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Real estate speculation happens across the country, but is particularly popular in our largest cities. Some say foreign ownership and speculation is driving housing prices up for local residents: wealthy investors living in far-off countries buy housing with no intention of living in it. But should the government step in and regulate the practice of flipping houses?
Just a month ago, the Simon Fraser University Urban Studies program held a symposium on housing affordability. Their data-packed brochure indicated that Vancouver has been second to last in housing affordability for the past six years, and 40% of residents consider the high cost of housing to be the most important issue in the city. The city’s annual homeless count has identified an increasing number of homeless people in the city–some 2,700 people in 2014 compared to about 1,100 in 2002. While 35% of homes in Vancouver are rented, only 17% of new construction was purpose built rental housing. Urban Futures has done a number of studies on foreign ownership: in one, they found that the 2011 Census (National Household Survey) showed that Vancouver didn’t have an excessive level of foreign occupancy–that is, about 1.4% of the apartment units in the city were occupied by foreign or temporary residents, but there are no Census data that specify their citizenship, length of stay, or that support a thesis on foreign investment. In another, they found that only 0.4% of purchases in the region in 2010 were made by people living outside of Canada. But an article in the New Yorker last year quoted a report from Sotheby’s International Realty Canada: in the first half of 2013, foreign buyers accounted for nearly half of luxury home sales in Vancouver.
Vancouver Mayor Gregor Robertson announced on Friday that he has proposed that the BC government develop a speculation tax who “buy a home just to make a quick buck” by selling it 6 months later. He’s asking Vision voters to support the call for a new tax on investors, and other tools like an increased property tax on the most expensive residential properties with proceeds invested in new affordable housing.
“Together, we can send a message that housing shouldn’t just be an investment commodity – it should be for living in.” –Mayor Gregor Robertson
Less than two days after Robertson’s announcement, a petition started circulating in Toronto calling on Brad Duguid, Minister of Economic Development, Employment, and Infrastructure, to restrict foreign investment in residential real estate in the Toronto region. As of 5 pm today Shaan Brach’s petition had 10,491 supporters.
I’m sure that the Liberal governments of both Ontario and BC will shy away from regulating real estate speculation and taxing the rich, but nevertheless the petition and call for a new tax do raise several troubling questions: who should be allowed to buy housing in Canada? Should the government (either provincial or federal) intervene when housing prices climb too high for the average person or household to afford? And if so, how should this be done?
Canadian governments have a history of intervening when market conditions create affordability issues for local residents or when housing conditions are poor. Forty years ago, Canada Mortgage and Housing Corporation was busy supporting the development of co-operative and non-profit housing with the ample funding of the federal government. The federal government helped develop co-operative housing from 1973-1991, establishing long-term operating agreements coinciding with the length of the mortgage. They also had programs to help first time homebuyers, supplement rents, and rehabilitate housing in historic and central neighbourhoods. But over the years, their balanced approach to housing affordability changed. The two ends of the spectrum (households with very low incomes and homeowners with enough equity to buy) continued to benefit, but programs that helped renters and low- to middle-income households were gradually dropped.
Municipalities and developers have also introduced innovative solutions to housing affordability:
The issue of foreign investors driving up housing prices is critical in cities like Toronto and Vancouver, but there’s no quick fix for the affordability problems that took decades to create. In cities like Calgary, Fort McMurray, and Kelowna, affordability is still a major issue even without high levels of foreign investment. In Edmonton, 33.5% of all condominium units are rented. Researchers and policymakers across the country have been trying to find and implement the solutions for at least two decades. A speculation tax would only be part of the solution, but combined with better rent controls and a higher high-end property tax whose revenues would be used to build and maintain housing of different types for different income levels, it could be a good start. We definitely need an increased role for the provincial and federal governments in affordable housing, but that’s not news.
You’ve spent several few hours of your time attending public meetings hosted by your municipality on the development of a new plan. You had to rearrange your child care and leave work early to attend. Wouldn’t you love to know how your comments on the proposed plan were used?
You may have heard about the City of Vancouver’s Greenest City 2020 Action Plan. Launched in 2010, the Action Plan planning process included a public engagement campaign that allowed residents to crowdsource ideas in an online forum. The Plan has ten goal areas, each with a specific 2020 target. The question asked in the forum was “How can we achieve reach our 2020 targets?” Guided by City staff, who moderated the forum, answered questions, and clarified levels of responsibility in implementation, participants suggested ways in which to meet the targets. Ideas were then reviewed and consolidated by staff, and participants were then able to vote on the ideas. As the status of an idea changed (under consideration, planned, started, completed, or declined), every person who voted on, commented on, or submitted the idea was notified by email. Since 2011, the City has published its progress on meeting the targets. The Greenest City 2020 Action Plan won the 2012 Sustainable communities Award from the Federation of Canadian Municipalities.
