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To Solve the Housing Crisis, We Have to Increase the Housing Supply

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British Columbia’s housing crisis is a multi-faceted beast, and we need to work collectively to make housing affordable and accessible to all as a human right. Most of my work on housing policy so far has been public and non-market housing,use progressive taxation Crack down and deal with speculation huge inequality Created by the land price explosion.

However, in this post I would like to focus on the overall housing supply issue, with a particular focus on the huge backlog of rental housing needs. The free market cannot solve the housing crisis, but the social housing program to match it will reduce rents across the board and create vacancies. Room rates are rising and we have to ensure that everyone has a home.

Here are five reasons why the overall housing supply deserves attention. If we get it right, the issue of supply is perhaps especially important even for those of us who are committed to expanding public and non-market housing.

1. Low Vacancy — Rarity of Available Homes – a nightmare for renters and a dream for landlords.

The easiest way to see the importance of supply to housing affordability is to look at the relationship between vacancy rates and rents over time. Below is a series of graphs plotting vacancy rates and rents over time for several cities in Canada. paper By data analyst Jens von Bergmann.

(Jens von Bergmann)

Rents rise faster when vacancy rates are low. When vacancy rates are high, meaning more homes are available to those looking, rents will rise slower (or actually fall).photo at that time Exploring US data are almost the same.

This is not surprising, but is often overlooked or downplayed in housing policy discussions.Vacancy rates in Vancouver have not been healthy for a very long time.

2. Large investors like REITs are taking advantage of the housing shortage.

Large corporate landlords, such as real estate investment trusts (REITs), have benefited greatly from the housing shortage.

(REITs regularly buy up rental apartments, including older buildings. Evacuation of long-term residents Pay lower rents protected by rent management. )

REITs fear increased housing supply, high and healthy vacancy rates, and the potential to compete for tenants with access to a variety of housing options. These “risks” must be disclosed in shareholder reports and regulatory filings, and are very impressive.

For example, for Kilam Apartment REIT annual report highlights “increased supply risks” and notes that “an increase in alternative housing could have a material adverse effect on Killam’s ability to lease units, and rents charged.” [sic] Killam’s earnings could be adversely affected. ”

Luckily for investors, but not for renters, “Killam had a very successful year as population growth and demand outstripped core market housing supply… to optimize.”

Canadian Apartment Property REIT (CAPREIT) annual report notes the risks to investors of “competition for residents” and “competition with other landlords or oversupply of rental housing.” Like other investors, we understand that “an increase in the supply of rentals available on the market in which CAPREIT operates may have an adverse effect.”

However, CAPRAIT is also optimistic about its prospects, stating, “We believe the value of the asset base will continue to increase due to increased demand and little new supply of rentals.”

mint REIT documents “High barriers to entry shield existing owners from increased competition and continue to contribute to favorable supply and demand fundamentals.” This “limited supply market will be an attractive investment opportunity for investors.” These are all Canadian examples, but the same is true for large investors. in the United StatesTates.

3. Rigorous academic studies show that building new housing supplies is effective, and building non-market housing is even more effective.

One of the best studies on the effect of adding new rental housing comes from Finland. In Finland, detailed government data allows researchers to accurately track the migration chain that occurs when new buildings open.

matches Growing research body, study As high-income renters move into new buildings, this will “relax the housing market in low- and middle-income areas, even in the short term… [and] It could improve affordability outside the submarket where new construction takes place, benefiting low-income people. ”

Interestingly, the study found that public housing provides these same benefits, as well as more. Additionally, the new social housing units themselves will soon become affordable. This makes us think: Wouldn’t it be a good idea to flood the market with public and non-profit housing? Yes, it should. There is an urgent need to significantly increase this kind of public investment. In fact, well-designed public investment in non-market housing pays for itself largely through the rental income streams it generates. Recent analysis.

4. If the non-market housing plan isn’t big enough to drive rents down across the board, it isn’t big enough.

To solve the rental housing shortage, we need a large amount of new rental housing.

After all, we are not only helping those who are able to live in the new non-market housing that is built (by luck or some other process), but also the vast amount of people still stuck for private rentals and rentals. Need to help a number of people. Completely excluded from the city due to lack of housing.

That means paying close attention to your overall supply. If plans to add new public or non-market housing are not large enough to bring down rents for those stuck in market-rate units, they are too small and must be expanded. Success on its own terms Until we can, we also have to accept it as a complement to new market housing.

The largest proposal I’ve seen for building dedicated non-market housing in British Columbia on a large scale is 20,000 homes per year (this is what I built). and policy note). If implemented, ambition would increase significantly, far higher than at any time in the state’s past. However, it is still far from meeting the overall need for new housing in BC.

Recent report Provides one estimate of the supply gap between Canada and British Columbia by the Canadian Mortgage and Housing Authority. According to the report, to return to the affordable levels of the early 2000s, B.C. will need to add 570,000 homes to her current plan by 2030.

As Mark Lee pointed out, in Metro Vancouver, “the amount of housing built as a percentage of the population has been low in recent years compared to the entire post-World War II period”. Taking into account, the amount of new habitable residential space built in recent years is even less by comparison. We have a lot of work to do.

5. Tenants’ rights are not guaranteed until the housing shortage is resolved.

The power of stronger tenant rights and Rental management — which is necessary and important — is undermined by a lack of housing. Even strong legal rights are often unenforceable if the tenant doesn’t have a suitable “outside alternative” (i.e. somewhere else to go) and the landlord knows it. Ensuring the rights of the renter requires an adequate supply of housing and sufficient vacancies should an individual or family need or want to move.

To illustrate this, let me give an example from personal experience. A few years ago, I received the equivalent of a wrongful eviction notice when the house I had rented my suite for many years was sold. This was probably for my attic level unit “for owner use”. It was planned.

Long story short, after contacting the new owner, I ended up “agreeing” to an illegally high rent increase that far exceeded what was legally permissible and allowed me to stay in the house. . I knew my rights and could have had a big fight, but that was probably due to finding a new home (not occupying my unit after it was owned by a new owner). It also meant living upstairs from the landlord (a neighbor I see every day) and I would have just gone to fight.

I didn’t want to live in that situation (more than I wanted to live in someone’s sweltering attic for 10 years in the first place), so I bit the bullet and “accepted” an illegal rent increase. ‘ and settled. This was better than any other option available to me.

The problem here was structural, not personal. They were a lovely young family and we got along well. But power imbalances due to housing shortages shaped the whole scenario.

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