Municipalities largely do not want new homes, at least not in the form that would be necessary to build them at significantly lower prices than our current stock of housing.
An excellent and needed article, and let me throw in a backpat for the writer and The Line in publishing: I'm happy to see a fellow engineer writing, and from a engineer's ("technocrat") perspective where you talk about the underlying problem, not about the politicians. This isn't really a right/left issue, or at least has equal right/left aspects. (Renters, left: Landlords, right)
I just have some data to show about Calgary, where I was a municipal engineer for over 25 years. I left with a bunch of public data and the ability to show it as maps (my job required a million-dollar software package from ESRI in the 90s, now it can be done with free software). At my web site, an image:
...which shows 2018 data on residential-only water services pipes, restricted to installs after Y2K. You plainly see all the 90,000 single-family detached new houses around the edge of the city, with some red dots for streets with duplexes and triplexes.
But you also see something in Calgary you don't in Vancouver: as our housing prices rose, tens of thousands of infills were done, creating thousands of blue and red dots in the middle of town. You can see over half are red, for duplexes/triplexes. (Also, many blue ones are still half-lot-wide infills, just having their own separate water service, an extra $10K).
I gather Vancouver just forbids this. No town should. The "inner city" of Calgary has whole blocks that have doubled the population, because they're mostly infills. Pretty hard to resist a guy offering $600K for your 1940s 800 sf knock-down, who outbid the prospective monster-home builder because he can sell both infills for $600K each.
The ability to endlessly grow outward (which is still most of Calgary's new construction, to be sure) isn't the only reason that Calgary prices are, relatively, sane.
I thought the recent MacPhail Report on housing in BC was excellent. It diagnoses the main problem as being "supply responsiveness" - that is, we're much slower at adding housing than we are at adding jobs.
It sounds like the main actor here needs to be the provincial government stepping in to override local-government bottlenecks, e.g. setting time limits on approvals.
Would public opinion support this kind of intervention? In Vancouver it seems like the large majority favour more housing, with only about 20% opposed to six-storey apartment buildings in their neighbourhoods. Even people who are homeowners are worried about where their kids are going to live.
One area where more federal money would help: the MacPhail Report also recommends having the federal government provide more funding for non-profit housing.
A particularly interesting observation from the report is that incentives for local governments are backwards, because they benefit directly from high land prices: whenever they rezone land for a project, they negotiate to take about 75% of the increase in land value. So if the City of Vancouver were to do a mass rezoning - say allowing six-storey apartment buildings within 1 km of SkyTrain stations - they'd be giving away a huge source of funding.
One suggestion to tackle this incentive problem, from Thomas Davidoff and Tsur Somerville, is to have the city auction off density rights separately. This would be faster, simpler, and more transparent than the current slow, project-by-project negotiation process.
This is where representative democracy fails. Those who are incentivized to keep density down and not have more homes built are who have the political power.
Most Canadians move to where there is work and education. We've done a good job distributing education across the country, perhaps like the Americans, we spread work opportunities across Canada. Is there a reason why most federal jobs need to be in Ottawa?
Fully agree with your conclusion - Housing solutions cannot come from the federal level. This country is so incredibly diverse, and that is especially true for its housing markets.
Every single article I read about Canadian housing focuses on markets like Toronto and Vancouver. Those are sexy stories to follow, runaway multiple offers, prices through the roof, etc. The problem... there are so many other markets that aren't experiencing this at all.
Calgary, Edmonton, Winnipeg, etc have had great signs of growth over the last year or two, but far from anything that needs to be regulated. Any federal intervention will hurt these markets that are performing well on their own.
A problem here is that not only does zoning restrict increasing density, it seems that people themselves prefer single family homes. A condo or a townhome is typically regarded as an entry into the home market, not an endpoint. You can’t make more real estate in then middle of existing cities, so the alternative is sprawl. Sprawl leads to infrastructure and transportation problems, and doesn’t even provide a long term solution in geographically constrained areas like the Lower Mainland. Yes, you could remove the restrictions of the Agricultural Land Reserve, turn it into tracts of single family homes, but then that’s it - the land has been used, people who got in are satisfied, and the next generation of wannabe homeowners is stuck.
Changing zoning in cities to encourage density would help, but it needs to be accompanied by a change in expectations for what type of home is achievable. The single family lots filled with dense developments simply restricts supply of those desirable homes further, and further increases prices.
How about an open, transparent beneficial ownership property registry? How about much more severe penalties for realtors etc. who fail to report suspicious transactions? How about a tax on residential properties (10-20% of the value of the property annually) for those who do not wish to disclose beneficial ownership? How does someone making 16,430.00/yr. afford the taxes on a property they bought with cash for over 2 million?
