According to an index created by the Organization for Economic Co-operation and Development (OECD), housing should not cost more than three to five times one’s income. But in cities like Toronto and Vancouver, housing costs over 10 times the average household income. It is often thought that other cities in the world like Hong Kong and London are more expensive, but if you factor in income, our cities top the list. This is creating a labour challenge for many businesses and organizations as residents of high-cost cities move away to more affordable communities.
A survey conducted by my company, Mustel Group, for the Greater Vancouver Board of Trade found that over one-third of Metro Vancouver businesses have considered relocating due to affordability issues and resulting challenges in hiring staff. Results from a survey of residents supported these fears with over 50% having considered moving out of the region for a more affordable lifestyle.
All levels of government are being blamed for the housing situation. While Prime Minister Trudeau in a recent speech said housing “isn't a primary federal responsibility”, that is not how the public sees it with a recent Leger poll placing the greatest responsibility on this level on government. CMHC (Canada Mortgage and Housing Corporation) was created in 1946 as the successor to the Wartime Housing Corporation for the main purpose of constructing affordable housing for returning soldiers. Over the years, CMHC has moved away from this role and focused on lending and mortgage insurance. But we are seeing signs that they are becoming more involved in supporting construction of low income and purpose built rentals.
The provincial governments are also trying to do their part. In BC, this is primarily through BC Housing (organization like CMHC), but also by pressuring municipalities to densify their communities. This, not surprisingly, is getting some pushback from municipalities, arguing that the government is not providing the infrastructure from roads to healthcare to support the additional housing.
Many argue that building more housing is not necessarily going to reduce the cost. In recent years, more than half of units in new developments in Vancouver were being purchased by investors. So local residents were in a bidding war with investors who are not as price-sensitive. The increased interest rates may have changed this situation slightly, but higher rates have also made housing even less affordable.
There is no magic bullet to solve the situation, but I would like to provide one (personal) example of a viable solution that is becoming more popular in Vancouver and other cities. Vancouver was one of the first cities to adopt the concept of laneway houses (also known as carriage houses). Initially there was pushback by neighbourhoods, but no longer. Laneway houses are a popular way to add density to single family neighbourhoods, and create housing for young families and for ageing residents wishing to downsize without having to leave their neighbourhoods.
In my family, a laneway house was an affordable way for my daughter and her husband to stay in the community where they were raised and close to family. Now with a child (and another on the way) a laneway house with a shared backyard was also a great alternative to a condo for a growing family.
We are taking things one step further this month by swapping residences. I am able to remain in the neighbourhood where I have lived for 37 years, and my daughter and family get to repurpose and use many parts of the house I no longer need. A win-win solution!
Shared property is not workable for every family, but it does feel like we are returning to the European model of living, where extended family members cohabitate and are able to support each other. It is a solution I highly recommend to other families, and one that governments should be supporting in whatever way they can.
