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Challenging 'the housing supply myth'
At least one academic takes issue with a contention that building more and more homes is addressing Vancouver's affordability crisis

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Saturday, November 18, 2017 – Page S4

In Vancouver, the detached house owner is often vilified. So, too, is the resident who protests density.

They are vilified by what one academic is calling "the housing supply myth," which is the belief that we need more housing in order to lower costs. It's an argument commonly used by politicians, industry, and some academics and citizen activists.

"There is an intuitive appeal to that argument," says Dr. John Rose, who spent the last year on education leave, researching the popular belief that Vancouver has a lack of housing supply. "We understand this idea of supply and demand, intuitively, even if you haven't taken an economics course."

However, he has concluded that Vancouver does not have a shortage of housing units. In fact, we have a surplus. And, as anybody in Metro Vancouver knows, prices have not plummeted as a result.

"If we are looking back at the last 15 to 20 years, we have been providing more than enough units of housing - and it's still unaffordable.

"And yet, you see this argument being thrown out there by various quarters, that we have this housing shortage."

Dr. Rose is a professor in the department of geography and environment at Kwantlen Polytechnic University. He's been teaching there since 2002. He calls his report the Housing Supply Myth, based on data from the Statistics Canada censuses and the Demographia housing-affordability survey. He also looked at supply in housing markets elsewhere in Canada, the United States and Australia.

"As a resident of Metro Vancouver and observing all this construction around me, I thought: 'How do we have a housing shortage?' Maybe I'm missing something, but this doesn't seem to stick. And this data supports that idea."

In order to ensure his findings weren't just a blip, Dr. Rose went back to the 2001 census, covering a 15-year span. He found that for each household added during this period, the region added 1.19 net units of housing. Put another way, for every 100 households that came along, Metro Vancouver added 119 net units of housing. According to census data, there are also 66,719 unoccupied dwellings in Metro Vancouver.

And despite a surplus of housing stock, affordability has significantly worsened - a contradiction to the supply mantra.

"It's quite the surplus," he says. "I should also note that Vancouver's ratio was the fifth highest of all 33 census metropolitan areas examined during this period - at the same time as its housing prices escalated far beyond the other markets.

"We would think that if a market got less affordable, maybe that meant supply was getting tighter and tighter. But that's baloney. That's garbage," he says. "So my answer to the supply argument is that it's tenuous for all the markets, because you can basically see no relationship - and this is over a 15-year period.

"Here, we've had more than enough supply and yet the housing costs have gone crazy."

It's important that people understand the true nature of the affordability problem so we can take significant action to correct it, says Dr. Rose. He favours taxes on speculation, and doesn't rule out a ban on foreign buying of existing properties, as New Zealand is implementing next year. He also questions the building of housing units that are overpriced and intended for speculation, and therefore "pointless."

And he's not a man without "skin in the game."

"I am doing research that would, if acted upon, significantly degrade the value of my property, and I think to myself, 'If I sell it now maybe I could retire earlier.' So the self-interested side of me would say, 'Don't interrupt the party.' The good side says, 'no, for this situation to get reined in, something more dramatic is necessary.' " The supply argument also targets residents who are more communityminded than concerned with housing units. Whether it's people trying to fight density in Chinatown, Marpole or Grandview-Woodland, they're routinely painted as selfish NIMBYs who are to blame for high prices.

Josh Gordon, assistant professor at Simon Fraser University's school of public policy, has regularly spoken out against the more-supply argument.

"There's simply no evidence of a slowdown in construction or supply," Dr. Gordon says. "The construction industry in Vancouver is operating at full throttle. There are around 40,000 units under construction, which is twice the historical average for the post-2000 period. The idea that we should get more supply into the pipeline is a bit silly.

"The role of the supply argument is, to a large extent, to distract the public and policy makers from action on the demand side, specifically in terms of foreign capital."

Dr. Rose says the pro-supply camps tend to be divided into those who blame land use constraints, such as the Agricultural Land Reserve (ALR), as limiting outward expansion, and those that argue for upward density, such as towers. Both camps blame government regulations on stifling development and consequently standing in the way of affordable housing.

Demographia, which puts out the Housing Affordability Survey of cities each year, attributes high prices to constraints such as the ALR. In the other camp is industry spokesman and condo marketer Bob Rennie, who has said: "If you have a 'no tower' sign on your front lawn, you have no right to speak to your children about affordability. ... We can't have low density and low prices. ... We just don't have the supply."

"What they're implicating is citizen resistance," Dr. Rose says. "Bob Rennie is very aware he's advancing an argument that benefits him economically. He acknowledges that. But it's interesting that it's an argument picked up by generally well-meaning academics that support the idea of smart growth. I'm sympathetic to that, too. But I'm leery of attributing our high housing costs and the escalation we've seen over the last 15 years to an inadequate densification."

University of B.C. sociology professor, Dr. Nathanael Lauster, who wrote the book, The Death and Life of the Single-Family House, advocates for greater density. He sees the singlefamily house as an oppressive housing type designed to exclude low-income people.

"I think both demand and supply policies, all these things are working together. But I do think insofar as we have a lot of land locked up, reserved only for millionaires, I think expanding into that land, and enabling more diverse housing options would enable more affordability."

There are supplyists who are notoriously confrontational, particularly on social media, and Dr. Rose knows that his findings will be challenged.

"Bring it," he says. "Here's the data.

If you want to argue against it, go ahead. It's publicly available. And when I did this research, I had my independence. Nobody owns this. I get no sponsorship from any industry, any sector. I'm a free agent.

"I think that's a benefit of this research. It's not coming from a school of business that is being funded by the real estate industry, or somebody who's passionate about densification and smart growth. I think there's some romanticizing going on, about what the ideal city should look like, and unfortunately it gets sucked into this debate about affordability.

"I'm just saying look at the numbers and we see Vancouver has plenty of supply.

"And can we build ourselves out of this? Not in this current model."

Associated Graphic

Condos have been rising around Vancouver for years, which calls into question 'this argument being thrown out there by various quarters, that we have this housing shortage,' says John Rose, a geography professor at Kwantlen Polytechnic University.


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