An excellent and needed article, and let me throw in a backpat for the writer and The Line in publishing: I'm happy to see a fellow engineer writing, and from a engineer's ("technocrat") perspective where you talk about the underlying problem, not about the politicians. This isn't really a right/left issue, or at least has equal right/left aspects. (Renters, left: Landlords, right)
I just have some data to show about Calgary, where I was a municipal engineer for over 25 years. I left with a bunch of public data and the ability to show it as maps (my job required a million-dollar software package from ESRI in the 90s, now it can be done with free software). At my web site, an image:
http://brander.ca/CalgaryC21.png
...which shows 2018 data on residential-only water services pipes, restricted to installs after Y2K. You plainly see all the 90,000 single-family detached new houses around the edge of the city, with some red dots for streets with duplexes and triplexes.
But you also see something in Calgary you don't in Vancouver: as our housing prices rose, tens of thousands of infills were done, creating thousands of blue and red dots in the middle of town. You can see over half are red, for duplexes/triplexes. (Also, many blue ones are still half-lot-wide infills, just having their own separate water service, an extra $10K).
I gather Vancouver just forbids this. No town should. The "inner city" of Calgary has whole blocks that have doubled the population, because they're mostly infills. Pretty hard to resist a guy offering $600K for your 1940s 800 sf knock-down, who outbid the prospective monster-home builder because he can sell both infills for $600K each.
The ability to endlessly grow outward (which is still most of Calgary's new construction, to be sure) isn't the only reason that Calgary prices are, relatively, sane.
I thought the recent MacPhail Report on housing in BC was excellent. It diagnoses the main problem as being "supply responsiveness" - that is, we're much slower at adding housing than we are at adding jobs.
https://engage.gov.bc.ca/housingaffordability/
It sounds like the main actor here needs to be the provincial government stepping in to override local-government bottlenecks, e.g. setting time limits on approvals.
Would public opinion support this kind of intervention? In Vancouver it seems like the large majority favour more housing, with only about 20% opposed to six-storey apartment buildings in their neighbourhoods. Even people who are homeowners are worried about where their kids are going to live.
https://researchco.ca/wp-content/uploads/2019/06/Release_HousingVAN_21Jun2019.pdf
One area where more federal money would help: the MacPhail Report also recommends having the federal government provide more funding for non-profit housing.
A particularly interesting observation from the report is that incentives for local governments are backwards, because they benefit directly from high land prices: whenever they rezone land for a project, they negotiate to take about 75% of the increase in land value. So if the City of Vancouver were to do a mass rezoning - say allowing six-storey apartment buildings within 1 km of SkyTrain stations - they'd be giving away a huge source of funding.
https://twitter.com/thenatehawkins/status/1411832869559799808
One suggestion to tackle this incentive problem, from Thomas Davidoff and Tsur Somerville, is to have the city auction off density rights separately. This would be faster, simpler, and more transparent than the current slow, project-by-project negotiation process.
https://engage.gov.bc.ca/app/uploads/sites/121/2021/06/Economics-of-CACs.pdf
So true. I have found this in my own experience. Some small town administrators are buttheads.
This is where representative democracy fails. Those who are incentivized to keep density down and not have more homes built are who have the political power.
Most Canadians move to where there is work and education. We've done a good job distributing education across the country, perhaps like the Americans, we spread work opportunities across Canada. Is there a reason why most federal jobs need to be in Ottawa?
Fully agree with your conclusion - Housing solutions cannot come from the federal level. This country is so incredibly diverse, and that is especially true for its housing markets.
Every single article I read about Canadian housing focuses on markets like Toronto and Vancouver. Those are sexy stories to follow, runaway multiple offers, prices through the roof, etc. The problem... there are so many other markets that aren't experiencing this at all.
Calgary, Edmonton, Winnipeg, etc have had great signs of growth over the last year or two, but far from anything that needs to be regulated. Any federal intervention will hurt these markets that are performing well on their own.
A problem here is that not only does zoning restrict increasing density, it seems that people themselves prefer single family homes. A condo or a townhome is typically regarded as an entry into the home market, not an endpoint. You can’t make more real estate in then middle of existing cities, so the alternative is sprawl. Sprawl leads to infrastructure and transportation problems, and doesn’t even provide a long term solution in geographically constrained areas like the Lower Mainland. Yes, you could remove the restrictions of the Agricultural Land Reserve, turn it into tracts of single family homes, but then that’s it - the land has been used, people who got in are satisfied, and the next generation of wannabe homeowners is stuck.
Changing zoning in cities to encourage density would help, but it needs to be accompanied by a change in expectations for what type of home is achievable. The single family lots filled with dense developments simply restricts supply of those desirable homes further, and further increases prices.
How about an open, transparent beneficial ownership property registry? How about much more severe penalties for realtors etc. who fail to report suspicious transactions? How about a tax on residential properties (10-20% of the value of the property annually) for those who do not wish to disclose beneficial ownership? How does someone making 16,430.00/yr. afford the taxes on a property they bought with cash for over 2 million?