Jennifer Keesmaat: It’s time to rethink Canada's housing system - Macleans.ca
 

Jennifer Keesmaat: It’s time to rethink Canada’s housing system

Opinion: What the federal housing strategy is missing—and why Vancouver’s new affordable housing strategy is leading the way


 

The Vancouver skyline, pictured in 2015. (Bayne Stanley/CP)

Jennifer Keesmaat is the former chief planner for the City of Toronto and a distinguished visitor in planning at the University of Toronto. She has worked on urban design projects in cities across Canada, including in Halifax, Winnipeg, and Lethbridge.

A city’s success depends on its adaptability. The ones that reinvent themselves prevail, while the ones that resist change collapse. Look at Detroit, Mich., the city that served as a point of entry to the American dream during the industrial revolution. By 1920, it was the fourth-largest city in the United States, with a population of 990,000, peaking in 1950 with a population of 1.8 million, riding a wave of immigration fuelled by job opportunities in the automobile industry.

But city leaders made a critical mistake: they treated the economy as static, and did not anticipate change or adapt to diversify from manufacturing toward knowledge-based industries. The city lost nearly half of its population in the second half of the 20th century, and in 2013, it filed for bankruptcy. Success today in Detroit is still measured by taking things down, instead of building them up. Government documents proudly claim that “thousands of vacant homes have been removed at a more rapid pace than ever before in Detroit’s history”—as if this is a good thing.

This may seem too dramatic a cautionary tale for Canadian cities. After all, we dominate the Economic Intelligence Unit’s list of most liveable cities year after year; Vancouver, Toronto and Calgary ranked third, fourth and fifth respectively in 2017. But we are smug about our growing brand of urbanism at our own peril.

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Cities, and how we live, have always been in a state of evolution as driven by political, social, cultural and technological considerations. So as much as I would like to credit urban planners for advocating for and advancing denser urban living in our cities as key to those excellent rankings, the stability of our banking and education systems, as well as the comprehensiveness of our health care delivery, all play a central role. Good governance at all three levels of government makes our cities work.

On the one hand, housing is about social justice if we agree that housing is a human right. Everyone in our country needs to be housed—full stop. On the other hand, it is also about the overall economic sustainability of our national economy. Both interests matter and ought not to be played one off the other. As a stark example, in its callout for proposals to lure its second head office, Amazon identified affordable housing for its workers—despite boasting that it would offer more than 50,000 high-paying jobsas a key evaluative criterion that it would use to assess whether cities were a good fit. This example, explicitly, shows how access to housing for workers is an economic development driver—and it’s no longer assumed, as it may have been a generation ago, that people with high-paying jobs didn’t need affordable housing. In our biggest markets like Toronto and Vancouver, where housing prices recently detached from both demographic change (like household growth) and wages, affordable housing matters for everyone—not only vulnerable populations.

Condominium buildings stand under construction along Lakeshore Boulevard in Toronto, Ontario, Canada, on Saturday, March 4, 2017. (Mark Sommerfeld/Bloomberg/Getty Images)

Vancouver and Toronto, despite their successes, need continual reinvention like any other city. As both of these cities’ real-estate markets have become truly hot over the past decade, they have also become less accessible for the key workers that make them tick. Many households simply cannot afford appropriate housing. Families are burdened with a long commute precisely because they cannot afford to live close to work. Young people are bounced from rental to rental at the mercy of investors, unprotected by the price stability that comes from rent controls. Seniors, for whom the cognitive benefits of living in walkable communities is well-established, end up enclosed in suburban long-term care facilities disconnected from the fabric of everyday life. Many more of those perceived to be in the middle class in Canada live with well-founded insecurities: what if interest rates rise a point or two and mortgage payments become out of reach? What if my landlord decides to sell, and I’m forced to find a new place in this aggressive rental market? We’ve gotten this far precisely because we have been willing to embrace change.

And now it’s time to fundamentally rethink our housing system.

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It was hoped that the federal government’s recently launched National Housing Strategy would offer some new solutions to redefine Canadian housing markets. After all, it’s a pretty loud clarion call when the Canada Mortgage and Housing Corporation (CMHC) states that Canadian housing markets are “highly vulnerable and at risk of being hit by overbuilding, overvaluation and too-quick price appreciation,” just weeks before the government’s strategy was actually released.

