Bring it on
City officials proudly broke ground for a 15-storey tower with 135 units of family-oriented affordable housing last week at Concert Properties Ltd.’s Southeast False Creek site at Quebec Street and 1st Avenue.
However, a recent report from the California Legislative Analyst’s Office in Sacramento suggests that market housing might do more to address the displacement of low-income residents.
“Considerable evidence suggests that construction of market-rate housing reduces housing costs for low-income households and, consequently, helps to mitigate displacement in many cases,” the report states.
The report’s rationale will sound familiar to advocates for affordable housing in Vancouver: “California’s housing shortage denies many households the opportunity to live in the state and contribute to the state’s economy. This, in turn, reduces the state’s economic productivity.”
Building subsidized and affordable housing units can constrict the supply of market-rate housing, making it more expensive, the report says, while well-intentioned measures such as rent controls may preserve but don’t expand the housing stock to serve the needs of a growing population.
In fact, rent controls might – as multi-family broker David Goodman and others in Vancouver have noted – reduce the quality of rental housing as property owners forgo maintenance and repairs given constrained rental incomes.
Comparisons with the Vancouver market are tough to make, but Canada Mortgage and Housing Corp. statistics suggest that rents have posted the strongest growth in rental hubs between Granville and Oak streets as well as Mount Pleasant where completions of new market units have been limited versus, say, downtown.
What does California’s legislative analyst suggest?
Give developers the freedom to build more homes for more people (as an Urban Development Institute slogan once said), which boosts the overall stock of housing and helps ease competition for older units. These properties in turn become affordable versus newer, better-quality units built at current prices.
By the time today’s seemingly unaffordable units are 25 years old, they’ll have matured into the more affordable stock ideal for the next generation of cost-conscious buyers.
On the contrary
Whether or not more housing alleviates the pressure facing B.C. homebuyers is another question, of course.
One’s head nigh spins reading Cameron Muir’s fevered summary of the February market.
“Downward pressure on active listings has created significant upward pressure on home prices,” the BC Real Estate Association’s chief economist says, pointing to Vancouver and the Fraser Valley. “While homebuilders have responded with a record pace of housing starts for B.C. last month, the supply isn’t expected [to] alleviate the imbalance in these markets in the near term.”
Cultivating farmers
Toronto-based farmland investor Bonnefield Inc. has moved into B.C. with the purchase and lease of an 8,345-acre ranch north of Fort St. John.
The acquisition is the latest deployment from Bonnefield Canadian Farmland LP III, a $261 million fund backed by some of the country’s major pension funds.
Two earlier funds in the series, totalling approximately $60 million, drew backing from individual high-net-worth investors. Bonnefield owns more than 75,000 acres in all provinces but Quebec, P.E.I. and Newfoundland.
“We have very high hopes for B.C. It’s got some interesting attributes about it,” said Marcus Mitchell, director, portfolio operations, for Bonnefield. “I suspect in 2016 we’ll probably see Bonnefield do another deal in B.C.”
Mitchell said Bonnefield enters long-term leases for its properties with farmers. Proximity to viable parcels isn’t possible in the urbanized and heavily parcelized Lower Mainland, so it’s primarily sought opportunities in the Northern Interior.
While major foreign buyers have snapped up farmland across Western Canada, Bonnefield’s focus on leasing its assets to local farmers distinguishes it from many of its competitors.
Bonnefield’s first purchase in B.C. was from a retiring farmer who wanted to recover his equity; the property was leased in turn to a group of young Alberta farmers seeking to expand their operation. •
