If the simple act of building more homes increased affordability, then Vancouver would rank among the most affordable housing markets in North America.

The paradox of the Vancouver real estate market involves several factors. The region's relatively small condo-building industry voluntarily constricted supply in 2008. Offshore buyers have come to dominate the high-end ($1.7 million and up) of the market. But underpinning these and other market manipulations is the simple fact that it now costs nearly $500,000 to build a family home here, while the average family can only afford to borrow about half that much.

In yesterday's installment, The Tyee's "Reinventing Co-op" panel discussed a "shared equity" strategy for closing that gap between what homes cost and what families can afford. Under such a plan, a family would "share" ownership of its unit with a co-op or public trust.

Today brings the good news: A potpourri of existing government housing programs could provide enough capital to close the affordability gap -- if such a shared-equity program existed, and if the provincial government would let it work.

"The obstacle to family housing is the B.C. government, not the federal government," said Nicholas Gazzard, who directs the Co-op Housing Federation of Canada.

Local and federal governments fund family housing

The City of Vancouver, like other large municipalities, has a long history of providing land for affordable housing. Many of the city's existing co-ops, for example, stand on city land that has been leased to the co-op at discount rates for a term of 60 years.

"The city has always been a supporter of co-ops to develop new neighborhoods," explained Cameron Gray, the retired director of the city's Housing Centre. "We see them as a foundation and a catalyst for new communities. Members may be a pain but they are good at building community," he added.

"The city continues to be supportive of co-ops," Gray continued. "When we can build them we still try to. I think there's a commitment for co-ops to provide affordable housing for families in a self managed way that doesn't result in price escalation."

Gazzard noted that the federal government also remains committed to co-ops and similar forms of affordable housing.

"Under the affordable housing program right now, provided by the federal government, the program provides up to $75,000 per unit in the form of a capital grant at construction time," Gazzard said.

"It's not enough to do affordable housing here, though it is in many parts of the country," he added.

"So what we're looking at," he continued, "is taking the capital grants program that are available now for basically non-profit development... and marrying that to the shared equity model."

BC diverts its grants to homeless housing

"The obstacle to family housing is the B.C. government," Gazzard continued.

"The federal government puts in $75,000 per unit under the present program... it's the B.C. government in this case that's decided it's not going to make any of that money available for coop housing, or family," he said.

Gray explained the province's reasoning.

"The provincial perspective is they're only going to provide housing which is housing-plus," Gray said.

"In other words, if you only have an affordability issue, they're not interested in providing you subsidies. You have to have a housing-plus-some other issue, whether it's an addiction or mental illness or physical disability," he said.

"They were initially focused on seniors who needed assistance, the Assisted Living Program. Now they're focused on homeless who need assisted housing," Gray said.

"These are very important issues," the City Hall veteran added. "However, for the city and for the province at whole, this issue of family housing is increasingly a serious issue."

Both Quebec and Ontario match the federal grant. And in both of those provinces, affordable family housing is being built.

"In the province of Ontario, co-ops are definitely disadvantaged because the provincial government wants sponsors to come to the table with some sort of asset or equity to contribute," Gazzard noted. "But they're not disfavouring family housing at all, they are doing family housing."

In response to a question about whether there might be some way to work around the provincial bias against family housing, Gazzard quipped, "If you want to open up the Constitution of Canada, yeah."

He continued, "On mainstream housing programs, the deal is the federal government is sort of the wholesale supplier of funding --- if money's on the table at all --- but the actual delivery of programs is provincial."

Making the numbers work

The Tyee co-op panel noted that if all three levels of government were to contribute, and if homeowners were empowered to contribute equity, there would be no financial limit to the amount of affordable family housing that could be created --- even in an expensive market such as Vancouver.

The rough numbers work like this: If the city puts up $50,000 worth of land and the provincial and federal governments contribute one-time capital grants of $75,000 each, that's $200,000. Match that with perhaps $275,000 in shared equity from a resident homeowner, and there is more than enough money on the table to build a new family apartment --- even in Vancouver.

The panel observed that such a subsidy for shared equity homeownership would be considerably cheaper on a per-unit basis than programs through which the government funds the entire cost of building new family housing.

Gray noted that unlike homeless housing, such a shared-equity grant program would create no long-term funding burdens for the government.

"It's a capital grant, it's a one-time shot," he said. "So there isn't an ongoing subsidy that is income-tested or whatever. It's a $200,000 grant of some kind that is held by a land trust or some kind of hybrid co-op."

Jim O'Dea suggested a change in terminology.

"I actually like the word incentive," O'Dea said. "The reason being is that government gives all these incentives to private business, to private industry, and they never call it a subsidy. So if you're helping poor people, it's a subsidy. If you're helping rich people, it's an incentive."

Gray noted that such incentives will be critical to keeping working families in Vancouver.

"This region, I think, is at risk actually in terms of its employment capacity. If it cannot accommodate families living near the downtown, this'll be a resort community," he warned.

Co-ops protect investment

Thom Armstrong, who directs the Co-op Housing Federation of B.C., noted that housing co-ops have a long track record of protecting such government investment.

"You've got to look at it from this point of view of the government," Armstrong said. "If you go back to the original federal programs, it's always been a partnership between the government and the co-op sector. The government invested in a supply of affordable housing and the co-op sector provided a government and management model that protected the asset over time."

A shared equity investment would require even greater protection, he said.

"If you've got a government investor in this scheme, that investor wants to know that the value of the asset is protected over time," Armstrong said. "And the best way, we would argue, to do that is to inject the principles of mutual self help and layer on the governance model of the co-op sector."

Gazzard stressed that while the province was a bottleneck here in Vancouver, the creation of such a shared-equity incentive program would have to begin in Ottawa.

"The persuasion has to be at the federal level, because that's the level at which the broad strpies of the programs are designed," Gazzard said. "That's where they say it's going to be a capital grants program, this is the level at which you have to match," he added.

"Politically I think that's actually potentially saleable in Ottawa. The attitude towards co-ops generally is good," he continued. "One of the main complaints you get from [the Conservative government] is that co-ops don't bootstrap -- but this [shared equity idea] gets people on to what they consider to be the right track towards independence and self help."

Tomorrow: Would fewer, larger co-ops serve homeowners better than thousands of smaller groups?