Little relief for housing prices, renters in budget

B.C.’s budget update delivered little relief from high housing prices or help for renters desperate to find a place to live.

Renters will have to wait for a promised $400-per-year rebate as the NDP and Green parties work this fall on what Finance Minister Carole James calls a comprehensive strategy on housing.

But she said Monday that “the renters’ rebate will come.”

The government announced $208 million to build 1,700 units of affordable rental units over four years, along with plans for 2,000 units of new housing for homeless people.

But there was scant help for those wanting to break into the housing market where prices have been climbing year over year. The price of a single-family house in the core of Victoria was $823,100 last month.

James knows that B.C. housing costs have skyrocketed. “People can’t afford a home in the community where they work. Renters can’t find a place to live.

“Families can’t get into the housing market as they grow, and parents worry about their kids’ future.”

And businesses can not find workers because of the high cost of housing, she said.

These are all familiar issues to Greater Victoria residents and businesses in a region with one of the lowest unemployment rates in the country, at 4.6 per cent.

B.C.’s housing market is important not only to residents but to the health of the province’s economy. Budget documents noted that the 2.6 per cent estimated increase in business investment in 2016, was “primarily driving the growth in residential development.”

But the province can not only rely on housing, said James. She is encouraging a more diverse economy, she said.

There is only so much the province can do, given that the Bank of Canada is responsible for trend-setting interest rates. “If interest rates start to climb, you will see a softening of the housing market.”

B.C.’s strategy aims to tackle ways to make housing more affordable, close loopholes allowing speculation, and to reduce tax fraud and money laundering in B.C. real estate, she said. “We don’t want to piecemeal the approach.”

Cameron Muir, chief economist for the B.C. Real Estate Association, said, “It is very difficult for the government to magically create affordability.”

Matching supply and demand in a timely fashion is becoming increasingly difficult, because of an ongoing trend toward more large multi-family projects, he said. “They take much longer to complete.”

When builders and developers start to respond to the needs of the market, it can take several years to bring a project to completion, he said.

Supply is the major issue around affordability, he said.

In Metro Vancouver, for example, there are 40,000 units under construction. That’s 60 per cent higher than the previous peak in 2008. “Mind you, most of those are already pre-sold.”

B.C. anticipates 114,000 units of new housing to be built in the next decade through partnerships with other levels of government, and non-profit and private sectors.

At the same time, B.C.’s housing starts are predicted to decline, provincial documents state.

This year up to July, B.C. housing starts averaged 41,251 annualized units, down by 5.4 per cent from the near-record levels of the first seven months of 2016.

B.C.’s overall homes sales started slowing in spring 2016 and rebounded this year. Anyone hunting for a home in Greater Victoria knows that the market remains hot. Houses in the $700,000 range are particularly in demand.