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James and Tina live in Point Grey, in a two-bedroom basement suite in a Vancouver Special. Tina, 34, a former music teacher, is now a stay-at-home mom. James, 35, teaches music and directs the 260-student Dr. Annie B. Jamieson Elementary School string orchestra. He also gives private cello lessons to bring in extra cash. Their twin boys were born last May, and their challenge as a new family of five is how to afford not groceries but space. The search for a larger home has not gone well. Real estate, they say, has been “a continual source of depression” for seven years. “We feel fortunate to be healthy, have three wonderful children, and have jobs that are mostly satisfying and interesting,” James says. But they’re tired of living below ground. “Our dehumidifier and industrial mould-spore-removing air filter are playing too large a role in our lives.”
On their combined income—at around $80,000, it’s well above the regional family median of $68,000—they’re still knocking their heads against the subfloor of the real-estate boom. While in their 20s, they saved for a down payment and made offers on six houses in Vancouver and Burnaby. Despite bidding over the asking price almost every time, says James, they always lost out. “Today, any starter home in the Lower Mainland is far out of our financial reach. We didn’t ever think that we’d be 35 years old having never lived above ground level.” They love Vancouver, and want to stay close to their families and their roots. But, like many middle-income earners here—web designers and police officers, young architects and teachers—they find themselves rehashing halfhearted talks of packing everything into a moving van. “Maybe we’ll head to Victoria,” says James, “somewhere we can realize our dream of living above ground.”
Around January 2002, the average price of a detached house in Metro Vancouver was $390,000. That has since nearly tripled to $1.1 million. For those who couldn’t or didn’t buy in—who were outbid, came late to the party, or sat it out waiting for a massive market correction—real estate has been a dismal science. This July, the MLS listed only 24 two-bedroom condos for sale under $300,000. That’s the maximum mortgage available to a household earning the median family income; Vancouver proper has about 30,000 renter households in that category. The story of real-estate affordability here can be told in that one stat: in a city of over 600,000 people, two dozen bottom-of-the-barrel starter condos available for sale to the middle class.
Tina and James are part of what, real-estate-wise, might be called Vancouver’s Generation Fucked. As the city becomes a global “lifestyle destination,” tens of thousands of middle-class households are getting a hard lesson in diminished expectations. Unless the members of Gen F want to raise their children in a one-bedroom condo, their salaries will qualify them to be no more than permanent renters in Vancouver. This is a well-known phenomenon in cities like Paris and New York, but it’s a recent development here, one taking an entire cohort in their 20s, 30s, and 40s by surprise. My wife and I also rent a basement suite in Vancouver, and occasionally we shake our heads that we’re pushing 40 and living in a space that barely notches above student housing. For a long while we’d been looking down our noses at people shelling out what seemed to be exorbitant prices for tiny, well-marketed properties. We waited, a bit haughtily, for the oft-predicted crash to bring prices back down to our level. While waiting in this particular basement for the past three years, we’ve paid $40,000 to our landlord.
As basements go, ours is fine, no mould-spore filter required. But it’s hard not to feel churlish when the subject of real estate comes up. At parties, we sip from the house cocktail shared by many young (and not-so-young) middle-class renters in Vancouver: two parts seething resentment, one part liberal guilt. To protest too much about our situation seems bourgeois, given we eat organic vegetables, drink good wine, and go on vacation every few months. We blunt our bitterness by counting our blessings, which are many—and it’s hard to stir a revolt on a full stomach and a glass of Merlot.
One thing that has changed in the past year is our perspective: we no longer believe a crash is inevitable, or that it would make any real difference to us. Like one of those Re/Max balloons, prices have risen so far out of our reach that even if they deflated significantly we still couldn’t get on board. Yet on our incomes, as a childless couple, we have a choice. Unlike James and Tina, we just might be able to purchase a property that suits our needs. Or we could leave.
Among the emigrants joining us might be Leif and Heidi. Leif, 31, is an intern architect, and Heidi, 32, a full-time student at Emily Carr. Former Winnipeggers, they had already owned homes in Saskatoon and Winnipeg when they arrived in Vancouver in 2009, bringing with them $75,000 in equity. Despite their modest income, they were optimistic that their good fortune in the real-estate market on the Prairies would set them up for a decent fixer-upper in Vancouver. They quickly realized their income and savings would only buy them a one-bedroom condo—if that.
