Why is there a homeownership affordability issue in Vancouver? The answer is simple: the market is under supplied for the demand, which pushes prices up, while at the same time the median income of the average Vancouverite is the lowest of all the major Canadian cities
Homeownership Price/Average Income = Affordability Ratio
Three Ways to Increase Supply:
Increasing supply is the area where currently most of the solution conversation is focused. Here are three ideas to consider:
- Rapid transit – the supply of housing is increased exponentially by providing excellent rapid transit to the suburbs and throughout different areas of the city. The “No” vote in 2015 transit expansion plebiscite has largely been cited as a vote of non-confidence in leadership and management as opposed to expanded rapid transit. Effective transit can significantly increase the housing supply.
- Multi-unit incentives – The local government planning departments should provide people with incentives to augment their current single family homes into multi-units. This has started with laneway housing and legal suites, however getting building permits and meeting ever changing development parameters makes this a frustrating, long, and costly process. Let’s figure out how to best enable more multi-units.
- Three-bedroom development quotas – The elusive three-bedroom condo is increasingly hard to find in Vancouver. Perhaps local government could require increased quota of three-bedroom units in each large development projects.
One Way to Reduce Demand:
Most of this conversation revolves around limiting foreign investment with taxation. Here is another idea that may curb the demand from the foreign investor.
To begin, it is important to understand what the foreign investor is looking for and then remove or limit any incentives to it.
The current market puts a high value on a single family home that can be torn down and replaced with another single family home. Currently, in Vancouver it is much easier to tear down a house than restore it. Any house, one built within the last 20 years or one with heritage status can and have been torn down. But what if all new builds of single family homes had different building restrictions on them and, as a result, became less attractive to tear down and more attractive to restore? For example, if you are building a new single family home the building permit process is a low priority compared to those restoring a home and/or converting a property to a multiunit such as adding a legal suite or laneway house. Funnily enough this seems to be more inline with Vancouver’s Green City goals. The greenest house is the one that exists even with its inefficiencies. This does not mean that some houses should not be demolished, however the pendulum has swung to a default position of tearing down and not restoring.
Two Ways to Increase Means:
This is the least talked about component of the affordability ratio and probably the one that needs the most attention because it is the least understood and requires the most strategic thinking. The question is how does the city of Vancouver attract businesses and industry that will pay a wage more in keeping with the cost of living or at least competitive with Toronto and Calgary?
- Increase Vancouver Head Offices - Continue to incent and grow businesses’ head office location/re-location to Vancouver. Vancouver has led Canadian cities in the growth of head offices from 49 in 2004 to 95 in 2014, an increase of 93.9% (https://www.biv.com/article/2014/10/vancouver-leads-nation-head-office-growth/)
- Partner with Industry Leaders - Work closely with current resident industry leaders, like Port of Vancouver and understand how the city of Vancouver can help them in their business plans.