Five years after participating in the online forum, I still receive Greenest City Newsletters. They contain information about events in the city (e.g. Bike to Work Week, the BC Commuter Challenge, the proposed Kinder Morgan Trans Mountain Pipeline) and ways that residents can help meet the goals, such as using a rain barrel for collecting water to be used for lawns and plans. At the bottom of each section, they site the relevant Greenest City goal: Green Transportation, Climate Leadership, Clean Water. And each newsletter has dozens of links to City initiatives and programs.
Just last week I received an update that the City was already meeting its Greenest City 2020 goal for transportation mode share: 50% of all trips in the City are now made by walking, cycling, or public transit. This is a major increase from 40% in 2008. There are almost 100,000 bike trips per day in the City. Vancouver has done a lot to mainstream cycling, including designated cycling routes with signals at bike height and installing protected bike lanes on the Burrard Bridge, Hornby Street, and Union. Many of these changes have been introduced through pilot projects, which were carefully evaluated before becoming permanent.
In the past few years I have visited many universities in Canada, the US and Europe, and I often get to speak to local planners and scholars in urban planning. Every one of them has been amazed at the Greenest City newsletters. Not only was the planning process itself innovative, but the way in which the City has kept in touch with participants on how the plan is being implemented is very unusual. Many municipal planning websites are difficult to navigate–it can take some sleuthing to find the official plan, by-law, or meeting information that you need. All of the information for the Greenest City is in one place, so it’s easy to see the progress that’s been made, like the establishment of the Greenest City Fund to implement the ideas in the Plan, strategies on climate change, a new program on recycling food scraps, and improvements to walking and cycling routes. The newsletters make it easy to understand all of the policies, programs, and initiatives that directly relate to the plan, and they’re written in non-specialist language and designed with compelling graphics.
Obviously, Vancouver is a large city and its planning department has more resources than a small or mid-sized planning department might have. However, partnerships with universities and colleges might make it easier to reach out to residents and keep them up to date on planning initiatives, particularly on the social media front. City councillors might also be willing partners in communicating progress on implementation, since many of them send regular newsletters to their constituents. Most cities haven’t caught up to online participation methods, and don’t have well-organized websites or regular email updates for their residents. Practicing planners regularly check out plans, policies, and programs in other municipalities to inspire their own work, so providing clear online information and regular updates might inspire policy transfer and innovation in other places.
Community Amenity Contributions (CACs) are one of the contributions developers are required to make in Vancouver to support affordable housing, community resources such as schools and libraries, and parks. Developers, in return, are often allowed to build at higher densities. Vancouver’s unique legislation, the Vancouver Charter, gives it the ability to levy a negotiable tax such as the CACs. In the rest of the province, municipalities can only charge Development Cost Charges (DCCs), non-negotiable fees based solely on the number of units or square feet of the development. Similarly, Ontario municipalities may use Section 37 of the Planning Act to obtain community benefits in exchange for higher densities.
Penny Gurstein, Director of the School of Community and Regional Planning at UBC, leads a project on housing justice in BC. She has just released an analysis of the use of CACs between 2010 and 2012, which produced just 170 affordable housing units. By contrast, BC Housing’s waitlist for affordable units averaged 3,425 over this period.
Developers also have the option of making cash contributions in lieu of building units—a total of $61.07 million was raised just from 2010-2012. This is the preferred option, as most developers want to build luxury condos to maximize their profits and get their investment back immediately–rather than invest in market-rate rental or mix in affordable units with their fancy condo owners. Unfortunately, cash contributions just go into a reserve fund, and the City is not very open about how much of it goes towards the housing budget or how it’s used. But it says it has approved over 1,000 affordable units since 2010. Gurstein’s analysis was based on staff reports, which are unclear on the use of cash contributions for affordable units. Read the article in the Vancouver Sun here.
Rental housing is also an issue in many Canadian cities, since incentives to build them (at least at the federal and provincial levels) disappeared long ago and changes to the Income Tax Act have made rental housing much less profitable to develop since the 1970s. Some analysts believe that a shortage of market rate rental units and the loss of units to condo conversion have contributed to very low vacancy rates across the country, pushing people into homeownership before they may be financially ready. Since 2010, Vancouver has also run the STIR (Short Term Incentives for Rental Housing) program and Secure Market Housing Policy, which have added 3,000 rental units at market rates.
