Is One of These the Answer to Vancouver's Affordable Housing Woes?

Early last June, on the heels of Vancouver's "Don't Have $1 Million" protest over housing prices, the mayor gave city staff a directive: find ways to ensure families working here can afford to stay.

Buried in fourth place among five bullet points in the press release: "researching entry-level homeownership models to support young families who live and work in Vancouver." Models, that is, not just to keep affordable roofs over people's heads, but to help them get a toehold at least on the wealth elevator that home equity has traditionally meant for many Canadians.

It gained scant attention at the time, but nine months later housing staff have scanned the globe for ideas and hope to present their top pick to city council as soon as next month.

"We've been putting hard work into this," says Abi Bond, the city's director of housing policy and projects, in an interview in her Woodward's building office. "But we're not really at the point where we've got a fully baked option that we're ready to show to the public and to council yet.

"It's a huge policy shift for us to do this, so the legal issues, financial risks, community aspects have just taken us longer."

An obvious gap

In fact, Bond explains, affordable homeownership has been on her department's radar since 2012, when the Mayor's Task Force on Housing Affordability recommended the city consider "innovative housing models that can demonstrate a significant level of affordability (e.g. affordable homeownership models)."

"To bring something down from the full market price to something that people can afford," Bond says, "is the essence of the challenge we're facing.

"If there's a group of people who are too wealthy for subsidized or social housing, but are struggling to get on the property ladder, that speaks to an obvious policy gap."

The city isn't set on a particular threshold for how much income a household would need to qualify for any new program it sets up -- that's for politicians to decide, Bond says -- but in general the demographic being targeted in Vancouver's research includes household incomes up to about $96,000.

When her staff rolled up their sleeves last summer, they knew the task wouldn't be easy in a city fixated on two poles of the housing spectrum: persistent and rising homelessness and housing stress, and a global auction for luxury real estate assets.

"Abi warned me about how daunting this would be!" jokes planner Allison Dunnet, who joined the affordable homeownership team last July. "It's been fairly intensive. It's a lot of exploring."

One of the things Dunnet admits the city team has "grappled with" over the past nine months is how, realistically, to bring down the cost of units large enough to meet the needs of young families hoping to raise their children in a secure home of their own. Asking young professionals to settle for relatively affordable micro-suites and condominium towers won't cut it for most.

"We've seen that as a real issue in the last couple years," says Dunnet, whose last city role was studying the challenge of appropriately-sized family housing.

"The price point here is quite high," she says. "Imagine a triangle between the income, the cost of housing here, and how far you can bring it down."

Bond cautioned that their survey of ideas is still cursory, and staff haven't fleshed out which approach may eventually be presented to council. Nevertheless, their research homed in on a number of innovative programs around North America as well as in Europe.

Many combine two mechanisms to varying extents: subsidizing down payments, and capping how much homeowners can earn from the home's financial "lift" -- or increase in value -- when they sell it down the road. A few models use creative financing levers to build up capital funds that can build even more housing units and benefit more homeowners in future.

Only one will be picked

Some of the models Vancouver planners studied may be familiar to Tyee readers. They've been profiled in our pages.

Closest to home, the Whistler Housing Authority has set hundreds of properties apart from the resort's explosive real estate market, available only to local employees and retirees. Those who buy from those listings can only sell their home for a lift equal to the rise in the national cost of living, not the resort's local market.

Notably attractive to Bond and Dunnet, Whistler's approach keeps its units affordable in perpetuity, even after they're sold.

They also looked east to the City of Calgary, which established a municipal corporation, Attainable Homes, to create family-owned housing as prices rose.

Bond knows about Attainable Homes intimately. She was part of the Calgary team that helped set it up. Its model is simple -- bootstrapped with a modest $2 million seed fund from the city, the self-sustaining organization finds ways to save on unit costs, and passes those savings on to homebuyers -- who only have to pay a $2,000 down payment but surrender a cut of the lift if and when they later sell their home.

Though this might be the simplest solution for Vancouver, Bond's not sold on the fact that units only remain affordable for the first buyer. After that, buyers pay regular market prices.

The Vancouver team also checked out one non-governmental Canadian model: Toronto's Options for Homes. The organization offers below-market-price homes for only a five per cent down payment.

It's able to slash up to 20 per cent off its prices thanks to no advertising costs, developer profits, luxuries or gimmicks -- and by registering a second mortgage on units, it captures some of the price lift from future resales to fund real estate acquisitions.

On the positive side, the idea is self-financing over time. But Bond again points out that this model, like Calgary's, doesn't keep units affordable forever, and risks being too complicated for many to easily understand.

"The aim is to create good options for people," Bond explains, "but not in a way that they're overwhelmed and have to become an expert themselves in affordable homeownership models to be able to decide to buy into one."

Bond and colleagues are casting an eye beyond Canada as well. San Francisco, for instance, has tried to combat its pricey real estate with a raft of programs for moderate-income, first-time homeowners.

Chief among these is its Inclusionary Housing Below Market Rate Ownership Program, which requires developers to sell or rent a percentage of new units at rates affordable to lower- or middle-income families.

Buyers of those units are restricted to re-selling them at prices tethered to local median incomes. Additionally, the city and state both offer an array of down payment assistance loans and first-time homeowner grants.

Meanwhile, Boston requires developers to allocate 13 per cent of new units for affordable housing, including below-market homeownership, whenever a large project involves city funding or land, or needs relief from zoning rules.

In a nutshell, the program allows people earning 80 per cent of the local area median income -- particularly those displaced by gentrification, local residents and first-time buyers -- into the market.

Resale values for those units are capped at a lift of five per cent per year of occupancy, which was the rate prices generally increased for decades before they began to skyrocket in the 2000s.

Bond and her team also looked at several programs from her former home in the U.K., where she had earlier experience in affordable homeownership experiments. One model unfamiliar here is called "shared ownership."

In that program, buyers don't have to purchase all of a home at once. Instead, they can buy a portion of its equity -- at minimum 25 per cent, up to a cap of 75 per cent -- from a housing provider, and become a shared owner.

It operates a little like a rent-to-own scheme, with the buyer able to increase their share of equity to 100 per cent over time if they choose, and meanwhile paying a percentage of the value to the housing provider to finance the whole program.

There may be a plethora of ideas around the world, but Bond insists her team will present one, easy-to-understand option to council.

"You're asking people to go get financing and invest their savings into these models," she explains. "I don't think you get there by having 25 different options across the city, all with slightly different rules, eligibility criteria, or sets of paperwork."

An 'optical challenge'

One hurdle facing any attempt to create a made-in-Vancouver homeownership model is the urgency of competing housing crises here. Homelessness, which grows year after year despite politicians' pledges to the contrary, has dominated elections; many voters recognize the need to tackle it.

But middle-class families? Their difficulties buying a home may affect many Vancouverites, but it hasn't been a hot-button election issue -- yet. Nor are the consequences of inaction as dire.

"It becomes an optical challenge," Dunnet says. "People have a tendency of overreaction when you start talking about a six-figure salary in a household needing assistance. That's a real tricky one."

The key, the two planners argue, is to ensure whatever solution they develop to bring affordable homeownership to Vancouver, it mustn't compete for energy or resources with building new market rental and social housing units.

"In a city where it's land value that's driving the affordability challenge," Bond says, "to turn that around and make it part of the solution -- which we need to do for an affordable homeownership option -- is perhaps the biggest challenge of all.

"It's something I've done professionally in other places, so I know that it can work. Whether it can work here is of huge interest to me. I know there are people who could benefit."