Time to think outside the housing box
A commentary by a retired risk manager who lives in Saanich.
Let’s be honest, we are at a crossroads on housing. For too long, housing demand has been strong enough relative to supply to create a high value commodity that is now beyond the reach of too many people — particularly young and lower income people. If nothing is done to satisfy the needs of these people, we risk civil unrest.
It is all very well for politicians to talk about “affordable housing,” but is anything really being done — or even planned? Where are the plans, or even ideas, to reduce the price of new housing to a level that modest income households can afford — when the living wage in Victoria, for example, is now over $25 an hour.
What can that buy (or even rent) in this housing market?
The fundamental problem is that there are two intractable components to the cost of new private housing — construction and land. The former is akin to a fixed cost that varies with inflation and labour costs. It will not be reduced significantly unless we get massive materials cost deflation accompanied by large reductions in labour costs. Unlikely, surely? Therefore, there is only one way to reduce overall new housing costs — by severely reducing or eliminating the cost of land. Not going to happen in the private sector, is it?
There is, however, one source of land that can be successfully used in this situation — government-owned land and, in two particular current Victoria situations, tax-exempt entity owned land.
I understand that government land at Nellie McClung library branch and the old Victoria fire hall is to be redeveloped with housing units.
A further large tract of land that could also be used is Cedar Hill Golf Course — why is a municipality running a golf course?
Since this land is not collecting taxes and is, really, owned by the citizens, why not use it in the following manner?
• Create a 999-year leasehold for each unit built at $1 per annum, prepaid by the purchaser. That is, effectively, freehold.
• Government hires developer/ contractors to develop modest-sized, but suitable, housing for singles and families (I banked such assisted housing developers in Ontario in the 1970s).
• These are sold to lower income buyers — perhaps a household income ceiling at, say, the basic provincial taxable income limit for singles and the top of the second bracket for families.
• For those able to find a downpayment percentage that would qualify for a private-sector mortgage, a government mortgage program at its borrowing cost; for those unable, the first five years of “mortgage” payments on a rent-to-own basis, converting to equity and mortgage after five years.
• No sales for the first 10 years, except to income-qualified purchasers, and with a cost-plus-inflation price cap, to prevent profiteering.
In addition, we see that two churchowned land plots are now planned for residential construction. As an entity getting a free pass on taxes, a church should be more than willing to contribute that land for society’s betterment using such a government plan.
Yes, the devil will be in the details, but the concept works. (I saw variations on the theme in Ontario). Would this make housing affordable?
Look at your latest property tax assessment — what is your housing unit worth (around construction cost?), compared to the land it is on? Even at current construction costs, removing the land cost can make the necessary difference.
It’s time for government to think outside the old box. It has the ability to make a difference, not only in Victoria but elsewhere in the province where it owns either unused land or existing construction slated for redevelopment.