But while the National Housing Strategy begins to tackle the first issue with “deep affordability” measures such as significant reinvestment in existing social housing stock, and $2,500 vouchers for low-income families to assist in paying the rent, it’s not enough. Merely subsidizing a broken system doesn’t fix or change the system. Whereas the federal strategy starts with Canada’s vulnerable populations, the next step must be to address supply-side challenges with supply solutions. And here Vancouver steps up, with its newly released Housing Vancouver strategy, acting as a beacon and showing the rest of the country a way forward. Recognizing that we need to act quickly to correct the imbalance in our current housing stock by adding more choice, particularly for families who are burdened by stagnating wages combined with escalating transportation and childcare costs, Vancouver has launched a supply-driven strategy that emphasizes the “right kind” of supply: adding affordable rental housing in existing neighbourhoods where it might not currently exist.

Vancouver isn’t shying away from reinvention. Acknowledging that speculation is a barrier to a healthy housing market, Vancouver’s strategy positions the city for an influx of affordable rental, promising to rezone low-density neighbourhoods for rental housing, step up the development of laneway housing, and reconnect rental prices to what people can afford to pay. It’s a different exercise to design and build a city for people who want to live and contribute to the city, as opposed to creating a city for investors. While the real-estate frenzy of the last 18 months has provided endless cocktail-party fodder, there has been little acknowledgement from public officials that a speculation-driven housing market will not house everyone, and as such needs to be upended with policy solutions that seek to ensure the housing we build is once again about housing people who live and work and contribute to our cities. We can mitigate speculation and increasing instability in Vancouver and Toronto in particular by providing an influx of affordable rental in the short term. Our current crisis demands this kind of transformation of our housing system, rather than simply patching it back together and hoping it will last another day.

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Some might consider the Housing Vancouver strategy to be too interventionist, too in the weeds. But it’s time to call out and specifically identify market failures in a housing system that is perpetuating unsustainable levels of household debt, discouraging young people from having families and consigning another generation to a long commute. We can begin to do so by recognizing that not all housing is an investment. We can also do so by acknowledging that few—very few—benefit over the long-term when we allow speculation to fuel our housing development industry. We can create a new tier of housing in our cities by expanding our affordable rental stock—not because it is an asset class, but because this is the best way to provide stable homes for an entire next generation in our cities. While Housing Vancouver proposes an ambitious reinvention of the city for the 21st century, history demonstrates that cities cannot go it alone. Rezoning specifically for rental, embracing innovative taxation policies, advancing greater construction loan financing for rental housing—there are a myriad of ways that all three levels of government can stabilize our housing system, and our economy. We must get cities the funding they need to envision themselves for a sustainable future.

If our ambition is to truly strengthen the middle class in Canada, after all, we are going to have to adapt the way we provide housing in our biggest cities to do it.


 

Jennifer Keesmaat: It’s time to rethink Canada’s housing system

  1. And for a take that in Vancouver, housing supply is not the problem, see h$$ps://www.theglobeandmail.com/real-estate/vancouver/vancouver-housing-supply-isnt-the-issue-affordability-is-data-shows/article31794288/

  2. This is an excellent article – makes me feel energized and so much more hopeful than I have been for a long time. I have personally spoken of my concern for years about the speculation in the housing market that, I believe, is at the heart of the tremendous price increases the big cities have seen. It has taken too long for city planners, Ms. Keesmat included, and governments in general to come to this conclusion and do something about it – so much pain and damage to peoples’ lives has already occurred. Let’s hope we can fix this and make our beautiful cities liveable again for everyone, not just the few.

    • Speculation is a demand problem, not a supply problem. Doing something about speculation would require steps like:
      – require a person to live in her home for some minimum amount of time (e.g., 2 years?) in order to be able claim the principal residence exemption (the US does something like this), and/or
      – require a person to own a residence for some minimum amount of time in order to be able claim the capital gains tax rate (the US does this for capital gains in general), and/or
      – fully tax any profit on the sale of condominium assignments; i.e., do not tax as capital gains

      Steps like the above would decrease flipping and thus speculation.

  3. Wow. Surprised she’s ascribed the mantel of “expert”, given her comments on the demise of Detroit. For those of us that lived it, we know first hand that it was the result of race riots, high crime rates, and corrupt municipal politicians that killed Detroit. I’m not inclined to trust her views on city planning.

