Homes for Living Survey from 2022 BC municipal elections
Rule of thumb: conviction follows self-interest.
“The knee-jerk response by seemingly one and all to Canada’s affordability constraints is “more supply”… The point is that supply has indeed responded in recent years, and yet the affordability needle has barely moved.”
- Bank of Montreal, “Catch-’23: Canada’s Affordability Conundrum”, May 26, 2023
The Canada Mortgage and Housing Corporation had set the 3.5-million target figure in a report in June, but follow-up research unveiled Thursday found that there will only be enough labour to increase the number of starts in four major provinces — Ontario, Québec, BC and Alberta — by 30 to 50 per cent.
- Financial Post, “Not enough workers to build homes needed to address housing affordability: CMHC”, October 6, 2022
Shelter is so essential that the lack of it compounds every other problem. The housing crisis is the text and subtext of elections, and the next federal election may be decided by it. Whomever catches the right amount of public attention with the right messaging, uplifted by winds of broad sentiment of “what’s working” and “what isn’t”, will be carried into seats of public power, tasked with governing the frameworks by which societies trend better or worse.
So the kinds of solutions presented to the public and implemented in power, matter. It matters if solutions work or don’t. People’s lives depend on it because shelter is so vital that making it so ghastly unaffordable closes doors to potential in life, to education pathways, to stable labour supply, and opens ugly doors to people who would rather die than be homeless, and the countless miseries inflicted on women and children when the choice is between rent and food.
Rents have increased 30% despite record-high supply growth.
This is not sustainable, or good.
Yet presently the only tools in good currency is entirely about increasing supply, and abdicates the point of supply and demand. Lobbyists and interest groups push supply-side measures and decidedly ignore the rest of the equation. Why?
Conviction follows self-interest.
As I’ve been pointing to, evidence is saying adding supply won’t be enough. And as validated by RBC, BMO, CMHC, BCREA, BuildForce, and numerous experts, supply demands a workforce that doesn’t exist. Demand isn’t even tracked by CMHC. So how can we say we just need to throw so much supply at the problem to turn it around? How much supply?
Where is the inflection point? When is affordable going to happen?
In BC’s last municipal elections in 2022, Homes For Living was one organization that was very effective capitalizing on the text and subtext of the elections to promote candidates who responded favourably to their survey. I mean, of course. That’s the point. It’s an interest group that mobilized.
But let’s be clear-eyed: democracy is rife with lip-service. Advocacy for increasing towers above 20 storeys, removing barriers that impede new housing, while knowing that demand far outpaces supply, does not serve the public interest because it does not solve the public problems of unaffordable shelter. Instead it can be recipe for building out unsustainable cities of expensive shoeboxes. Cui Bono?
Democracy must be measured by how well it solves problems. When democracy cannot, we can always turn to the inter-relationships between politician, citizen and journalist to understand what is impacting the effectiveness of our group decision-making systems.
Below is the open letter sent to candidates in the Greater Victoria municipalities that received the Homes For Living survey. Rankings for each municipality surveyed can be found here on the HFL website.
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Greetings,
Recently candidates in the upcoming municipal elections received a survey from Homes For Living.
Homes for Living is a registered third-party sponsor with Elections BC and registered non-profit, as they state. Also provided is a platform of seven policies including: 1) Legalize Missing Middle Housing; 2) Quantitative targets to meet Housing Needs; 3) Automatic approval of OCP-compliant non-profit or affordable housing; 4) Delegation of rezoning of multi-family housing to city staff; 5) Minimize or mitigate displacement of tenants; 6) Pass and enforce regulations on demand sources like short-term rentals; and, 7) Initiate an in-depth review to identify and remove restrictive bylaws and Design Guidelines impeding new housing.
This is well-intentioned work springing from the belief that making it easier to densify and build new supply will improve affordability. However, the survey is careful not to make that claim.
