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A secure, affordable home is becoming increasingly out of reach

Our language is littered with cultural tropes about that most important element in our lives: a home. Home is where the heart is, it is home sweet home, there is no place like home and we want to be home for the holidays.
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The City of Burnaby says the 2020 Supplementary Utility Fee Declaration form is due Saturday,

Our language is littered with cultural tropes about that most important element in our lives: a home. Home is where the heart is, it is home sweet home, there is no place like home and we want to be home for the holidays.

Yet that most essential element to ensure our well-being, a secure, affordable home, whether we are a retired senior, a recovering addict, a refugee on the run or just plain folks trying to make their way in life, has become increasingly out if reach in our part of the world; unaffordable for both those who aspire to own or those who are willing to rent.

This socially destructive situation did not happen all at once, nor was there a single cause, although it can be generally viewed as the de-coupling of personal income and the cost of housing.

Malcolm Gladwell, the Canadian journalist and author, in his insightful book The Tipping Point, noted that when it comes to trends there is no one incident that triggers the phenomenon — rather there are a number of patterns and factors at play. That would certainly be true if you consider the tipping point that has led to Vancouver’s chronic lack of affordable housing.

In one of a series of research studies on housing availability and affordability conducted by the director of SFU’s City Program Andy Yan, he noted that following the 2010 Olympics in Vancouver, we saw the first burst of Vancouver single-family houses priced above $1 million. Before that, 10 years ago, about nine per cent of the city’s houses were in that range. Now that represents the city’s average house price. And it was at that point at which the relationship between house prices and income “fell apart.”

The invitation during Expo 86 and the global exposure of Vancouver during the Winter Olympics had its affect. Foreign capital, which had become increasingly mobile, came to town. And immigration accelerated.

Because of the 2008 financial crash, we saw a change in investment patterns. Rather than putting money into the stock market, real estate was seen as a more secure option for building wealth and not just the traditional factories and commercial buildings, but homes.

At the same time, money was getting cheaper as interest rates were dropping around the world.

Developers, who 30 years ago received  Federal Government tax incentives to both build and maintain rental properties, were no longer in that business of building affordable rentals once those incentives were removed. But with low interest rates and the prospect of a new stream of investors shifting from the stock market to residential real estate, there was a boom in condo developments, many of which were sold out before a shovel was even put in the ground.
Cheap money also encouraged locals wanting to own to stretch themselves more than what otherwise would have been prudent.

Then Airbnb and other platform players in the short-term rental market entered the scene half a dozen years ago. That allowed two things to happen. Home buyers could stretch themselves even more by renting out a portion of their homes. And tenants found they were being pushed out of long-term rentals by landlords who wanted to increase their profits by turning their properties into tourist accommodations.

In a speech to the Vancouver Board of Trade last week, CMHC’s president and CEO Evan Siddall presented a grim picture while exploring housing prices particularly in Metro Vancouver. He considered the impact that increased inflow of people and cheap money had on soaring household debt and concluded: “Highly-indebted borrowers are more likely to be younger, first-time homebuyers. With potentially less employment experience due to their age, they would also be at higher risk of losing their jobs in the event of a downturn.”

Siddall also looked at “core housing needs,” which means you spend 30 per cent or more of your income on housing. “Severe core housing needs” means you are spending more than 50 per cent of your before-tax income on housing. And, he noted, Metro Vancouver is among the highest in the country on both counts.

He criticized the “weak and lagging supply response in Vancouver to the need for more housing, making the problem worse.”

“If,” he said, “we are in a crisis, we should all act like it.”

Indeed we are and we should.

agarr@vancourier.com
@allengarr