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It's no secret that our real estate market is a mess. But these experts think it doesn't have to be.
If Vancouver is going to fix its housing crisis, it’s going to need a major disruption to the way it’s been operating so far. And even then, housing experts say it’s going to take years to turn the ship around—because the city’s housing system is driven as much by the economy as it is by highly personal factors, including the way we build wealth for the future.
It won’t be easy, because land values in Vancouver have already made it nearly impossible to build cheaply. As one pundit put it, “You can turn the taps off, but the bathtub is already full.”
On the upside, there is publicly owned land along with a lot of underdeveloped parking lots, one-storey buildings and backyards for rental housing. We could add gentle density, or aggressive density; we could ratchet up regulations around landlords; and, of course, we could throw more money into building social housing. We could also create alternative forms of housing and innovative financing models, for those who can’t give up on home ownership.
Perhaps most importantly: we could open our minds and take a few lessons from jurisdictions elsewhere in the world, who’ve found ways to comfortably house their citizens.
Big Idea 1: WWVD (What Would Vienna Do?)
Big Idea 2: Build More Housing of All Types, the American Way
Big Idea 3: Emulate Finland’s Prioritization of Ending Homelessness
Big Idea 4: Make Renovictions a Thing of the Past, Like the Scots
Big Idea 5: Create Our Own Innovative Financing Options
Imagine a city where a regulated private rental sector competes with social housing. Imagine social housing designed by star architects.
In Vienna, social housing isn’t marginalized the way it is in Canada. That’s because nearly half of Viennese housing is nonprofit, with another 36 percent of residents living in private rentals and 19 percent in owner-occupied homes.
“Vienna is a really great model to emulate in terms of an inclusive, equitable and sustainable city,” says Sasha Tsenkova, a University of Calgary professor of planning at the school of architecture, planning and landscape. Tsenkova has studied housing issues around the world, and edited and contributed to the 2021 book Cities and Affordable Housing.
Vienna, Amsterdam and Copenhagen feature as examples of sustained social housing with a social mix, as opposed to the segregated Canadian model.
A big part of Vienna’s success is its publicly owned land, and there is a lot of it. Because of the property endowment fund created in 1975, the City of Vancouver owns a lot of land too—to the tune of about 700 properties, which makes it the largest landowner in the city. The Vienna thing to do would likely have been to hold onto Olympic Village and use it to develop a thriving community of affordable housing.
But there are still lots of future opportunities to think more like Vienna. The City owns much of False Creek South, where residents of co-ops and affordable rental housing units are fighting to keep their community while the City considers its options on how to build new housing there. About 6,000 people live in the neighbourhood, and there are 573 units of co-op housing. Half of the co-op households, including many seniors, earn less than $60,000 a year.
Vienna’s housing program is part of the city’s DNA, and of Austria’s national identity, says Tsenkova. Vienna has produced 2,000 to 3,500 units of social housing a year since the 2000s—and it’s not shoebox design, but highly innovative, sustainable developments built by private companies and high-profile architects, with financial support from government. About 44 percent of Vienna’s housing is subsidized, compared to 6 percent in Canada.
“A lot of cities across Canada are moving in this direction inch by inch,” says Tsenkova. “This is not really something that can be fixed overnight—it’s something that will take decades. They need to plan for the long run, not come up with a program and wrap it up within a year or two.”
Tsenkova says there are glimmers of hope. Although a tiny portion of the sector, there’s a mighty ecosystem of committed nonprofit housing groups in Canada, and there’s the fact that the federal government is attempting to revive a national housing program. There’s even a 101-unit social housing project in East Vancouver underway called Vienna House—a partnership between provincial housing agency BC Housing, the City’s affordable housing agency and a Mennonite nonprofit group called More Than a Roof. They’re sharing information with experts in Vienna, who are returning the admiration with a housing project called Vancouver House.
The most contentious argument among Vancouver housing experts is the question of building more market-rate supply. Neoclassical economists, most of the developer community and many policymakers subscribe to the idea that when more supply of any kind is built—everything from subsidized units to luxury penthouses—the price of housing must inevitably fall.
The theory goes like this: with an abundance of housing, the wealthier people move up into more expensive units, freeing up the cheaper housing.
Those who oppose the idea generally do so on the grounds that they’ve never seen prices fall, despite steady condo development. And speculation guarantees unaffordability before the housing is even built. There’s growing consensus that flat-out market-rate development must be met with supports for low- and moderate-income groups. Otherwise, residents are displaced, old communities are busted up and a sea of high-priced condos and retail is created that makes for a pretty boring city.