“Coming here was a slap in the face,” says Leif. “We thought we were lucky getting that down payment together, but it’s pennies here.” Recently he spotted a new one-bedroom in Kitsilano for $300,000; to prove a point, he went on MLS and found a home in Winnipeg for the same price: an old-stock character house with four bedrooms and two baths on three floors. It was 2,400 square feet; the Kits condo was 400. “The longer I’m out here, the more I’m convinced this market is unstoppable. If this was any other regional city, prices would adjust. But that’s not how it is here,” he says. “I don’t want to sound like we’re feeling sorry for ourselves, because we could happily move back. But we realized that Vancouver is not a regional market. Real-estate-wise, it’s not really Canada anymore.”
Alex and Erin are also doubtful about their future. Smart, practical, and into the city’s culture of dining, outdoors, and high-tech, they’re the Everycouple of Gen F’s 20-somethings. They rent a 500-square-foot apartment in Hastings-Sunrise and love living in Vancouver—even if it means having a living room not much larger than a snooker table. Alex, 28, is a young chef who moved here from Medicine Hat in 2005. After completing culinary school in January, he was hired at the new Hawksworth restaurant in the Rosewood Hotel Georgia. Erin, who grew up in North Vancouver, is 26 and until recently was a pr manager at 1-800-GOT-JUNK. A Twitter lover, she broadcasts their gourmet experiments to the world in 140-character bites. They’ve chosen careers that tie them to Vancouver, or a city of this size, and necessity aside they enjoy the city’s vibe.
They’re not optimistic about putting down roots. As a cook in an upscale restaurant, Alex can count on earning around $29,000 a year. Erin makes more with freelance copywriting and PR, but not much. “Together we make about $70,000, which sounds like a healthy combined income at our age,” Erin says, “and we’re not destitute. What frustrates us is that there’s no way to look at growing wealth or security while living in this city, making what we make—which anywhere else would be considered a really good living.” They’d like to buy a condo in five years or so, but that’s a stretch. “It would have to be in Port Moody or something, which means you’re commuting. Even if we lived on macaroni and cheese for three years, we couldn’t make it work here.”
As real-estate prices have risen, median-wage households have been pummelled by Vancouver’s shift from a resource-based economy to a tourism-and-service mix. (If you work in the mining or forestry industry in B.C., your average weekly wage is about $1,200; in hotels or food service, it’s around $400.) Gen F’ers are paying off student loans and financing stratospheric mortgages in a city with few large firms or corporate headquarters. And due to aging Boomers who stay in their jobs longer, there are fewer jobs available for experienced workers in their 30s and 40s. Erin has over $40,000 in student debt from her UBC years and her Kwantlen diploma, and while pr was a consciously practical choice, getting ahead is tough. “The pr departments are small to begin with, unlike in Toronto,” she says. “So there are piles of people coming in at junior levels who can’t move up because people aren’t moving out of senior positions—the director has been there for five or 10 years and will be for at least another 10.”
Generation F is leaving the city just when its members become most valuable, creatively and economically. Michael Heeney is a principal of Bing Thom Architects, whose research arm, BTA Works, studies affordability and other urban issues. BTA attracts “fantastic” young architects to Vancouver early in their careers—“the best and brightest” from around the world. The dilemma many employers face, says Heeney, is that once their employees want to have a family in their 30s and early 40s, they leave the city. “When they have one child in a two-bedroom apartment they can get away with it, but as the child gets older, or they have a second child, it really doesn’t work very well here.” When they leave, he notes, they don’t go to Surrey and commute, but light out for distant centres like Chicago. “These are people who are at their absolute most valuable, because they’ve been working in the business for 10 or 15 years. They’re the backbone, the boiler room of your business. And we’re losing that investment. In many ways, our most significant export is talented people.”
Heather Tremain, former CEO of green building consultancy and development company reSource Rethinking Building, is now a community development consultant. She says she’s been “overwhelmed” by stories of young professionals leaving the city. “There are so many people with great skill sets, really the emerging leaders of this city, who are leaving because they can’t have kids and live here,” says Tremain. “They can’t afford the accommodation. It’s partly a generation gap, where all these people came of purchasing age at a point when the market took off. It’s just bad luck, bad timing.”