The idea behind supply and demand is that by increasing supply we outpace demand and prices come down. When there are more sellers offering choices than people wanting to buy, those choices broaden their appeal by reducing their prices. This is a robust logic in many cases, and the popularly accepted one.
As the Canadian Mortgage & Housing Corporation wrote on page 6 of their recent Restoring Affordability Report:
“How will supply improve affordability? More housing units created in the housing market will create opportunities for households to move into housing that responds to their demands. In addition, this ‘filtering process’ likely frees up housing to improve housing affordability over time.
Here's the but:
Statistics Canada (StatCan) and the CMHC either do not release or track investor data.
The Bank of Canada found that at least one-in-five mortgages since 2014 are made by investors. This doesn't count cash or corporate purchases.
The BC Construction Association estimates 11,331 construction jobs will be unfilled in the province by 2030 due to labour shortages.
BuildForce Canada, which owns the labour force data in construction and skilled trades, says that even with enhanced recruitment from immigration, the skilled trades deficit will be several thousand for BC by 2027 and thousands more nationally.
When Will Affordability Happen?
If a community has X amount of people, Y amount of whom need affordable housing, and Z amount new people joining every year, how many homes must be built for shelter to be affordable? When will affordability happen?
This basic formula does not factor in investors or how many homes can be physically built each year.
Investors by definition are not in Core Housing Need. Over 1.6 million Canadian households are though.
We Prioritize What We Measure
CMHC released a report in June calling for an additional 3.5 million homes in Canada by 2030 to meet their defined goal of affordability (40% of household income) which would require 570,000 additional homes in BC.
British Columbia completed 41,899 homes in 2021. Not Started, but Completed.
Housing Starts are when permits are approved and shovels break ground, and by the numbers are about the same as Housing Completions when homes are ready or near-ready to be absorbed by the market and either sold or rented out. Housing Under Construction is about 5x higher, and that holds true across the country.
Housing Starts are the official measure of construction activity and is displayed on the BC Real Estate Association's (BCREA) Housing Forecasts (PDF warning | page 14 typically) along with other key data like average prices and population growth. But what it measures are not finished homes ready to be lived in. The distinction in a housing crisis is vital.
We prioritize what we measure and measure what we prioritize. In a crisis of not enough livable homes, improving Completions seems the better measure for progress.
Housing Completions also get at the capacity of our construction sector to produce over time. The workforce shortage impacts how many homes how fast can be built. If you have 1000 people and 100 need affordable housing and 50 new people arrive every year, but you can only build 25 homes annually, when will affordability happen?
Beginning 2023, BC would need to complete 122,000 homes every year to meet CMHC's goal. At the current Completion rate, it would take nearly 14 years to build 570,000 homes.
This strongly suggests there is a physical limit to how much how fast can be built.
The survey is silent on this but BCREA stated in their Market Intelligence report (PDF warning) "Bigger, Faster... More Affordable?":
Both the number of starts and the speed of completion affect prices in the resale market. If starts rise but construction durations also rise due to a lack of skilled labour, the benefits of those starts will be attenuated. (page 10)
Regulations related to permits and starts are certainly an obstacle to housing supply. However, the surging ratio of workers per unit under construction may suggest that there are also capacity constraints in the development industry, even after a project is out of the hands of city planners. (page 8)
This evidence suggests that if housing prices are to be moderated through increased supply, additional workers will likely be needed to prevent the number of workers per unit under construction from falling further and construction durations from rising further. (page 9)
So even waving a magic amalgamation wand and then automatic approval of the densest, most intense proposals, the workforce shortage is the bottleneck.
Improving Housing Starts does not fix the affordability crisis, so why are we using that to measure candidates?
An Opportunity for Me, a Crisis for Thee
The housing crisis affects us all but not everyone equally.
What real estate boards call "low inventory" and a "housing shortage" is a crisis for those seeking to live and work with the full opportunities of participating in society and making of their and their children's potential what they choose.
