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The Run
  |  
Rights + Justice
  |  
Housing
  |  
Election 2021
  |  
The Run

A Brief History of BC’s Housing Dumpster Fire

The federal government got us into this mess. Here's how it can get us out.

Jen St. Denis 14 Sep 2021 | TheTyee.ca

Jen St. Denis is The Tyee’s Downtown Eastside reporter.

[Editor’s note: This is an abridged version of a story that first appeared in our pop-up election newsletter, The Run. Sign up here to get new issues sent directly to your inbox every Tuesday and Thursday until election day.]

Back in 2015, as the Liberals swept back into power after nine years of Conservative rule, B.C.’s housing market was red-hot. It wasn’t yet the flaming dumpster fire it would become just a few months later, but still — not great.

By June 2016, home prices had risen by 40 per cent in some Metro Vancouver neighbourhoods, homelessness was up for the first time in a decade and rents had increased at the highest rate ever recorded.

At the time, housing was top of mind for voters in B.C. and for the federal Liberals, who promised the federal government would get back into housing. It seemed like an about-face for the party that had abandoned the housing file in the 1990s (yes, the Liberals were in power back then, too), leaving it to the provinces and municipalities to sort out.

Throughout the 1990s and 2000s, the construction of social housing and rental buildings slowed to a crawl. The gap widened and widened, and when that enormous price spike of 2016 hit, B.C.’s fragile housing system shuddered and swayed.

There was no room on the housing waitlist for the single mother fleeing domestic violence. There were no other apartments for the cook and the house painter and the retired engineer to go to when they were evicted so their landlord could renovate their building and charge higher rents. Some people fell into homelessness, living in their vehicle perhaps, hoping the situation would be temporary.

After they were elected in 2015, the Liberals created a national housing strategy, and the Canada Mortgage and Housing Corp. was rejigged from a Crown corporation focused on insuring mortgages and tracking the health of the ownership market to one with the stated purpose of making housing affordable “for everyone in Canada.”

If you’re a housing developer looking to build a new rental building, you can now apply to CMHC for a low-interest, government-backed loan.

If you’re a non-profit developer, you can apply for a mix of low-interest loans and government grants to get your project off the ground. Many housing advocates applauded the federal government’s return to housing.

But some experts were harsh critics. The withdrawal of the feds from housing in the 1980s and ’90s had had real consequences: the construction of social housing simply fell off a cliff.

At the same time, housing developers and investors had stopped building rental buildings, which had been incentivized with generous tax breaks, and had turned to building condos, a newer, more lucrative type of housing that provided a much quicker return on investment.

Given the huge gap in supply for both social housing and rental, many advocates said the federal plan was underwhelming.

851px version of social-housing-chart.png

In 2017, B.C.’s housing dumpster fire continued to burn bright. There were also some changes at the provincial level.

The BC Liberals (who, for readers outside of B.C., are NOT associated with the federal Liberal party) lost a provincial election for the first time in 16 years and the BC NDP, supported by the Greens, brought in a bunch of measures designed to rein in the out-of-control prices seen in the most expensive homes.

The foreign buyer’s tax, introduced by the BC Liberals in 2016, and property taxes on homes worth over $3 million were both increased. The province also introduced a provincewide speculation and vacancy tax.

With some help from their new federal partners, the B.C. government also promised to build a bunch of new housing, starting with modular housing buildings that could be built quickly and cheaply.

But things kept ticking along. The luxury home market was rocked by painful multi-million price drops. Despite the investment in modular housing, the number of homeless people in Vancouver continued to rise. And years of untamed housing prices had soured the public’s trust in real estate development, making high-density housing a harder sell politically.

Then COVID-19 hit. Realtors wondered if this would finally be the event to bring housing prices down. CMHC published a dire forecast, predicting “declines in all housing indicators.”

None of that happened. Instead, home prices across the country spiked, and not just in big cities like Vancouver, Toronto and Montreal.

Rural areas were also hit with price increases as people scrambled to find properties to buy, some looking for a secure investment, others seeking a change from high-priced urban life. The Canadian composite benchmark price for a home was $570,000 in January 2020; today, it’s $736,000.

The number of people without homes also went up, and cities like Toronto, Halifax, Vancouver and Victoria grappled with large encampments in city parks. In Toronto and Halifax, there were ugly scenes of police pepper spraying or pushing residents and camp supporters.

Clearly, something needs to change. So, what are Canada’s major political parties promising this time around?

More help for homeowners, naturally!

Every election, parties offer more and more goodies to homeowners: tax credits and loosened mortgage restrictions and tax-free savings accounts and — well, how about some more tax credits! This election cycle, all three major parties are offering a grab bag of tax breaks and promising to loosen lending restrictions.

Never mind that the federal government already spends $8 billion per year to spare Canadian homeowners from paying capital gains tax on the sale of their homes.

“We’ll make housing more affordable,” governments repeatedly promise Canadians. “Here’s some more money to buy housing.”

You don’t need an economics degree to figure out what’s wrong with that strategy, but I’ll let the economists spell it out anyway:

“All three major parties are in various ways extending access to mortgage credit, to try to squeeze a few more people onto the property ladder,” said Alex Hemingway, an economist at the Canadian Centre for Policy Alternatives, “which will cause inflationary pressures on prices, and not get at the fundamental problems of the housing crisis.”

Or as David Hulchanski of the University of Toronto put it when speaking to my colleague Christopher Cheung in 2017: “In Canada, we favour and subsidize ownership, then make renting pretty miserable.”

Many young people in Canada still dream of homeownership — our boomer parents are pretty adamant that it’s the only way to go. But we’re not going to get out of this crisis without building a lot of rental housing, housing that rents at below-market rates and social and supportive housing.

Ask yourself, where is that housing going to be built in my city? Is it going to be close to transit, and will existing neighbourhoods accept that new housing?

Voters can ask how much housing the parties are promising to build, and whether they include any tools to incentivize municipalities to allow higher-density buildings. Whether those buildings will actually be affordable is another good question to ask.

THE RUNDOWN

Additional readings reeled in from around the web.

How do the housing platforms stack up? I quizzed some B.C. housing economists about what they like in the platforms, and what’s leaving them underwhelmed.

Just how much housing do we need? The Canadian Centre on Policy Alternatives recently modelled how many housing units we need to be building every year — and came up with 10,000 units a year for Metro Vancouver alone.

From subsidized housing to renting to ownership, families are squeezed: My series on how families are faring in Metro Vancouver’s housing market takes a look at the entire housing continuum, showing how families are affected by a dearth of social housing units, an unstable rental market, and the sky-high costs of ownership.  [Tyee]

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