A think tank says governments should finance 10,000 units of affordable rentals every year in Metro Vancouver.
Metro Vancouver experienced a major building boom from 2016 to 2018, with record numbers of housing starts. But according to Marc Lee, a senior economist with the B.C. office of the Canadian Centre for Policy Alternatives, there weren’t anywhere near enough affordable rental dwellings constructed to meet the public’s demand.
“I think we need a concerted commitment over time if we’re really going to make a dent in the problem,” Lee told the Straight in a phone interview. “The market is choosing to build things that are very different from what we actually need.”
In a new report, Lee has pointed out that developers are mostly building condos. Although a large number are rented—37 percent in the region and 46 percent within Vancouver city limits—they generally go for higher rents and do not offer the same security of tenure as purpose-built rentals. In 2017 alone, 65 percent of the housing starts were condos, 17 percent were ground-oriented homes, and just 18 percent were new rental housing. The report states that this occurred even though one-third of households in the region are renters.
“The current way of thinking about housing is largely in the context of private-sector property developers,” Lee said. “And, also, the conversation is primarily around homeownership as the preferred mode for how people access housing.”
In his view, however, access for low- to middle-income households to affordable rental dwellings is a far more important issue. “We have a crisis for people who actually live and work in the city—and that’s the demographic that’s not profitable for those developers,” he stated.
Lee’s report, titled Planning for a Build-Out of Affordable Rental Housing in Metro Vancouver: How Many Units and How Much Would It Cost?, includes ambitious recommendations to respond to this situation. It proposes that governments finance 10,000 nonmarket rental housing units, including co- ops, in the region every year. He arrived at this number based on the annual growth in the population and backlogged demand for housing from the homeless, low-income seniors, immigrants, and refugees.
He anticipates that this would cost about $2.5 billion a year. This assumes that a 600-square-foot one-bedroom unit could be built for $180,000 and a 400-square-foot bachelor unit could be constructed for $120,000.
Lee acknowledged that this is “no small sum” of money. “But if you think about it in the context of the B.C. economy, it’s less than one percent of our GDP,” he added.
He noted that the biggest obstacle would be finding the capital to kick off a housing initiative of this magnitude.
But once that were achieved, there would be a flow of rental income over the life of the building that could pay down the debt.
Lee examined 70 neighbourhoods in the region and found not one in which a full-time minimum-wage worker could afford the cost of renting the average one-bedroom apartment. But it’s also extremely tough for median-income renter households in Vancouver. In the 2016 census, they earned $ 48,959 per year, compared to a median income of $90,278 for owner households.
“The City of Vancouver’s ultralow vacancy rate for rental housing of 0.8 per cent and the more expensive new market rentals coming on stream clearly point to the need for more rental housing that is affordable to ordinary households,” Lee writes in the report. “After two years, housing targets have been exceeded for higher-income households ($ 80,000 and up), while low-to-middle income groups had fewer-than-targeted units.”