If transit were a soft drink, it might adopt the slogan, “Transit: The Choice of a New Generation”. Evidence continues to lend support to the idea that young people in Canada and the US choose to take public transit rather than drive.
In Vancouver, the Insurance Corporation of British Columbia (ICBC) reports a significant decline in driver’s licences among 20-24 year olds, from 70% in 2004 to just 55% in 2013. For 25-29 year olds, the rate decreased from 77% in 2004 to 67% in 2013. The only increase in the licensing rate was among older adults.
The greatest declines were seen in the municipalities that are the most urbanized and served by a substantial level of public transit…Burnaby and New Westminster’s proportion declined from 68 per cent to 50 per cent, likely due in part to the increased accessibility to transit following the construction of the Millennium Line. Richmond also saw a similar drop of nearly 20 per cent from 2003. Metro Vancouver’s data shows that the biggest year-to-year drop for both Vancouver and Richmond was in 2009 when the Canada Line opened for service. –Kenneth Chan, VanCity Buzz
A survey released recently by the The Rockefeller Foundation and Transportation for America surveyed 18-30 year olds in ten major US cities found that 4 out of 5 wanted to live in places with a variety of transportation options. More than half (54%) said they would consider moving to another city if it had better options for getting around, and two-thirds said they access to high-quality transportation is one of the top three criteria in deciding where to live next. But transportation mismatch is prevalent in cities like Nashville, where 54% said they would like to live in areas where people have alternative transportation options to the car, but only 6% lived in such areas. In the US, the millenials (those born from 1982-2003) are the largest generation in history, which is why the study focused on this group. Click here for the survey’s topline results.
Interestingly, the travel demands of youth and young adults will be more aligned to those of older adults in the future. Jennifer Wallace-Brodeur of Planners Web reports that 21% of the over-65 population in the US do not drive. Many planners advocate complete streets, transit-oriented development, and volunteer drivers in rural areas in response to the problems faced by an aging population who can no longer drive. So planners interested in providing alternative transportation solutions will be able to develop solutions that work for both the young and the young at heart.
“Canada’s housing challenges are too big and too complex for any single order of government to solve on its own. We believe the government’s commitment in Budget 2013 to evidence-based solutions such as the Housing First approach for homelessness is a promising start, but they need to back it up with real results and expand that action to other areas of our affordable housing problem.” –Gregor Robertson, Vancouver mayor
Along with other big city mayors in Canada, Gregor Robertson announced a new national campaign to create more affordable housing and involving all levels of government to create a long-term housing plan. The Big City Mayor’s Caucus is part of the Federation of Canadian Municipalities, which often advocates a larger role for municipalities in federal issues such as housing.
Although housing affordability remains a major problem in Vancouver, the city has done a considerable amount to address it in recent years, including enabling new affordable rental housing on City-owned land, developing an arms-length Affordable Housing Advisory, establishing a Rent Bank to help renters in crisis through short-term loans, and creating the Rental 100 program which provides incentives for new, 100% rental housing. But of course, there’s only so much municipalities can do–housing experts agree that the federal, provincial and municipal governments need to cooperate to develop a long-term, sustainable funding model for affordable housing.
Many congratulations to my colleague and co-conspiritor at SCARP, Dr. Cornelia Sussmann. Cornelia finished her Ph.D. this August, unfortunately (for me!) just after my move to Amsterdam. She has been a friend, mentor, collaborator and valuable sounding board before, during, and after my Ph.D. years at SCARP.
Dr. Sussmann’s dissertation, Towards the Sustainable City: Vancouver’s Southeast False Creek, tells the compelling story of sustainable planning initiatives in a city that tops the “most livable” lists each year. Through in-depth interviews and analysis of the Southeast False Creek project goals and targets, she showed that only minimal reductions in greenhouse gas emissions and ecological footprint were achieved–quite an underachievement for a LEED-ND Platinum-rated project that won a UN Livability award. However, the City of Vancouver may have achieved important political, bureaucratic, industry and public support with this “stepping stone” project. After all, in the past three years the City has embarked on The Greenest City initiative, a comprehensive and broad-based attempt to make Vancouver the world’s greenest city by 2020. While the technical achievements of Southeast False Creek won’t impress our Professor Emeritus Dr. Bill Rees, they illustrate the messy collision of planning politics, construction and development paradigms.