Debate Pits Freer Markets Against Gov't Intervention on Affordable Housing

Yes, we know the cost of housing in Metro Vancouver is getting more out of reach by the day. Is it time for governments to step in?

That was the topic at the third city futures debate hosted by Urbanarium, a non-profit composed of academics, city planners and citizens. The series, organized in partnership with the University of British Columbia's School of Architecture and Landscape Architecture, pits two teams of urban experts against each other to argue the merits or faults of a hot idea in Vancouver's civic conversation.

This debate followed a day after the City of Vancouver released a report revealing that the number of homes vacant at any one time in the city -- 4.8 percent over the past decade -- is in line with other Canadian cities. The finding dismissed one widely-expressed theory: that Vancouver's sky-high housing costs are connected to foreign investors buying homes and leaving them empty.

But the report did nothing to dampen tensions around what a poll by Insights West found to be Vancouverites' top city issue, rising above crime and health care: housing affordability. The finding startled debate moderator David Beers (disclosure: David Beers is the founding editor of The Tyee). "As a guy who has edited newspapers," he commented, "crime and health care were always on the top."

Arguing in favour of legislating affordable housing were Vancouver-Point Grey MLA David Eby and lawyer DJ Larkin of the Pivot Legal Society. Two business professors argued against: Tom Davidoff of UBC, and Andrey Pavlov of Simon Fraser University.

Both sides agreed that Vancouver's geography -- fenced in by water and mountains -- make it a challenging place to accommodate population growth. Eby and Larkin believe it's government's responsibility to take that challenge on and make sure a diversity of individuals can live in the city. Davidoff and Pavlov believe the challenge can be tackled better by the market.

Legislation grows good 'hoods

Eby kicked the night off with a personal memory of renting on the top floor of a heritage building in Vancouver's West End. He was "blissfully" unaware at the time, he said, that "I was moving into housing only made possible because of a law targeted at protecting affordable rental housing." If developers want to knock down a rental building to erect a condo tower, a city by-law requires them to retain the same number of rentals in the new project.

The NDP MLA argued that government intervention is what makes affordable, diverse and livable communities possible in places like the West End. "I don't agree that governments always create monstrosities," said Eby. "[The West End] is quite a remarkable neighbourhood in the face of government intervention."

Eby also gave the example of False Creek South, a walkable planned neighbourhood of co-op housing built on leased city land in the 1970s.

Vancouver is too in love with houses

But the anti-legislation side criticized how Vancouver's city government has intervened in allocating and limiting housing density. Davidoff and Pavlov argued that zoning rules have restricted the market from bringing in density to satisfy demand and keep prices low.

"High density is basically illegal," in the city, Pavlov argued. "The building permit process is trying to achieve all sorts of social and environmental goals other than real estate. All those are wonderful things, but doing them through the building code is extremely expensive."

Both asserted that density is necessary and inevitable for a land-crunched city with a growing population.

Davidoff gave the example of tall, compact century-old rowhouses in Park Slope, Brooklyn as a style that could work well in Vancouver, but lamented that the city has trouble giving up single-family residences.

"The free market would give us something like this," said Davidoff. Instead, "Vancouver forbids this kind of density because, God forbid, a bunch of eyesore 'Vancouver Specials' would be transformed."

Lax regulation invites investment

Despite those local efforts, Davidoff's partner on the market side argued, macro-economic trends leave the city government with little it can do.

Low interest rates, low mortgage rates, and a lack of regulation on foreign investment put Vancouver's real estate market "on steroids," said Pavlov. "What we're really doing is drinking 10 coffees a day and going to the doctor and asking for sleeping pills at night."

Davidoff agreed, describing foreign investors as "perfectly rational" for choosing to put their money in Vancouver. "What better place to go than a city that punishes the workforce with high income and high sales taxes and rewards speculation with low property taxes?" he said.

There were occasional comments by the intervention side that the market side was actually promoting state intervention through selective tax changes.

The intervention side's Larkin countered that unfettered market supply alone can't be counted on to cool housing prices. She cited statistics from the Australian state of New South Wales which showed prices can increase even as the market supplies more housing. But neither she nor Eby took up the subject of foreign investment.

Who gets to live here anyway?

Debate heated up when it came to the question of who gets to live in expensive Vancouver.

Davidoff argued forcefully that some just shouldn't. "The aggregate of working class people," the UBC prof argued, "would benefit more from selling the land and they can take the cash and look for an affordable place along the SkyTrain, probably not within the city limits, but within a decent commute."

Larkin was quick to point out that Davidoff was ignoring the half of the city that rents and doesn't own land.

"So what you're advocating is this notion of 'region-wide' affordability?" she said. "If you could push out all the working-class people, as long as they can access the SkyTrain, that will be sufficient?"

Asserting that allowing the market free reign would displace seniors who want to age in place or ethnic groups struggling to integrate into Canadian society, she asked, "Who's going to be left in the city to appreciate it?"

A young woman in the audience shared that she rents and works in the city, but worries about being pushed out as Vancouver becomes increasingly unaffordable. Even so, she also conceded that if that happened, she'd likely take transit to continue working in the city.

Legislate affordable housing, says audience

The audience voted on the proposition that government needs to act on housing both before and after the debate. On balance, Davidoff and Pavlov changed more minds. The intervention side began with 161 voted and dropped to 156 after their arguments were heard. Votes against went from 36 to 39.

One way or another, density is coming to Vancouver -- something both sides in the first Urbanarium debate agreed on. Estimates are that the population of every city in Metro Vancouver will grow 25 per cent over the next 25 years. That's a million more people looking for room in the region by 2041.

But the big question is who will get to live in the crown jewel of the region, the coveted, "livable" city everyone wants to get into -- Vancouver proper? Eby and Larkin say the government can ensure that everyone is welcome. Pavlov and Davidoff say it won't happen without looser zoning for density and rebalanced property taxes.

Whatever the case, Vancouverites are going to have to cozy up with a few more neighbours, shell out extra dollars for their home, or say goodbye to the city for the growing suburbs.