When Real Estate Investment Trusts (REITs) are making record gains in their purchases of residential properties and apartment buildings, they are doing their job: having their investments seek a return. But their investments are homes during a housing crisis and their returns are based on increasing revenue over time.
As the Vancouver Sun reported one CEO saying:
“We think there is a definite housing shortage, or almost a crisis level in Canada … and the good news for investors is there is no easy solution in sight. … This is not good news for consumers.”
This is supposed to be solved by adding new supply, but if at least one-fifth of supply goes to investors, and workforce shortages constrain new supply to a trickle...
If we called it barbaric and selfish when people hoarded hand sanitizer and toilet paper to sell at a profit, what do we call it when shelter is submitted to the same logic?
Shelter sits right next to oxygen and water in Maslow's hierarchy of needs. If you got lost in the woods or stranded on an island your first order priority is food and water and shelter.
Yet this profiteering is okay if it's "competitive market" rates for rent. This is true of the mom-and-pop investor as it is for the big institutional investors.
We already know those suffering from the effects of long-Covid or other autoimmune conditions are seeking Medical-Assistance in Dying [MAiD], calling it "exclusively a financial consideration" or saying "I've applied for MAiD essentially...because of abject poverty".
Why Reach Out?
I want problems to be actually solved, and not sit by another election where the desperation of so many people, seniors on fixed incomes, students, workers, and low-income families contend with deep pockets only to receive another round of promises to fix things that fail to materialize. Personally, this reads like a habitual defrauding of voters.
In a better light, it may be because the roots of the problem are not identified clearly enough. Housing is a systemic, multi-level problem likely requiring systemic, multi-level solutions. As problems grow more radical, the solutions may begin to look radical too.
I won't pretend to have all the answers but I did at least work out what factors are involved in supply and demand trying to answer the question, when is affordable going to happen?
So when I read proposals that disproportionately address making new housing easier to start but not complete, faster to approve but never walking the public through just what "red tape" and "inefficient" means, and see proposals that carry a kind of faith that supply will exceed demand when workforce shortages are real and demand isn't accounted for, I balk. I have to.
This will not solve the crisis. This survey may just create a false traffic light system that favours rubber-stamp candidates and not problem-solving.
Democracy as a Way to Problem-Solve
This is about clear diagnosis of the scale and depth of our public problems.
Many of our issues in our country involve global forces impacting our economy and environment, and we use democracy to choose who is to lead our jurisdictions. The sorts of leaders elevated to positions of power matter.
Homes for Living has provided a survey and evaluation guide with instructions how to donate to advance their agenda that almost entirely focuses on making approvals faster, densification easier, without claiming it will improve our society's affordability crisis.
There are many good reasons to think about densification. There are many good reasons to think about continual process improvement. But no process was started with bad intentions, and all processes can get long in the tooth.
We have yet to see a public presentation showing all the steps it takes to get a proposal through from conception to approval, to pick out which ones don't make sense anymore or can be streamlined. They exist. The Urban Development Institute does a good job pointing out several.
Democracy depends on good information, and its problems are as old as the system itself. At some of its worst, democracies pander and fail to deliver. People's desperate need for affordability, experienced personally by so many, creates a demand for a supply of promises come election time. Then the one-time currency of the vote is exchanged, and leaders are elevated.
But the math has to work out and the promises have to be delivered. In this case, the full accounting of housing supply and demand must be made.
Accountability may not come from elections but between them when decisions are made by elected leaders. The paradox of our time is that between elections the public attention span retreats, and media focus strays. There is no dashboard tracking promises kept and broken, no dedicated investigative journalism supporting both the public and elected leaders in sussing out good information over bad, clarifying problem identification and diagnosing its roots in a process of democratic problem-solving. There's a desperate need for that too.
I urge consideration of the above when reading this survey and choosing your responses, if any.
You can find more information here. And for those interested, I have a glut of toilet paper I'm selling at a good discount...