Washington, D.C.-based Michael Spotts, senior visiting research fellow for the Urban Land Institute’s Terwilliger Center for Housing, says the affordability crisis in North America is the result of low incomes and an insufficient supply of decent, attainable housing.
“The biggest issues that cut across these different crises are a lack of income at the bottom end of the spectrum—and then, at the macro level, a pretty considerable housing production shortage,” he says. “And I think that those two elements create a vicious cycle, because typically you want the market to reach as far down the income spectrum as it possibly can, and that way you can use your available subsidies and supports to help those the market can’t reach.”
Instead, he says, we’ve under-produced housing of all types.
When the market isn’t functioning, higher-income households compete for older housing stock that would have normally filtered down to lower-income households, he explains. Instead, we’re seeing older apartment buildings that are central and that previously served lower incomes being acquired and repurposed for moderate-income households. That happens when those middle- and even upper-income earners aren’t being served by the new production of housing stock.
As a result, we see the price of older properties dramatically escalate.
“I don’t want to imply that the market can and should solve everything by itself,” he adds. “But that’s kind of the starting point of how we got here… There is also considerable under-investment in affordable housing programs and subsidies. That’s the other side of the coin. Supply growth does not necessarily exclusively need to mean market-rate supply growth.”
That supply, he says, includes the rehabilitation of neglected older housing stock in communities that haven’t seen as much population growth.
In the world of housing advocacy, says Spotts, supply is only one leg of a three-legged-stool approach to affordability: there’s the production of more housing for a mix of incomes; the preservation of existing affordable housing; and the protection of subsidies and rental assistance for vulnerable renters.
University of Glasgow professor and applied economist Duncan Maclennan, who has studied the Canadian housing system for many years, says that one option is mandatory “inclusionary zoning,” which would require that all new multi-unit construction of a certain size include a percentage of below-market units. This could ensure that there are greater options and more diversity than the market would allow on its own, and without government subsidies. Such policies typically help create moderate-priced housing, and are not considered a replacement for subsidized housing.
In Vancouver, the City doesn’t have the authority to mandate inclusionary zoning, so creating such a system would require legislative change. Instead, the City typically negotiates for below-market housing in exchange for density bonuses, which is a key strategy for delivering social housing units in the city.
“Canada has been slow to use it, and I think Vancouver could look to the U.K., but also to California, where a lot of housing is inclusionary zoning,” says Maclennan. “What we found in the U.K. was that the first couple of years, when [inclusionary zoning was] introduced in the early ’90s, there was [pushback] from the development industry. But once the rules of the game were clear, what happened was that it was reflected in lower land prices… There was a synergy there that worked out really well.”
Finland has a highly subsidized social housing program that houses people at reasonable rents and that has, most notably, drastically reduced homelessness from about 20,000 people 35 years ago to 4,300 today. The majority of unhoused people in Finland are living with friends or relatives. Sleeping in the rough has been all but eliminated in Helsinki.
The general housing benefit last year in Finland was two billion euros, says Juha Kaakinen, chief executive officer of Y-Foundation, one of Finland’s major nonprofit housing providers. In Finland, he says, it’s possible to get 80 percent of one’s rent subsidized, in either social or market-rate housing.
Kaakinen believes that the only way to conquer a housing crisis is to build or acquire permanent, secure housing for people who are homeless and struggling. Temporary housing, such as hotel rooms or hostels, doesn’t cut it. The idea is: house people first and then help them solve their problems—not the other way around.
Housing rights activists say Canada could also make addressing homelessness a top priority, much like the way the federal government found emergency income funding during the pandemic. The Finns were resourceful. Starting in the 1980s, Y-Foundation obtained grants from the government to purchase apartments. The money came from the government-run Finland Slot Machine Association.
Today, 25 percent of all new housing in Finland’s urban areas must be for social housing, says Kaakinen—and policies are in place to foster a socio-economic mix and no visible difference with private market-rate housing. There’s no Finnish version of the “poor door,” such as we saw at the W32 building in the Woodward’s complex, where social housing tenants had a separate entrance.
In the Finnish model, subsidized loans to build affordable social housing, built by municipal development companies or nonprofit groups, have an amortization of 40 years. Capital costs are covered by the rents. Affordable social housing is built on public land, and the greatest concentration is in the major cities. An abundance of affordable housing keeps market-rate prices in check, Kaakinen says.
“The only way to cut the rent level and make it more affordable is to make sure there is more affordable social housing,” he says. “You can’t rely on the private market.”
