A housing plan that isn't actively building housing is no housing plan at all

It's a wish

/ dustin godfrey

Last Wednesday, I woke up to CBC Radio’s The World This Hour telling me the federal Liberal Party was expected to announce a new housing plan that morning.

This was of interest because the party’s numbers are deep in the rough, and housing has been a file Conservative Leader Pierre Poilievre has been dogging him particularly hard about — and with good reason.

The cost of housing in Canada has, for nearly two decades, been increasingly unhinged, but the last few years has been particularly bad. One graph published by the National Post in 2021 compares disposable income with housing prices. And while the two were relatively close between 1975, when the graph starts, and the early 2000s, housing prices then began a steep climb.

By Q2 2021, housing prices had roughly quadrupled compared to 1975, where disposable income had only doubled.

All of that is to say that the issue is particularly stark. And while federal Conservative and Liberal governments and BC NDP and then-BC Liberal governments have let this gaping wound fester for decades, the public is in a position to demand more from the federal level, where the minority Liberal government is in a similarly stark position in polling.

Governing parties with tanked polling are particularly susceptible to desperate measures. In the year leading up to the 2017 election, Christy Clark announced a $500-million housing fund, which columnist Rob Shaw then described as “a plan that was big on funding, short on details and all but ensures a series of further feel-good housing announcements for her government in the run-up to the May provincial election.”

Just a month prior to that announcement, she’d abruptly changed position on a foreign buyers tax.

Any government in a position like the one the Liberals currently find themselves in is, therefore, bound to make significant changes. Some of those changes occurred at the cabinet level, with a major overhaul in July. But with Justin Trudeau himself still in charge and insisting he will run as leader for the next election, surely something else has to change, and in a major way, right?

Right?

After tuning into the big announcement last week, that didn’t seem to be the case. Trudeau said the government will have more to say “very soon,” and more details could be more positive news, but what has so far been released after a cabinet retreat that apparently focused on housing isn’t promising.

On Wednesday, the big announcement was one specific funding announcement from its Housing Accelerator Fund, which was announced last year and is intended to incentivize municipal governments to increase housing supply through local initiatives.

The $74 million announced for London is expected to incentivize the construction of 2,000 units of housing, which is, indeed, a fair bit. And the funding does address some of the needs beyond, as the prime minister put it, the nails and hammers and materials needed to build the housing themselves. London’s mayor said it could help with increasing sewer or water capacity to service increased density, for instance.

So how does this lead to more housing?

“With this new funding, London will allow for high-density development without the need for rezoning – eliminating a major barrier to creating the types of homes we need. London will also move to allow up to four units to be built on a single property in low-density neighbourhoods, dispose of city-owned land for more development, and create partnerships with non-profit housing providers to build more affordable homes,” reads a news release from the Prime Minister’s Office.

The government claims the $4-billion fund will spur the creation of about 100,000 units altogether, with applicant cities providing “innovative action plans” to receive their own funding.

The prime minister emphasized the four-unit property zoning changes as a bold move by London’s city council — this was the kind of thinking that would lead to us solving the housing crisis! In order to get in on the Housing Accelerator Fund, other municipalities will also have to end exclusionary zoning, Trudeau said.

I won’t sit here and try to tell you increasing density in traditionally single-family housing zones isn’t an improvement. But increasing from three units to four is hardly bold, nor will it do much to actively create more housing. In a crisis as deep as this one, allowing row housing and small apartment buildings of up to three or four floors in all residential zones without a zoning amendment feels like a more appropriate response.

Missing middle policies aren’t unimportant. Replacing single-family housing at a large scale with duplexes, fourplexes, row housing and small apartment buildings will increase the supply of housing, and this is particularly important for a region like Metro Vancouver, where we’re bordered by mountains, agricultural land, a literal border and ocean. It also reduces sprawl, which would bring down infrastructure costs, improve the viability of public transit and make neighbourhoods more walkable. All of this adds up to not only reduced housing prices, assuming the missing middle becomes found, but also lower-carbon cities in both the construction and maintenance of housing.

