Don’t expect action on Vancouver housing crisis; maybe a task force

TheGlobeAndMail.com
June 3, 2016
Gary Mason

If you want a window on the B.C. government’s thinking around the housing-affordability crisis squeezing Metro Vancouver, there is often no better place to get it than at a speech by real estate soothsayer Bob Rennie.

Over the past 14 years, Mr. Rennie’s annual talk at the Urban Development Institute has become a must-attend event – even though some have gone on for two hours or longer. The mad dash to the washrooms when they conclude is fun to watch. His presentation is highly entertaining, too, and usually includes singing.
 
In the past few years, however, Mr. Rennie’s address has taken on a different hue. No longer is the content viewed as simply the projections of a guy who’s advised the development community for a long time. Now, he is a confidante of Premier Christy Clark. Not only does he help raise gobs of money for her, a lot of it from those who attend his UDI chats, but he also fills her ear with his views on the heated discussion over housing.

As such, his insights offer some important clues about what the government might do – or not do – about the mad escalation in prices we are witnessing. In fact, his views are already being reflected in the language being used by the government when talking about this issue.

In that regard, I would not anticipate Victoria intervening in the market to impose some artificial correction in prices. Nor would I expect the government to introduce any measures that stifles the influx of foreign money, almost exclusively from mainland China, which is, in part at least, driving the price escalation we are currently seeing.

Mr. Rennie’s take: a punitive tax on foreign investors won’t stop them from coming. And when it doesn’t, it will only serve to exacerbate the “racially charged conversations” going on now. He adds that China buys $6-billion a year of B.C. exports and Chinese students pay exorbitant tuition rates to attend schools here, rates that play an outsized role in helping many of these institutions to keep costs down. In other words: Before advocating policy moves that could possibly turn the Chinese off B.C., be careful what you wish for.

I think that is a view Ms. Clark’s government shares, as well. More generally, I believe Mr. Rennie is right about affordability in Vancouver. When you’re talking about the city itself, forget it. That horse has left the barn. The only way you can make the city more affordable is by building scores of condo towers and that would take a civic government that is prepared to accept the political heat such a wave of development activity would set off. In the absence of that, people who dream of living in the city are going to have to wrap their head around two-bedroom condos starting at $1.6-million.

He’s likely right, too, that the city should focus on building as much rental housing as it can and get out of the “affordable-housing” game.

Rental is where millennials and their offspring are going to live in the city. And once they are ready to plunk money down on a house, of whatever description, they’re going to have to accept that it’s going to be in the suburbs. That is the main reason why building up a decent transit system in the region is so essential.

So, if you accept that Mr. Rennie’s views are broadly acknowledged by Ms. Clark also, it would lead one to surmise the government will not be announcing any bold measures on the housing front before the next election. At least, the Premier will not be doing anything to affect the massive equity people are building up in their homes at the moment, profits they couldn’t imagine even a few years ago.

Given how hot a political issue this is, however, a hands-off approach could be a risky strategy.

That is why my guess is that some time before the next election, Ms. Clark will strike a regional task force on housing to take a deeper look at things. This will allow her to appear like she’s taking the matter seriously while not committing to any radical proposals. And when the task force reports out, its central recommendations will be: the region needs more supply and more transit.