The economic modelling behind the projection of 250,000 new net housing units through two government housing bills is getting the thumbs down from parts of the provincial opposition. But the measures also enjoy support.
Government released the modelling Thursday (Dec. 7) when Premier David Eby announced the figure, not counting new units from other current and future housing legislation. Bill 44 increases density across most B.C. municipalities and Bill 47 increases density around transit hubs such as Skytrain stations and bus exchanges.
BC Green Party Leader Sonia Furstenau said Friday (Dec. 9) the modelling confirms the government’s reliance on the free market to build more housing, when the market bore responsibility for higher prices in the first place.
“When we allow for the building of more and more and more commodities, we are not creating communities,” she said. “I think there is a real risk here that we are going to see housing prices go up as a result of this legislation and affordability decrease.”
BC Green House Leader Adam Olsen repeated his criticism, government should have released the modelling before passing the legislation.
“Releasing these documents with no briefing, no press conference, no accountability confirms for me the BC NDP are hiding critical information and accountability,” he said. “How else can one read into this approach? This was a deliberate and autocratic approach that shows a clear disdain for democracy.”
Both Furstenau and Olsen said they have already seen evidence of speculation with developers looking to purchase lots with eye toward building and selling more units.
“That potential (of 250,000 new units) will only be unlocked, when the private sector development industry determines profitability and not affordability,” Olsen said. “Where developers are telling me, they need to get the land value down in order to be able to build affordable units, this BC-NDP government just did the opposite of that by making land values more expensive without necessarily putting anything new on it. What they have done is completely insane.”
Olsen was referring to a section of the modelling that predicts “single family detached houses will overall become more scarce as they get replaced by multiplexes” in built-out areas like Metro Vancouver. “This will exert upward pressure on prices of single family properties and their land.”
BC United’s Karin Kirkpatrick, shadow minister for housing, echoed concerns about the ability of the bills to create complete communities, future speculation and the lack of government transparency and consultation. She added the modelling focuses narrowly on Bill 44 and Bill 47.
“If you look at some of the other legislation that all came in at the same time, you will find that some of it negates the potential benefits,” she said. Kirkpatrick said she is also hearing about a growing amount of confusion among municipalities and developers, which could actually lead to less housing in the future.
The projected figure of 250,000 falls in the middle of estimates that range between 216,000 and 293,000 new units. According to a recent CMHC estimate cited in the model, B.C. would need an additional 610,000 housing units on top of the current “business-as-usual” development patterns to return affordability levels to early 2000s.
In other words, Bill 44 and Bill 47 alone would leave B.C. well short of the 610,000 goal, but government has passed other housing-related legislation with more on the way.
The measures and models behind have also enjoyed support from a range of voices in the housing sector, including Leo Spalteholz, an independent real estate analyst and volunteer at Homes for Living.
“Of the suite of reforms passed this fall, removing barriers to transit-oriented development has the potential to deliver the most new housing in the shortest timeframe in B.C. In a time of rising construction costs, de-risking approvals and reducing costs for housing is crucial to address the shortage of homes,” he said.
Spalteholz also addressed concerns about upzoning raising land values.
“If making zoning more permissive raises land value, that’s just proof that the zoning was too restrictive to start with,” he said on X, formerly known as Twitter.
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The report acknowledges a “range of potential land lifts,” pointing to a likely figure of 7.5 per cent.
“(Experiences) from Auckland and Kelowna suggest that prices of existing single-family properties and their land are, on net, fairly unaffected by the policy change to allow multiplexes, but there is a small bump after announcement of policy.”
Overall, the modelling projects falling prices in the first five years, while hedging its bets over 10 years.
“The additional 44,000 to 54,000 net growth in dwellings over (five) years estimated by our model would result in 6 (per cent) to 12 (per cent) lower prices and rents than what they would have been without the provincial legislation.”
The report also notes “increased supply of housing will on average decrease prices, particularly in segments where multiplexes act as good substitutes for other kinds of housing” depending on location and other factors.
The report also notes increasing the supply of multiplex housing “will exert downward pressure on nearby apartment condominium prices” and increasing housing near transit “gives people more choices to trade off between commute times, access to amenities and housing costs, increasing overall efficiencies in the housing market.”
The model also plays through various non-monetary pros and cons of increased density, without reaching a definitive conclusion.
“The specific mixture and net effect of these impacts remain difficult to predict,” it reads.
Housing Minister Ravi Kahlon said the models only focused on Bill 44 and Bill 47.
“It did not consider the other significant actions that (B.C.) is taking both on the supply and demand side, like regulating short-term rentals and speculation and vacancy tax,” he said, adding all of actions are “coordinated and work well together” in trying to meet growing housing needs. “(Bill 44 and Bill 47) are critical, foundational pieces to shifting the system to create more supply and be more responsive to housing needs.”
Kahlon also reiterated promises of more actions ahead, noting that “there isn’t one strategy” that will fix the crisis.
“Our government will continue to deliver many big changes that will significantly impact our housing market in the years to come,” he said. “While we are confident with our approach, we know there is more work to do. We look forward to exploring more opportunities in partnership, to deliver the homes that people need.”
@wolfgangdepner
wolfgang.depner@blackpress.ca
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