    • Further to your point, Moxie; Detroit, Philly, Baltimore, Chicago are all in varying states of the same economic storm brought about by rampant over-government. Taxation drove the productive people out of these cities. Decades of Democrat-led civic governments that insisted on having the highest paid civic work forces drove people to the suburbs. Detroit had the highest paid policemen, firemen, teachers, and social welfare workers in the USA, and it had taxes to match. Rent controls drove up the cost of rental housing, and the expansion of the welfare state destroyed the nuclear black family.
      Unions aligned themselves with big government to limit access to jobs and gainful employment, further exacerbating the social ills that have come to define those cities. Social housing projects, sold with utopian optimism, became anti-communities, corrosive blights to not only the residents , but the communities that surrounded them.
      More than anything, the author abandoned all hopes at credibility when she used the term “knowledge-based industries.” It takes a determined measure of wilful ignorance to suggest that, for example, the auto industry is something other than a “knowledge-based” industry. Beyond the fact that being unable to grasp that any industrial enterprise is “knowledge-based” is demonstrative of a lack of intellect and so-called expertise, the author’s observation belies substantive ignorance of the government-imposed burdens upon the automotive industry that have been complicit in reducing its economic might.
      How can an industry that employs tens of thousands of machinists, welders, engineers, tool-and-die makers, designers, etc. NOT be classified as a “knowledge-based’ industry? When the author can re-design an existing mini-van’s electrical system so that it places a lower amp draw on the alternator, and thus the engine, resulting in a minuscule but measurable reduction in fuel consumption and emissions, then she can disparage the auto industry as not being “knowledge-based.”
      In the end, the author subscribes for Canada, the same social engineering that has led to social collapse every where it’s been tried. I would suggest the writer get her head out of her socialist backside and do some real research. That, or get a job at the drive-thru, where she can match her intellect to her productivity.

  4. “Vancouver’s new affordable housing strategy is leading the way” – that’s at least a surprising claim. Vancouver was the first Canadian city to embrace the ‘modern’ notion of intensification and subsequently took the lead in fomenting a real-estate ‘crisis’ or at least the decimation of affordable housing. From the article it seems the new idea is just more intensification – insanity is dong the same thing over again expecting a different result. “We must get cities the funding they need to envision themselves for a sustainable future” … and there we have it, the ‘problem’ is that major cities somehow can’t manage to pay for themselves and routinely expect other taxpayers to foot the bill; given that they are repositories of the most expensive real estate in the country, one must wonder how it’s even possible that their tax base is insufficient, especially when a major justification for intensification is to reduce the per capita cost of municipal infrastructure. It seems the planner’s solution to lack of affordable family housing is more 2-bed basement apartments and high-rise bachelor suites; in other words, replacing back yards and green space with more buildings. Unfortunately, past history is soon forgotten: the city of Waterloo is still in the early phase of intensification which entails closing major streets for a year at a time (perhaps with an eye to driving small scale businesses out), removing all of the trees from entire residential neighborhoods, inserting high-rise buildings into family friendly neighborhoods, and replacing public green space with hard-scape. “We can create a new tier of housing in our cities by expanding our affordable rental stock—not because it is an asset class, but because this is the best way to provide stable homes for an entire next generation in our cities.”?? First, how can you expand what doesn’t exist? Second, the notion that ordinary families be arbitrarily deprived of the opportunity for home ownership seems a little too totalitarian for democracy as does, third, the notion that property owners can be coerced into becoming landlords and/or building over their backyard gardens, patios and swing sets. It seems that planners are blind to the value of green space, recreational space, safe/walkable streets and even privacy, fresh air and sunshine; scientifically, these are all things that reduce crime and improve health and well-being of ordinary citizens.

    • Gerald- We’ve too easily let people don the mantle of “expert”, who have no expertise whatsoever. Being a student of theory (and I’m led to wonder how much studying the author has done, due to her glaring lack of apparent knowledge), does not make one an expert by any stretch. An expert is someone who has gained knowledge through experience. A formal education in a filed of theory can lead someone on the path to becoming an expert, but no one can be an expert without having suffered the sting of failure that comes with learning that favorite theories do not always translate into real world success.
      One cannot actually claim to be even an authority on housing theory unless they have applied their pet theories to, say, a bank loan, and then built and rented out a number of units based on the suppositions of that theory. If one makes a series of claims based upon observations of successes and failures, and can pen a reasoned observation without resorting to nonsense (see “Knowledge-based industry” above), and can tie together various causes to housing issues, then one might be considered authoritative. Failing to weigh the costs of runaway government when speaking of the social ills that are related to housing issues in Detroit illustrates either willful blindness or just plain stupidity.
      The very best illustration of what separates an expert from a theorist is a guy by the name of Robert Glenn Johnson, Jr. A legend in his field, Johnson was described by engineers from both sides of the Atlantic as having one of the greatest engineering minds in his field of expertise, despite never having completed school beyond the 8th grade. Most folks know him as Junior.
      It’s been my observation that far, far too many people want the honorific of “expert” without all the trouble of earning expertise, that such expertise can be gained from the pages of books. Sure, you can be a seasoned observer, but you can never- NEVER- be an expert if you haven’t gone out and “been there, done that, and bought a truckload of t-shirts. Governments need to quit relying on so-called experts who have no real world, hands on experience in the fields in which they claim expertise. They don’t know jack squat.