[Editor’s note: This is an abbreviated version of Canada’s Housing Crisis: 22 Solutions, which can be found here. ]
The housing crisis is crazy. It’s unfolding in many cities around the world, not just the big ones like Vancouver, London and New York, and is far more serious than most people realize. It’s time for far-reaching, innovative solutions.
Thirty years ago, if you had a reasonable income, the gap between renting and owning was bridgeable. Today, in many parts of Canada, it is not. In 1976, it took five years for an average family to save a 20 per cent down payment on a typical home. Today, it takes 16 years in British Columbia, and 23 years in Vancouver. The average household income in Vancouver has grown by only 11 per cent since 2001, while the cost of housing has risen by 172 per cent.
And here’s the thing — a third of Canadians don’t own property, so their children don’t stand to inherit that equity. Unless they win the lottery or start some genius business, they will have to rent for life, constantly on edge, feeding money to property owners for as long as they live, causing the divide between rich and poor to grow ever wider.
The high rents and housing prices are driving young families out of Vancouver and other cities, causing painful disruptions to family life. They are increasing pressures on the vulnerable, who resort to couch surfing or living in their parents’ basements. And they are hell for the super-vulnerable, 35,000 of whom live in the bushes, on the streets, or in emergency shelters on any given night in Canada. It’s a miserable cascade of suffering.
Canada is one of the wealthiest nations in the world. Are our politicians really unwilling to make the commitment that every Canadian should be able to live in a safe, affordable home, and that homelessness should end forever? These are achievable goals — if we only cared enough.
What’s causing the crisis?
I am not a housing economist, but there seem to be several contributing causes, including:
· the failure of successive governments to address the crisis of poverty, income inequality, and affordable housing; · the trend towards the commodification of housing, allowing wealthy people and investment funds to treat it as an investment; · the recent faster increase in the money supply, compared to the growth in GDP, leading investors to bid up housing prices; · the choice by Canadians with high disposable incomes to invest inheritances in housing, fuelling price-inflation; · the ability of wealthy non-Canadians to buy property in Canada with few restrictions; · the failure of governments to end tax evasion; and · the failure of those in need to become a formidable political force.
So what can we do?
The first step is the simple commitment to get it done. The federal government has opened the dialogue with its Let’s Talk Housing initiative and will be publishing a national housing strategy in 2017. The commitment — a highly appropriate 150th birthday gift to Canada — should be a declaration that housing will henceforth be an inalienable Charter right, not something left to the market, and that by 2020 every Canadian will have access to a safe affordable home.
In Metro Vancouver, the Canadian Centre for Policy Alternatives estimates the need at 5,000 to 10,000 new units of affordable housing a year. For B.C., we need 10,000 to 20,000 units a year. Federally, First Nations have a shortage of 40,000 to 85,000 homes. Meeting the B.C. need, at $250,000 per unit, would cost $2.5 to $5 billion a year — but as I’ll explain, it could cost a lot less.
So far, the federal and provincial governments have committed to build 2,900 rental units in B.C. It’s a beginning, but nowhere near enough. Advocates in Vancouver and Victoria have been working hard and doing their best, but they need far greater strategic support.
Solution 1: Restrict foreign ownership and end tax evasion
Our governments should restrict foreign ownership of land, as Martyn Brown argued in the Georgia Straight, or limit it to those who live and pay taxes in Canada.
We must also work far more actively to close the tax havens since tax-avoiding housing “investments” push up prices, as well costing Canadian governments $6 billion year in lost revenue.
We should require any company buying property in Canada to list the real owners in a public register of beneficial ownership. We should punish financial professionals who help Canadians evade taxes. We should close the loopholes and dodgy practices that enable tax-evaders to buy and flip property. We should enable local municipalities to impose a hefty annual surcharge on properties owned by offshore entities.
Solution 2: Use municipal powers
Municipalities can use inclusionary zoning to require developers to make 30 per cent, 50 per cent, or 100 per cent of new units of a development affordable and family-friendly, creating mixed-income communities.
They can zone for increased density in single-family neighbourhoods to allow more townhouses. They can allow car-free laneway housing and secondary suites, accompanied by good transit, safe bike-routes, and car-sharing.
They can encourage designs such as the Montreal Grow Homes, which start small and can be added to as a family grows.
They can encourage self-building as practised in the Netherlands, where new homes, often in large-scale developments, are built by private individuals (some earning less than $29,000 a year helped by a local government stimulus scheme). These now account for a third of all homes bought in that country.
They can make it easy for non-family members to buy a house together, owning it as “tenants in common.”
They can allow land left idle for more than a year to be used for temporary tiny homes villages, learning from Dignity Village in Portland.
They can limit Airbnb and other short-term rentals to people’s principal residences, denying a rental licence for separate apartments or houses. In Vancouver, this could release as many as 3,000 units back into the long-term rental pool.
