Let it not be said the City Parks department does not have the resources and land to solve the housing crisis.
Here in rainy Vancouver, or in any Anglo-American city for this matter, the suffering caused by homelessness, high rents, and onerous home mortgage payments could be easily and quickly alleviated by throwing open for development large amounts of unused public land. A substantial increase in land supply would cause a proportionate decrease in land price thus lowering the cost of constructing new houses and apartment buildings. A policy of dramatically increasing the amount of land available for development also would be of tremendous benefit to the local construction industry. But the economics of increasing the real estate supply are not entirely "win-win". Those who already own developed real estate in a market about to be inundated by a wave of cheap land will see the value of their land holdings, and their rental revenues, diminish. The more buildings one owns, the more one stands to lose by this policy. Alas, the more buildings one owns, the more say one has in local land use decisions.
Every high school student has seen the standard price/supply graph demonstrating how the price of a commodity declines as the supply of the commodity increases. This is a universally observed regularity in all economic systems. When only one farmer can make it to market his produce will fetch a dear price; however, if hundreds of farmers are elbowing their way into the marketplace, then the same produce will go for much less. This applies to all commodities be they tea, biscuits, or Vancouver real estate.
The "supply" of real estate in Vancouver consists of all the land, developed or not, within the region. The Greater Vancouver Regional District (GVRD), with a population over 2 million, consists of 21 separate municipalities of which the City of Vancouver is the most central and populous - under 600,000. The total area of the City of Vancouver is 114 square kilometres while the GVRD, which includes the City of Vancouver, covers 2,800 square kilometres.
This land is put to many uses, a fraction of it for residential purposes. In the City of Vancouver alone there about 220,000 dwelling units of which over 90,000 are owner-occupied with the remainder being rentals. Slightly over 100,000 of these housing units are single detached houses or duplexes, etc, with the rest being apartments. Commercial real estate takes many forms. The City of Vancouver has about 32 million square feet of retail store space mostly located in the ground floors of low-rise buildings lined along busy streets such as Robson and Broadway. Of the 34 million square feet of office space in the City, around 90% is located within high-rise towers in the downtown core. The City also has around 25 million square feet of industrial space found in the usual single storey box structures with load-bearing concrete floors scattered over a few dozen small industrial parks. (Generally speaking, the GVRD has two to three times the number of buildings that the City of Vancouver does and overall the GVRD has a much higher house-owner-to-apartment-renter ratio and much less office space than does the City of Vancouver.)
What strikes anyone studying urban realty is the enormity of the cumulative revenues extracted in the form of rents and lease payments. Residential rents in the Vancouver area vary from $350 per month for a vermin-infested single room in a dilapidated hotel to $1250 a month for a full, modern house. Multiply the median monthly rent of several hundred by the over 200,000 units in the GVRD and one realizes that, on an annual basis, the sum collected easily exceeds a billion dollars.
The commercial property landlords extract similar amounts. The region has scores of thousands of small stores, coffee bars, dentists' offices and auto-body shops, etc, very few of the proprietors of which actually own the premises out of where they do business. Rather, this group pays monthly rents, frequently in the thousands of dollars, to a small, and rich, group of landlords. Similar relations govern the office and industrial space markets, and once again the gross annual rents would be counted in the hundreds of millions and billions of dollars. In addition to the residential rents and the commercial lease payments, one must include the quarter million or so monthly mortgage payment cheques sent to the banks. In total the bankers and landlords are receiving an amount 20 to 30 times larger than the region's municipal governments are drawing in property tax revenues. The overall value of developed real estate in the GVRD has been estimated at a quarter of a trillion dollars.
The housing crisis is chronic and profound. New homeowners frequently have to save for years to come up with a down-payment and then are resigned to forking over about half their income for 20ish years to pay off the principal and interest. Many don't make it. As for residential rents, governments at all levels have mitigated the harm a bit by constructing social housing units; but the rents in these buildings are frequently at or near "market" rates and supply of subsidized housing is far short of demand.
(The social housing policy hitherto, has been to build on already privately-owned, developed land and to have the government pay full "market" price to the property owners as opposed to building on the copious amounts of free, unused, public land.)
