to the suburbs or farther, and the inability of all kinds of organizations to attract and retain employees. In vain a few stats analysts like Andrew Ramlo at Urban Futures have argued that the way-high prices in a few hot spots skew our perception of the market. Yet reports from banks, school boards, and international organizations keep insisting that housing prices here are seriously disconnected from income.

The numbers suggest otherwise. There’s no question houses cost more here than in Calgary or Ottawa, but it’s unclear what impact that has. Yes, Vancouver is losing schoolkids, with parents in surveys claiming they’re leaving because of high house prices. But schools in Langley have also had to close as population declines. And Vancouver is actually building schools in parts of the city — downtown, UBC, Marpole, the Olympic Village — where the population of school-aged children is climbing or is expected to.

And if high housing costs are driving out young people or forcing them to spend their lives in basement suites, it’s not apparent from the statistics. Fewer youth here? Not true. People between the ages of 20 and 34 represent 25 percent of the population in the city of Vancouver; in Calgary, where city numbers include a vast swath of single-family suburbs, it’s only 23. Do they all rent? Among those 25 to 34, according to the 2011 National Household Survey, 34 percent own homes in Toronto and 57 percent in Calgary. That’s compared to 26 percent in Vancouver but in the Lower Mainland, which is more directly comparable to other metropolitan areas, it’s 48 percent. Moving up one age group, 45 percent of people here between the ages of 35 and 44 are homeowners (62 percent in the Lower Mainland). That’s lower than the 73 percent in Calgary but in line with the 50 percent in Toronto.

Even in overall housing costs Vancouver doesn’t top the country. That’s Toronto, where housing demands an average of $1,366 a month; in Calgary, it’s $1,339. Vancouver trails at $1,294. Lower Mainlanders also pay less for transportation and utilities than people in other cities, thanks to our clement weather, good transit, and compact, walkable neighbourhoods. Now, a third of Vancouverites do spend more than the recommended 30 percent of income on housing. (And almost half of renters do.) But that’s because incomes are lower. Or, some analysts argue, just appear to be. B.C. has the highest level of unreported income in Canada. Whether that’s drug money, under-the-table proceeds, undeclared basement-suite rent, or revenue coming in from offshore, no one knows for sure. All that is certain is that the amount people in B.C. report they spend in a year doesn’t match their income. Or, in some cases, housing prices. Richmond, for example, has one of the lowest median incomes in the Lower Mainland yet some of the most expensive real estate.

If high housing costs are driving out young people or forcing them to spend their lives in basement suites, it’s not apparent from the statistics. Fewer youth here? Not true.

 

what do we even mean when we talk about affordability? Vision councillor Kerry Jang earned scorn last year when he defined it as “what people can afford.” He’s not wrong, though. Just imprecise. For many, affordability is not merely about what they can afford. Those who typically complain loudest about high housing prices in Vancouver are not talking about how hard it is to find anything at all to rent: a crummy hotel room, a bedroom in a shared basement suite. For the bulk of us, safely installed above abject poverty, when we complain about the cost of housing, what we’re saying is: With my university degree and the income from my job as an architect/nonprofit manager/social-media strategist, I shouldn’t be reduced to buying a condo in Port Moody. Or: My partner and I should be able to use our combined income to buy a nice detached house on the West Side. It’s an expectation amplified by everything we see and hear around us. In other major cities where different assumptions are in play, living in (and renovating) rental suites still equates with the good life. But here, well, even though Vancouver isn’t Saskatoon, we persist in believing it should have matching house prices. The real injustice isn’t that we can’t afford to buy our way into the market. Clearly we can and do. It’s that we can’t all enter at the top. So Vancouver does what it can to create affordability — which can only be done by encouraging developers to create attractive but smaller places on the city’s expensive land — but our collective sense of grievance is not satisfied.

 

 

Perhaps we’d care less if we didn’t care so much. Mario Canseco of Insights West says polls repeatedly show that people in this region are substantially more real-estate obsessed than anywhere else in Canada. When you ask Easterners the value of their home, whether they think that value will increase, whether they’re thinking of moving — a lot just don’t know. That lack of interest doesn’t happen in Vancouver; here friends call each other to compare changes in their property assessments each January.

We compare not just among ourselves. We follow real-estate stories from everywhere, constantly marvelling at what can be bought for $400,000 in Charlottetown or Red Deer or Orillia. “We don’t do that kind of comparison with other things,” says Canseco. But we do it with real estate, forgetting to factor in that many of us would have to be paid richly even to consider living through an Alberta winter or on an island with a population smaller than Richmond’s. We look only at the house — not everything that comes along with it.

Our obsession, our anxiety, our aspirations, our competitiveness make us easy prey for the many people out there who use our fixation on property to advance their broader criticisms of the city. For Jason Clemens at the right-wing Fraser Institute, part of the problem is that Vancouver has restricted the transportation infrastructure, which makes commuting difficult. That puts a premium on housing that’s close to workplaces. Ergo, Vancouver’s sky-high prices. On the left, the municipal party COPE is planning much of its election campaign around the issue of affordable housing. Its members believe we should impose even stricter rent controls on the thousands of apartments that rent for some of the cheapest prices in town — and do more to stop landlords from evicting, renovating, then charging higher new rents.

Our obsession, our anxiety, our aspirations, our competitiveness make us easy prey for the many people out there who use our fixation on property to advance their broader criticisms of the city.

 

And then there’s David Goodman. The director of HQ Commercial, part of the family team that brokers and reports on apartment sales in Vancouver, says the problem is that the City has put a moratorium on demolition or conversion of its stock of older three- and four-storey apartment buildings. Those buildings should be torn down and towers put up in their stead. Only that will create the 7,000 or 8,000 units he believes will be required over the next three years. “I can appreciate the need to protect this housing, but should someone be allowed to live in prime Kerrisdale at $800 a month?” he asks. “Is there a law that dictates people should be able to live wherever they want?”

 

 

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