They can adopt the Whistler model, established in 1997 to address the chronic shortage of staff housing. About 1,000 properties are now available only to local employees and retirees, and the price when a property sells is based on increases in the Consumer Price Index, not the property market. Vancouver’s Affordable Home Ownership Pilot Program works on similar principles.
Solution 3: Build a big pool of money
Seattle has had an affordable housing levy since 1981, enabling the city to build 12,500 affordable apartments, help 800 families purchase their first home, and provide emergency rent assistance to 6,500 families.
We could impose an additional levy on properties bought through offshore companies, or owned by non-residents or non-Canadian taxpayers, as UBC economist Joshua Gottleib has proposed.
Vancouver is already charging a one-per-cent tax on empty properties, targeting 10,000 empty condos. If 20 per cent of those properties were available as rentals, the vacancy rate would increase from 0.6 to three per cent.
There could also be an escalating property transfer tax on high-end properties, which would help cool the market and end to the loopholes that enable people to avoid paying the tax altogether. The B.C. government has raised the tax to three per cent for the portion of a home price above $2 million, but it could go higher.
There could be a 10 per cent speculation tax on properties bought and flipped quickly.
And finally, no doubt controversially to some, we need a progressive tax on inheritances over a certain level, with all the revenue being invested in affordable housing.
Solution 4: Housing First
Every municipality should adopt the “Housing First” approach to homelessness, giving priority to ensuring that everyone has a home before focusing on mental illness, drug and alcohol addiction, and other factors. Since starting on this strategy in 2009, Medicine Hat, Alberta, a city of 60,000, has eliminated homelessness, providing secure homes for 875 people, including 280 children.
The Canadian Alliance to End Homelessness’s 20,000 Homes Campaign is leading the call for Housing First, asking for 20,000 new homes to be created for the homeless by July 2018.
Solution 5: Build 10,000 to 20,000 affordable housing units a year in B.C.
With money in the pot, we need to tackle the crisis with the same determination and ambition that Tommy Douglas adopted to address Saskatchewan’s heath care crisis in 1962. We need up to 20,000 units of affordable housing a year in B.C. alone, which would generate 22,000 new jobs for builders and the trades.
If the homes were designed using pocket neighbourhood principles, prioritizing humans over cars, and Passive House principles, eliminating the need for heating, they would also be solutions to the loneliness crisis and the climate crisis.
If land being purchased were placed in a Community Land Trust, it would be off the market forever, while the homes could still be bought and sold. This is the best way to guarantee permanent affordability, while allowing families to own their homes and leave them to their children. This is how Vancouver is proceeding, with the Vancouver Community Land Trust Foundation.
There is also an urgent need for 20,000 new units of student housing in B.C. The universities are able to self-finance housing projects, but the provincial government does not allow them to take on debt for student housing. Changing that rule could clear the way for new housing. At $100,000 per unit, this would be the most cost-effective way to relieve the rental pressures in Victoria, Vancouver and Burnaby.
Solution 6: Housing co-operatives
In Montreal, the non-profit Batir Son Quartier has developed 10,900 units of affordable housing since 1976, half in co-operatives.
In Sweden, 13,000 housing co-operatives provide housing for 22 per cent of the country’s population. The tenant-owners finance 75 to 80 per cent of the development costs, and the rest is financed by a loan taken out by the co-operative.
Zurich has no housing crisis because the city responded to a shortage years ago by offering interest-free loans to buy land for co-operative housing. Today, a quarter of the city’s housing is not-for-profit, 80 per cent in private housing co-operatives.
The B.C government can borrow money at very low interest sates. If affordable housing funds are used to cover the borrowing cost, zero-interest loans could be provided to co-operatives and other initiatives.
Solution 7: New villages
Many younger people want more than an affordable home. They also want to live sustainably with a strong sense of community. They want to build a sharing economy, with a lighter footprint on the Earth. They want to build their own eco-villages and tiny home villages.
An eco-village places more emphasis on sociable, pedestrian-friendly designs, habitat protection and solar energy and Passive Homes than a conventional development. We should train people how to become their own developers, forming eco-village development co-operatives, raising the money needed and navigating the complex world of zoning and development approval.
Solution 8: A Canadian Affordable Housing Alliance
Finally, we need a Canadian affordable housing alliance with a strongly participative membership among the people who are hit hardest by the crisis: the millennials, the renters, the couch-surfers, the parental basement dwellers, the homeless. The solutions exist, but political pressure is weak.
What’s needed is old-fashioned community organizing, the same kind that that ended child labour and won the vote for women.
It was only after Victoria’s Super InTent City ruffled so many feathers and won legal battles that the city and the province found $86 million to finance 714 new units for homeless people. Some people complained that its leadership was too activist, but that’s exactly what was needed.
One thing is certain: without deep, intentional solutions, this crisis will only get worse. More millennials will be shut out of home ownership, more people will be stressed by unaffordability in the rental market, more people will be obliged to couch-surf or to live with their parents, more people will live in vans and trucks, more people will become homeless, and more angry Tent Cities will spring up — and not all will be as well organized as Victoria’s.