'Bold action' on housing issues won't be easy

Premier Christy Clark has taken to YouTube to announce that her government plans “bold action” on the very significant issue of housing affordability.

Clark said, in a video released last week, that the province will be announcing specific measures to make housing more affordable in the coming weeks. On Sunday, Housing Minister Rich Coleman and his federal counterpart announced that the federal government will spend $150 million on affordable housing in B.C.

Housing prices have gone from a curiosity to an annoyance to a full-blown problem in the past few years. It’s not a problem for those who have significant equity in their homes, but it is a big problem for everyone else – renters, homeowners with large monthly payments and those who want to buy their first home, or those hoping to relocate from one home to another.

Prices have been rising sharply. Many realtors admit that it is very difficult to accurately price homes because of the demand. The supply is not coming close to keeping up with the demand, at least some of which is driven by foreign buyers seeking to park money in a safe place. It’s hard to say just how much of a factor that is, because of a lack of statistics on the nationality and permanent residence of buyers.

While the phenomenon of sharply-rising prices has been worst in the City of Vancouver itself, particularly on the west side, it has become a more significant issue in many parts of Surrey, and in White Rock. When many homes go on the market, there are multiple offers and even bidding wars. Subject sales have become rare, and even property inspections have declined, as people become frantic to become a successful buyer.

The province has been criticized for doing too little, but the truth is that this is not an easy issue to deal with. The housing market is a free market, and people are free to pay what they want to, and to sell to the highest bidder.

The federal government has, for decades, shown little interest in housing, other than providing mortgage insurance though Canada Mortgage and Housing. The lack of new social housing has resulted in more people trying to find rental housing in the marketplace, and has also led to a huge number of suites in what were once single-family homes. Surrey has been wrestling with this challenge for years.

The province has actively encouraged development, and gained significant revenue from the property purchase tax. Other than some specifically-targeted social housing, it has played little role in the overall housing market. The regulation it does oversee, through the Real Estate Council and real estate boards, has been shown to be severely lacking. While it might have worked better in a less frenetic market, rapidly-rising prices lead to greed. Some people in the real estate and development industries have been less than ethical at times.

Recommendations from an Independent Advisory Group on Real Estate Regulation are due this week and will make for very interesting reading.

Local governments have been pushing for greater housing densities and new development, as it contributes significant revenue in the form of development cost charges. Development also generates new sources of property tax, although the cost of growth to Surrey has likely been greater than any additional revenues it has gained. Substantial growth in population leads to demands for substantial growth in services, and they don’t come cheaply.

The premier said in her video that all levels of government must work together to boost the housing supply. That will ease the demands, but housing stock takes a significant amount of time to appear on the market. A boost in supply likely won’t make any significant difference for several years.

She also said transit investments need to be tied to the housing supply. This makes sense and certainly eases pressure on the road system. However, TransLink needs more funds to expand the bus service, the backbone of transit. It was completely ignored in the recent announcement of transit funding by Prime Minister Justin Trudeau.

Clark also calls for support for first-time home buyers. There is some support now, but more is needed, as these are the people finding it hardest to get into the market.

She said that “the dream of home ownership” is important to middle class families, and it is. Her government can help do something to make it more achievable, but any action taken will not likely have much effect for years to come.