The issue is a common flaw in housing plans. Governments aren’t building housing — at least, they aren’t building enough housing. Instead, they offer some incentive or reduce barriers and expect the private sector to fill the gap. 

The Liberals’ other announcement this week, an intention to remove GST on construction of new rental apartment buildings (this one similarly was nothing new — only this time, it was finally making good on a promise from way back in 2015), also falls into this quagmire. 

Poilievre’s position on housing does too — perhaps more so. His rhetoric goes something like this: We used to build so much more housing than we do today. In fact, we built more in 1974 than we did last year. And the reason we’re not building now is because the government keeps getting in the way.

But as writer Nora Loreto noted: Poilievre misses an emphasis on the “We” in that statement.

In the 1970s and ’80s, We — the capital We, the collective We — built piles of co-op housing and public rental housing. The neoliberal wave put a swift end to that in the 1990s, first with the Progressive Conservatives under Brian Mulroney, then with the Liberals under Jean Chretien. This continued under Paul Martin and Stephen Harper.

Going back to the National Post graph from earlier, you’ll note that it was shortly after this that the cost of housing departed so rapidly from disposable income.

Trudeau got the federal government back into some level of public housing, but not in a serious way that would address a 30-year deficit. Missing middle housing could fill some of that gap, but it seems unlikely to truly address the crisis.

Portland, Oregon and Minneapolis, Minnesota have both enacted missing middle policies, and their contribution to increasing housing supply isn’t nothing. But it also isn’t particularly significant, according to reporting by ArlNow, a local outlet covering Arlington County, Virginia. Auckland, New Zealand similarly saw some stabilization of rents with upzoning, but the cost of land itself has remained among the most expensive in the world, according to the Vancouver Sun. Part of it is that it can create a land rush — developers looking to snatch up land to capitalize on the density that’s newly available to them.

But there’s likely another reason for it: developers (including the executives who rank among the top donors to Poilievre’s Conservatives) aren’t going to willingly develop housing to a point where it would lower the cost of housing — or, in other words, cut into their profits.

As Concordia associate professor Ted Rutland noted in a thorough debunking of Poilievre’s housing talking points, “Pension funds, REITs [real estate investment trusts], etc., invest in property precisely because the profits are high.”

Back in May, the ABC-majority council voted to create exemptions for unsold inventory owned by developers to the City of Vancouver’s empty homes tax. They even went so far as to apply it retroactively, effectively giving back about $3.8 million to those developers. This is money that was intended to go towards building below-market housing, mind you. And a quote from Green councillor Pete Fry is rather telling in a Vancouver Sun article on the vote:

I do appreciate some of the concerns we’ve heard from the development industry, they’re sitting on properties they can’t move, and I think this is a compromise to recognize, let’s give them a couple years,” Fry said. “If this is a market-economics condition that is unfairly impacting them, I think we should give that consideration, but I certainly wouldn’t want to offer that in perpetuity, because I don’t think that meets the intention of the empty homes tax.”

In other words, developers are sitting on empty homes because the market isn’t favourable to them. The $3.8-million refund was on 60 units, which isn’t a ton, but the point still stands. The same types of people (developers) who tell us more supply will reduce housing prices and make life more affordable to everyone have the ability to hold units, sometimes for years, because the going price is too affordable. The power imbalance between individuals and developers is insurmountable without intervention.

The market will never solve the housing crisis in part because the cost of entry into providing housing is so great that the only entities that can afford to build at the scale that’s needed are governments and massive for-profit organizations.

But in the case of the former, we’ve seen little more than measures here and there that would lower costs to the latter. A housing plan that relies mostly on incentives for profit-driven entities isn’t a plan at all.

It’s throwing money into the wind and praying it lands in the hands of those who need it.