It’s not perfect: there are waiting lists for social housing, and private-sector rents are creeping up. There’s also that growing housing allowance bill, a hefty amount for a country of just 5.5 million people. But the cost of properly housing and supporting the most vulnerable is offset by the savings in public expenditures (such as social services), which are estimated at around 9,600 to 15,000 euros per person per year.
Finland can boast that their most vulnerable people aren’t living in tents or hotels, but in safe, secure, permanent housing—with a host of practical programs, including education and training—for as long as they like. For Canada, copying Finland’s housing-first approach is merely a matter of political will.
In a national effort to improve housing and affordability, to increase tenants’ rights and to improve energy efficiency, Scotland is undertaking a massively ambitious housing strategy over the next two decades.
Unlike England, Scotland stopped selling off its council housing years ago. The country introduced meaningful rights for unhoused people in 2003, and also unlike England, its social housing supply is growing, says Kenneth Gibb, director of the Glasgow-based U.K. Collaborative Centre for Housing Evidence.
Scotland’s new housing strategy is centred on social and affordable supply programs and aims to raise all housing quality standards, as well as to retrofit all housing to net zero by 2045. It even aims to end homelessness and speculation.
“I do recognize that many of my colleagues in the rest of the U.K. look on in envy at the different and arguably progressive path being taken in Scotland,” Gibb said in an email.
Scotland has a long history of subsidizing its housing, and “social landlords” are the majority. The private rental sector is small; only about 15 percent of the population relies on market-rate rentals.
There are parallels between the Scottish example and the situation in B.C. Scotland put an end to fixed-term rentals. B.C. did so as well. Rents can only be increased annually in Scotland; ditto in B.C. (and not increased at all during a pandemic). Scottish law can penalize properties left vacant for more than six months. B.C. has a speculation and vacancy tax that amounts to a penalty.
Vancouver could follow the Scottish example further and also beef up its renter protections by creating a landlord registry that would ensure quality standards, much the same way we licence daycare operators.
Through enforced maintenance of building standards, landlords wouldn’t so easily have the excuse to renovict.
Back home in Canada, developer, urban planner and SFU adjunct professor Michael Geller says new financing models would help buyers acquire secure housing. The longtime housing expert is a regular speaker on affordable housing, and says there is a way to alleviate the pain of high housing costs: it’s a matter of policymakers and regulators having the will to offer alternatives.
“Most of the people I know don’t dream of growing up and living in rental housing,” says Geller. “Innovative financing programs are a major solution.”
Some Vancouver residents have proven resourceful enough to do it on their own. Local theatre people brought the life-lease model to Vancouver at the Performing Arts Lodge (PAL) downtown. PAL launched an eight-storey building in 2006, featuring social housing devoted to people in the arts.
These lifetime leases, which are common in the U.K., are typically listed at market price, and residents buy the right to occupy a unit for as long as they want. They pay an upfront lump sum and a monthly fee of $550 toward operating costs. The tenure is more secure than renting and doesn’t require mortgage payments.
There’s also co-ownership. The Horseshoe Bay Cottagers’ Collective, which formed in 2021, is a group of longtime renters of eight cottages in Horseshoe Bay. When their landlord decided to sell, he supported their purchase of the little cottages as part of a co-ownership community. As tenants in common, each member of the group is on title, owns a percentage of the property, and shares a mortgage. Vancouver realtor Noam Dolgin helped the tenants-turned-owners put the deal together. He has made it a specialty to facilitate co-ownership, sometimes with investment partners, in order to purchase property that buyers could never otherwise afford.
“I’ve helped friends buy multiple units in the same apartment building, helped clients purchase units in cohousing communities and in collectively owned buildings,” says Dolgin. “When you start to think outside the traditional strata and single-family home boxes, a lot of options open up.”
In Canada, private investors have taken note of the growing co-ownership model. In the last year, Toronto company Ourboro got into co-ownership as a business by contributing to young buyers’ down payments in exchange for a share of future equity. They help with a first home, not a forever home, says Alex Kjorven, Ourboro’s chief product officer. The agreement lasts for 10 years—reasonable, she says, given that research shows most people stay in a property for five to seven years.
Buyers can buy out Ourboro’s interest at any time, for fair market value, and they don’t pay rent or additional interest, notes Kjorven. Only the buyer is on title because they take out the mortgage.
Ourboro funding comes from real estate investors, so instead of competing with those investors, first-time buyers are effectively partnering with them. Kjorven says the way we own homes is ripe for disruption.
Adds Geller: “The point is, don’t just look at the forms of housing, but look at different financing options as a way to affordability. These solutions have a place.”