This just arrived from Urban Futures:
Notes from the Road
Even in his post-Urban Futures retirement travels, David Baxter continues to keep up with Lower Mainland housing market news and data. From all the way over in Japan he’s just sent us links to several papers he’s recently penned, and we wanted to share them with you. They are (with some excerpts from me):
Let’s pause here for a moment to consider what would happen if even a small portion of the net 197,000 people (100,000 workers and their families) who currently live in other municipalities and work in the City of Vancouver decided to move into the City to be closer to work. Density and prices would go up in the City as more households competed for homes located on the fixed supply of land in the City.
At the same time, in the other municipalities, prices would fall and vacancies would increase as people moved to the City of Vancouver. At some point, someone would look around and say, gee, the prices for nice, low density housing in other municipalities are so much lower than for any housing in the City of Vancouver, lets just live in a house outside of the City: the higher cost of the commute to the City is worth it given the cheaper housing outside of it. People would trade off higher transportation costs for cheaper housing – which is, of course, what has always happened, is happening now, and will happen in the future.
So what should governments do to improve affordability? Simply put, they should focus on the problem. This means focusing on those who have affordability problems, and working with them, rather than implementing market wide programmes that are indifferent to circumstance, resources, and consequence.
If they do so, governments are going to have to manage both their expectations and those of potential beneficiaries. Housing is a big-ticket item, for both households and governments. Governments, therefore, will need a set of rules and priorities to determine how to allocate their scarce resources: one standard rule that might be considered in this regard is the old international development rule – help those who need help most first. This, alas, may mean that the discussion may not about being able to own a home, but rather to be able to have a home.
And finally, given the burden that a arbitrary reduction in housing prices would bring to the two-thirds of households that already own, it would seem obvious that governments, if they are going to do anything general with respect to housing markets, should be working to ensure price stability in the market, not talking about bringing prices down. History shows that the only thing worse than a rising housing market is a falling one.
… since 1974 policy has steadfastly confirmed that agricultural land is off limits for urban development: we have, collectively, made a choice to have higher densities and higher prices than we would otherwise have by restricting urban land supply to the 113,400 hectares already in urban use. In comparison with other regions, the natural constraints in this region combined with the preservation and conservation constraints we have chosen, means that we have about 22 percent of the land supply that Calgary and Edmonton have, and we already have twice their population5. It is no surprise that, all other things equal (such as incomes), our housing prices are much higher than theirs and our residential density is much greater.
Livable Region 1976 1986: Proposals to Manage the Growth of Greater Vancouver p.7
We have to face the facts:
– the population of this region will continue to grow;
– this region has a naturally limited supply of development land compared to other regions in Canada;
– we have made choices to limit this supply further through agricultural land preservation; and
– land prices and density in this region will be greater than they will in other regions in Canada, all other things equal.
We must figure out how to work with what we have within constraints both natural and chosen, rather than wasting our time demeaning ourselves looking for someone to blame.