Tenants generally pay 40% to 50% of their income on rent, with those on the dole paying 60% or more. Thousands of the region's residents are outright homeless, while tens of thousands more are semi-nomadic sofa-surfers, while hundreds of thousands are compressed into all manner of procrustean forced cohabitation situations. At present, the housing shortage is ruining the lives of a significant fraction of the city's youth.
The effect of high rents on small business is usually ignored but is also profound. In most cases rent is the principal expense of a fledgling business, and failure to cover rent is the most common cause of business failure.
Home ownership is also suppressed by high land prices. New homeowners must save for years to come up with a down-payment and then fork over around half their income for the next quarter century to pay off the principal and interest. The land cost is often two-thirds the cost of the house. The amount paid in interest is a direct function of the amount one had to borrow in the first place. The higher the price of land the more the consumer is dependent on the banker to make the purchase.
Against all this suffering and economic discontent we have a backdrop of green. Each of the individual municipalities in the region administers a patchwork of parks, and the GVRD, as a corporate body, has an even larger portfolio of "green space". The City of Vancouver has 192 parks, with most of the largest situated in the more affluent parts of the city. The centrepiece, Stanley Park, covers around three square kilometres of prime downtown land. Bringing a halt to any further development in the Stanley Park area was the object of the first resolution the city fathers passed at their first council meeting in 1886. Maintaining high land prices through the judicious and parsimonious incorporation of new land has been the rule ever since.
The GVRD manages over 110 square kilometres of "green space". Their showpiece is Pacific Spirit Regional Park (formerly known as the University Endowment Lands) which covers nearly 8 square kilometres of choice land between the City of Vancouver's western boundary and the University of British Columbia campus. Few people regularly use this space which includes an un-drained 20-hectare bog and the square kilometre "Ecological Reserve #72" -legally off limits to the public.
The GVRD's Regional Parks Department defines its mission "to protect and care for a legacy of diverse ecosystems, wildlife and features which represent the region." Its' publications contain innumerable stanzas one would expect to find in the pages of fringe eco-extremist pamphlets. But this is not the fringe. This is "the State" talking. This is the "dominant ideology".
Here's a proposal! The GVRD and/or the City of Vancouver should open 25% of their existing inventory of "green space" for development. Half the land could be sold at public auction where it would net the public treasury zillions. The other half of the land could be reserved for some form of low-rent, social housing with the government free to use some of the proceeds of the aforementioned land-sale to subsidize or build the cheap new apartments. Using free land and taking advantage of the latest developments in prefabricated home manufacturing, apartment units could be supplied at a small fraction of the cost of current public housing projects. Sound reasonable? We get a boom in construction activity, we eliminate homelessness, and we dramatically lower rents and new home prices. And we would keep the most popular 75% of "green space" as it is! And it would not cost the taxpayer a nickel! Is this likely to happen? Never!
The bankers and large landlords do not want to see the market flooded with cheap land. They already have vacant lots and empty rooms they cannot get want they deem a reasonable price for. Bringing any more land on the market would decrease the value of their landholdings. During the last civic election in the City of Vancouver the establishment party boasted about their record of increasing the city's "green space" while their perennial rival promised even more. This in a city where trees outnumber people by a large multiple! The "Green Zone Area" (parks plus the agricultural land reserve) of the GVRD is five times larger than the amount of land set aside for residential use. When the allegedly pro-development provincial premier was asked about bringing more land onto the market, he responded by saying there already was enough land available - not cheap land, he conceded, but enough land.
The true goofs are the legions of lower class tenants who can be counted on to religiously vote for the "greenest" slate on the ballot and to roundly condemn anyone who even suggests housing development in the parks. But environmentalism, like all religions, masks ulterior motives. And let us not put the cart before the horse. First comes the economic interest of powerful land-barons, then comes the dippy hippy on Commercial Drive ripping his dreadlocks out at the very idea that a tree might be removed for the residential needs of humans. To paraphrase a wise old man - nothing is more irritating than unearthing the origins of ones' own cherished values.
By William Kay
|Designed by W3Media. Hosted by W3Media|