Some dispute claims that young families and professionals are leaving in droves, insisting the stats don’t support it. And indeed, the proportion of people aged 20 to 40 in Vancouver lines up with the rest of the province. “It’s hard to measure the people who’ve left, because they’re not there to measure,” notes Tremain. “But you can look at school enrollments, which are declining in Vancouver but growing in Surrey.” What the provincial numbers may be cloaking is a phenomenon of mass-scale gentrification, whereby people with oodles of money—the independently wealthy, or those who can work remotely—are arriving from elsewhere and displacing existing residents with Vancouver-based jobs. The city acts as a revolving door, attracting young people in their 20s, then turning them back to where they came from or to another urban centre as they reach the family years. For those who grew up in Vancouver, of course, there’s no revolving door—only an exit sign. “This,” says Michael Heeney, “is the double-edged sword of being the most livable city in the world.”
Urban planners talk about “the housing continuum,” with homeless shelters at one end and purchased condos and detached homes at the other. Rental stock—from social housing to leased condo units—is in the middle. For Vancouver, that spectrum has more than common complexity, because our city has the highest share of low-income households per capita in Canada and a sizable homeless population, around 2,600 people. Combined with our high real-estate prices, these social realities mean that creating affordable housing is less an art than a form of ecosystem management. “Affordability is our single greatest challenge,” acknowledges Brent Toderian, director of city planning. “There’s never been a time when Vancouver hasn’t been working very hard in progressive ways to address it.”
When Vancouver planners talk about increasing affordability, they’re talking mainly about helping the city’s most vulnerable—what Toderian calls “deep affordability.” In the past three years, the city has reduced street homelessness by over 80 percent with easier-access shelter beds. But those nearer the middle of the continuum also face grave challenges.
Over 20,000 households in Vancouver—one-third of them home owners—pay over half their income toward housing, making them vulnerable to eviction and default. Demand for new rental properties in Metro Vancouver exceeds 6,600 units per year, but tax laws and other factors make it hard for developers to earn a profit on rental units, which means hardly anyone builds them. Over the past decade developers have built on average only about 1,000 purpose-built rental suites per year, running short of demand by about 50,000 units. That’s why the city of Vancouver is scrambling to enable secondary rental suites like basements and laneway housing.
To help renters, the city has deployed policies like the Rate of Change program that prevents rental buildings from being torn down without replacement—or the now-defunct Short-Term Incentives for Rental program that rewarded developers for building rental units. The policies are progressive and important, though they’ve done little more than stave off decline. Back in the ’80s Vancouver planners created their 20 Percent policy, a now almost-forgotten program that should have worked better than it did: still in place, it requires that developers of new neighbourhoods like East Fraserlands set aside 20 percent of buildable space for affordable housing. In the early ’90s it worked some miracles, using a mix of federal and provincial cash to build 1,300 units of affordable housing in Coal Harbour and Concord Pacific Place, among other neighbourhoods—embedding social diversity and affordable housing in otherwise uniformly spendy areas. But when Brian Mulroney pulled the funding on social housing in the early ’90s, the program faltered. Developers like Concord Pacific and ParkLane Homes have set aside airspace and dirt for over 2,000 units under 20 Percent, but it’s questionable whether the units will ever be built.
If people like Tina and James, and Leif and Heidi, and my wife and I are hoping city or provincial governments will help us move up into home ownership, we’re out of luck. Once people are employed and decently housed, the city lets them go their way; in the triage of Vancouver housing, high real-estate values are a concern but not a priority. “Home ownership is at the top of our affordability continuum, where the bottom is literally people living on the streets,” says Toderian. “Increasingly, in a city as expensive as ours, it’s about affordable living, not affordable ownership. We’re making sure people have the opportunity to live affordably in the city, in everything from rent to daycare. But not to own, necessarily.”
Over the next decade, the city has committed to help build 39,000 housing units. “The three most important words with affordable ownership,” says Toderian, “are supply, supply, supply.” An increased supply sounds reassuring, but the current projections barely keep up with projected population growth—and nearly half of new units are bought by investors, who turn them into rentals. From the city’s perspective, investors are a blessing: they own 35 percent of condo suites and provide over 17,000 units of rental housing. “That’s been a positive thing,” says Toderian. “We’d have a harder housing challenge if we didn’t have it.”
