When Victorians think of the biggest issues to plague the city, housing is usually one of the first topics that come to mind.
But what many people don’t realize is that a lot of the reasons why the crisis is so bad has to do with city policies dating back to the 1960s.
If you’ve ever wondered why developers seem to keep building houses and apartments that nobody can afford, you may want to take a closer look at what zoning bylaws are all about.
What do you mean by “zoning”?
Victoria Buzz talked to Luke Mari, a Victoria-based developer and partner in TalktoAryze.ca, who broke it down for us and our readers.
Here’s the gist of it:
Zoning is used to delineate land uses to maintain compatibility between conflicting uses like industrial land from housing or schools.
Historically, townhouses and apartments used to be totally normal in many neighbourhoods and were serviced by the old streetcar network. The problem of modern zoning is the nuanced separation of residential land into highly regulated and restricted categories.
The numbers on the ground
Across Victoria, almost 70% of the residential land is restricted to single-family dwellings (SFD) but only accommodates 24% of households.
In a city of 60% renters, of which 86% live in multi-family housing, we are essentially saying that the overwhelming majority of the city is off limits to renters or people who can’t afford the Victoria average SFD price of $1,100,000 (VREB August 2018).
By limiting where housing can be built, zoning restricts the total number of new
homes in a given neighbourhood to far fewer than the market would otherwise provide.
What about “developer greed”?
Rick Jacobus of Citylab explains how zoning restrictions explains lead to an unaffordable housing market by comparing developers to car manufacturers:
“…the problem is not greed. The development industry is… behaving exactly the way we would expect any industry to respond to an artificial cap on their production volume. The same thing would happen in the auto industry: if we limited Toyota to only 100,000 cars per year, they might well choose to keep the Lexus and scrap the Camry, even though, at volume, the Camry is more profitable.”
Like cars, new housing eventually filters down the housing ladder. Think about who buys new cars versus used cars; it’s not all that different. Yet there’s no outcry about Canada’s affordable car crisis because our country has plenty of affordable cars, just not affordable brand-new cars.
By artificially capping production, all the fears that generate community opposition to new
housing in low density areas now occurs in other areas because intense pent-up market
demand is concentrated like a fire hose (Downtown, VicWest, Harris Green).
Furthermore, that development is undertaken primarily at large scales (giant apartments) and in needlessly expensive ways.
Feeling the effects
Lower density neighbourhoods like Gonzales, Rockland, Fairfield, and Fernwood occupy 42% of the City’s residential land base but have only absorbed 10% of Victoria’s population growth over the last 45 years.
Conversely, Burnside Gorge, Harris Green, James Bay, and VicWest occupy 26% of the residential land base but have accommodated 54% of Victoria’s growth in that same time.
As shown in the graph above, this data shows that the protection of specific, low density neighbourhoods is causing displacement and migration to other areas of town.
What isn’t shown is that the areas with high renters and displacement also have the greatest increases in housing cost.
What about all these “luxury” houses being built?
Nine times out of ten, “luxury” is really just a marketing term. Most houses marketed as “luxury” aren’t really luxurious in any meaningful sense of the word.
Sure, if you’ve got a personal elevator, a home movie theatre, or sixteen bedrooms, your house might be a luxury house. For most of us, though, “luxury” homes are totally ordinary homes.
But if you build almost anything in Uplands, Rockland, or Ten Mile Point, someone will
pay top dollar for it. So what we’re really talking about is luxury locations and what makes a location a luxury? Scarcity.
When relatively few people can actually live there in comparison to the number of people who would like to live there.
If the land is valuable, and all you can build on it is a single-family home, why not build a very expensive single-family home?
This is documented in Fairfield, Rockland, and Gonzales where the spread of large homes that don’t add any net new housing to the city, but were the most profitable thing homeowners or builders were allowed to construct on their lots.
The antidote to the disruptive effects of big change is gradual change. The next increment of development—from single-family to duplex, duplex to townhouses, townhouses to small apartment buildings—should always be available, everywhere.
This is why the proposal in the city’s draft neighbourhood plans to allow larger garden suites, house-plexes, townhouses, and some apartments throughout residential neighbourhoods is such a promising idea.
The majority of these new homes will be not cheap, but they would be comparatively affordable, as apartments and townhouses require 40-60% less income and would have a fairly direct filtering effect of homes down the property ladder.
In terms of buying power, unless your income increases you can never go up the housing price ladder but you can certainly go down it. The people who can afford a $850,000 townhouse will no longer be competing to buy the $600,000 townhouses because there is available housing choice for them.
To use the argument that all newly constructed apartments and townhouses will not be affordable to low-income residents as an argument against allowing them at all is entirely misguided as is implies that doing nothing will somehow solve the problem.
Stay tuned for more conversations about Victoria’s housing crisis!
published by think-tank StrongTowns.org