But investor-owned condo stock is more expensive than purpose-built rental, he adds, and it’s vulnerable to mass selloffs if interest rates rise. The city would like to get more ownership properties into the market to mitigate price increases, says Toderian, but it’s not easy. “To some extent the market ‘self-regulates’ how much it puts out there. And the city workload around getting supply approved in a high-quality form with meaningful public input is more than a handful.” Former councillor Peter Ladner has suggested a different approach to the problem: the city, he says, should mandate that when single-family houses are torn down—offshore investors tend to replace heritage homes with big-box mansions—they must be replaced with duplexes or triplexes.
A city increasingly composed of median-income renters widens the gap between rich and poor. As new members of the middle class are pushed into rental units, they boost the fortunes of existing property owners while depleting their own, whether their landlords are the people living upstairs, offshore condo investors, or funds like Great-West Life. And this is where things start to topple. When prices heat up, the middle class eats up units that would previously have been occupied by moderate- to low-income earners. “Moderate-income people in Vancouver are moving into student housing,” says councillor Heather Deal. “Students are moving into welfare apartments in the Downtown Eastside. And the homeless are popping out the bottom of the system.”
There seems little hope that Generation F will steal a happy ending from a depressing decade. A market drop of 40 percent—as seen in several U.S. cities in the real-estate meltdown—still wouldn’t put a median-income family within reach of a three-bedroom home in Vancouver. If there’s an upside to the crunch, it’s that we’re entertaining new ideas about home ownership and beginning to make real-estate prices an election issue.
Vancouver isn’t the first place to experience a permanent real-estate spike, nor the first to realize that high real-estate values are both a social and economic problem. During the dot-com boom of the 1990s, housing prices in Santa Clara County, the cradle of Silicon Valley, shot up so high that even companies offering plum upper-management jobs couldn’t attract talent. In 1998, a group of tech companies—led by Intel with a $1-million investment, then more millions from Adobe, Cisco, and others—joined with housing activists and local governments to create the nonprofit Santa Clara Housing Trust. Combining public and private funds, the scht has leveraged $1.8 billion over the past decade to create affordable rentals and home-ownership units for 9,000 people of varying incomes. It hasn’t solved affordability in Santa Clara, but it has chipped away at it and provided a promising model.
Inspired by various models—in Silicon Valley, Whistler, and Toronto—affordable-ownership pilots are starting to spring up in Vancouver. (See sidebar, page 74.) Toderian approves of such projects but is not convinced they’ll add up to anything significant or ultimately change the Vancouver market. “We can do a lot more of those projects, but it’s going to be a drop in the bucket,” he says, adding that experiments in places like Whistler aren’t necessarily transferable to Vancouver. “You won’t be able to build enough of these pilots to change the nature of affordable ownership in this city.” Tim Wake respectfully disagrees. Wake, who worked with the Whistler Housing Authority from 1997 to 2005 and was recently appointed ceo of Habitat for Humanity of Greater Vancouver, thinks the city has yet to really explore the possibilities for affordable home ownership. “It’s not widely known that between 1996 and 2011 Whistler solved its affordable-housing problem,” he says. “It’s no longer a significant problem for Whistler. Not a lot of communities can say they’ve done that.”
As Vancouver increasingly resembles a massive resort community for wealthy retirees and investor-class immigrants who want a mild climate and good golfing, we may have something to learn from Whistler, which spent two decades struggling to house working families. Five years ago, few people wanted to hear lessons from Whistler about affordable ownership, Wake says, but things have changed. “Vancouver planners and officials were very focused on rental housing, and some didn’t think that what Whistler was doing with worker housing was relevant. But housing pressures similar to those affecting resort towns appear to be happening here now. Many working people are getting fed up, and they want to hear about creative solutions.”
He does agree with Toderian on some points. “You can’t just take what Whistler did or Santa Clara did and transplant it. We need to find our own ways to hook on to the engine of development to produce affordable home ownership.” For Wake, the best solutions boil down to increased density paired with what are called “covenanted deeds,” whereby units are bought—and later sold—below market value. Owners who sign these deeds don’t reap all the windfalls of a runaway market, but they’re able to capture some gains along with the equity they’ve paid to their mortgage. “The beauty of a market-based approach is that it does not rely heavily on government subsidy. The strong real-estate market in Vancouver, the very thing that is causing the affordable-housing problem, can also provide solutions.”
Vancouver’s affordable-ownership micro-projects are in their infancy, and scaling them up will take years. The greatest shift we’ll see may be one of expectations. “There are many world cities where ownership is simply not an option,” says Brent Toderian. In London or Hong Kong, he points out, “you don’t think about buying, you don’t really even think of renting a place on your own. It’s a bit of a North American thing to think about affordability in terms of this dream of ownership.” As people realize that real-estate prices are not going to revert to 2002 levels, Toderian counsels the need not for mass exodus, but for a shift in culture and attitude.
So does David Smith, founder of Boston’s Affordable Housing Institute, an “action-oriented consultancy” that advises governments on housing policy and promotes affordable housing projects. He sees the Vancouver market as ripe for a correction, but says prices will likely rebound and in the long term remain high.
“It doesn’t go the other way once a city attracts that international attention,” says Smith. “Thirty years ago, San Diego was seen as a small town; now it’s a major city.” Smith also points out that what Vancouverites are experiencing is a common problem globally. “If you live in the big city, you live in a smaller space. That a teacher cannot afford to live in the city she teaches in, that’s common in cities all over.”
If you want to retain median-income workers and avoid having the city divide into penthouses and slums, which Smith says is a natural progression of economic forces in cities, government has to step in by scaling up innovative programs. “You can’t rely only on market forces. If the government doesn’t do anything, poorer people have to live an hour out of town or in substandard housing.”
But focusing government intervention on the hardest-hit is not enough for middle-class earners like Erin. “Saying that it’s too bad about high prices and you should be resigned to renting is to me inconsiderate and frankly a little ridiculous in a city with no real support or protection for renters,” she says, adding that other expensive cities—Vienna, for one—have long-established advocacy systems for tenants.
“How is it really a home when a landlord can evict you to do ‘upgrades’ to get around rent-increase limitations, or when they tell you you can’t have pets? As a renter you’ve got very little security, which is not the way most people want to start a life for themselves, let alone a family.”
“We could probably find a larger basement suite,” says James, the Point Grey music teacher with three kids. “But after more than a decade of living in basement suites in order to save for a down payment, I want to feel more like an adult and less like a mole. Tina and I don’t want to ‘settle into a lifetime of rental.’ We want to feel like we’re a real part of the city. We want to put down roots.”
As Gen F looks for real-estate security, they might learn a new acronym. MEEs (Mission Entrepreneurial Entities) blend profit and not-for-profit motives to build affordable housing. Seen in overpriced cities the world over, a few are evolving locally.
The Affordable Homeownership Trust aims to finance a novel approach to condo ownership, inspired by Whistler, Silicon Valley, and Fort McMurray. Begun by the Vancouver Native Housing Society, the multifamily developments—not only for aboriginal people—will comprise around 100 units, half sold at market value and half at up to 50 percent off. A microfinancing approach to solicit funds from businesses and the public will create a pool of interest-free capital. “It’s not philanthropy we’re asking for,” says CEO Dave Eddy. “It’s social responsibility based on a business case.”
Vancity has acted as a MEE on some recent affordable-housing experiments, including 60 West Cordova in Gastown and the SFU development Verdant. Completed in 2007, Verdant was meant to attract staff and faculty turned off by high real-estate prices; by cutting land prices it sold two-thirds of the family-size units for 80 percent of market value. At 60 West Cordova, Vancity partnered with developer Westbank to offer condo units to residents, workers, and volunteers in the Downtown Eastside at 75 percent of market value. A dozen were also discounted further and sold to the Portland Hotel Society and Habitat for Humanity.
The MEE with the most experience in Canada may be Options for Homes, a Toronto-based nonprofit that has built $400 million worth of affordable-ownership units in Toronto and Montreal since 1997. By pouncing on cheaper land in up-and-coming areas—and leaving out expensive swimming pools, gyms, parking stalls, and third-party marketing plans—OFH is able to offer deep discounts. Where a traditional Toronto developer might charge $290,000 for a 775-square-foot, two-bedroom in an emerging neighbourhood, OFH can offer the same unit for about $190,000. —Tyee Bridge