How to Become a Resort City

I think many people are concerned that Vancouver is turning into a “resort city” – a playground for the rich – rather than a diverse and thriving city for all. But is this really happening? Yes. And I’m concerned too!

Certainly we see a lot of luxury cars and retail outlets, but we don’t really track wealth very well in Canada. Nevertheless owner-occupiers report their home values in the census and that’s where most wealth ultimately lies for Canadians. We can ask a simple question: where do the millionaires live? By millionaires I’m referring to anyone who reports owning and occupying a home worth a million dollars or more – not a perfect proxy, but not bad. The census uses self-reporting to get at this, and Statcan Table 98-400-X2016232 – in conjunction with total household numbers from Census metro area profiles – enables me to generate the following figure.

MillionaireHHs

Vancouver contains almost as many millionaires as Toronto, despite being less than half the size. Together the two metropolitan areas account for less than a fifth of Canada’s total number of households but over three-quarters of all owned dwellings worth on million dollars or more. To put matters differently, nearly 25% of Metro Vancouver’s households own a dwelling worth a million dollars or more, compared to just over 1% of the Rest of Canada (outside Toronto). We are literally concentrating the One Percent in terms of Canada’s wealthiest households.

Maybe Vancouver’s not quite a resort city yet, but it’s definitely in the neighbourhood!

So how did we get to this point?

In some ways Vancouver was predisposed to growth because it’s got lots of things people want: ocean, mountains, one of the mildest climates in Canada, a thriving port, a railroad line, lots of jobs, diverse ex-patriot communities, parks, strawberry-picking in the Agricultural Land Reserve, etc. This could explain growth overall. But everybody wants these things, not just rich people.

If it’s not just amenities that attract specifically rich people to Vancouver, then how are we becoming a resort city? Some people blame the fact that Vancouver’s amenities have been heavily marketed to rich people around the world in recent years. They have a point: this has certainly happened. But lots of other places try to market themselves to the rich as well. What makes Vancouver special?

We might not be attracting the wealthy so much as we’re systematically excluding everyone else who wants to live here. It’s about changing the composition of in-movers, so that wealthier and wealthier people tend to come (incidentally, this fits with research on neighbourhood change suggesting this is mostly how gentrification occurs).

How are we systematically excluding everyone who’s not rich? Easy! Under conditions of growth, all we have to do is preserve lots of urban land for millionaires and largely prevent anyone else from competing with them. Effectively this is what residential single-family (RS) zoning accomplishes in places like Vancouver, which we can see by comparing what proportion of detached and duplex housing is evaluated at over a million dollars.

ResortCityZoning

Across Metro Vancouver, nearly 60% of detached or duplex housing is evaluated at over one million dollars, yet the vast majority of urban residential land is zoned to support only these forms of housing. This is how you get a resort city, fit only for millionaires (with a little bit of room for their servant-tenants living in basement suites below – which is what duplexes mostly consist of in Canada). This compares to around of quarter of detached houses worth over a million in Toronto, and just over 2% in the Rest of Canada.

We can flip the question around to ask what percent of million-dollar dwellings are single-family detached or duplex dwellings. Strikingly, the answer in Metro Vancouver, Metro Toronto, and the Rest of Canada is pretty much the same: almost 90%.

Luxury zoning is almost entirely detached zoning. Across Metro Vancouver, the converse is also increasingly the case: detached zoning is becoming luxury zoning, affordable only to millionaires.

In places with lots of amenities – including jobs! – where people really want to move, growth is mostly limited by housing. If we only make housing for millionaires, we’ll increasingly have a city of millionaires. If we want to keep Metro Vancouver from becoming a Resort City, we’re going to have to tackle the zoning issue.

For this and more: yadda yadda yadda… book.

Thanks to Frances Bula, Jens von Bergmann, and Chad Skelton for inspiring today’s post and/or snatching away my afternoon! And if you’re interested in what you can do about reforming zoning, look into the platforms of municipal parties, like OneCity, that advocate for inclusivity across our urban landscapes.

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A Rough Working Guide to Housing Crises and Policy Levers

The housing market: it’s all about supply and demand, right?

Not quite. States and markets – especially markets for housing – grew up together. Housing is heavily regulated in ways that generate, constrain, and ultimately channel supply and demand, creating not one, but many sub-markets and also non-markets. The policies governing housing have been layered one atop the other through history.

Where do these policies come from? They often respond to perceived crises. For instance, Vancouver enacted its first Fire By-law on July 19, 1886, just five weeks after the newly incorporated city burned to the ground. As a result, the policies set in place to deal with various crises are frequently reactive in nature. They also tend to be crafted in the image and interests of those most powerfully situated to govern.

Since the late 19th Century, policies across North America (and elsewhere) also tend to respond to an ideological background of “market fundamentalism,” or the idea that the market governs best (sometimes referred to as “neoliberalism”). As Karl Polanyi diagnosed early in the 20th Century, markets are terrible at governing some things (people, nature, productive capacity). As I argue in my book, urban land and the housing built atop it is one of these things. This sets up an interesting dynamic whereby ideological attempts to govern by a singular market create all manner of housing problems, which in turn generate reactive policy responses and explain why housing is so heavily regulated. The most frequent policy response, I think, has been to set up protective partitions within markets. This produces sub-markets and non-markets and helps explain the distinct nature of our various housing crises.

In what follows, I’m going to attempt to provide some insights into Vancouver’s current housing crises in a way that gets at the history of this partitioning of markets. The past barriers we’ve created to generate, constrain, and channel the market forces of supply and demand continue to shape policy levers available to us today.

Here’s a working visual guide (link to larger version). Sorry: it’s still pretty rough and necessarily messy, so it might not “work” for everyone!

RoughModelCrisis4

Ok, so what’s going on here? Just to get it out of the way: “SFD” = Single Family Dwelling and “PBR” = Purpose-Built Rental. Combined together with “Condo” and “Non-market” housing, we’ve got our (heavily simplified) major basic forms in which housing is provided.

We can link these basic housing forms into how they relate to our perceptions of four distinct housing crises. I’ve distinguished these housing crises in terms of need, primary group of interest, and how Vancouver is doing addressing these crises in comparative perspective (more here).

Crisis #1: Homelessness involves the greatest need for housing, mostly affects the poor, and in comparative perspective, Vancouver actually has a not-terrible track record addressing this crisis. Though it’s gone up in recent years, the prevalence of homelessness remains relatively low. But the homeless are those most likely to be at risk of dying due to their housing situation. Everyone else’s crises pale by comparison.

Crisis #2: Rent Access involves high and immediate need for housing, mostly affects the working class and/or young, and Vancouver has a mediocre track record addressing this crisis. Rents remain relatively middle-of-the-pack for North American cities, but this is largely due to rent control and vacancy rates are very low, making it difficult for new entrants into the rental market. Failure to provide rentals can lead to real hardship and (ultimately) homelessness.

Crisis #3: Housing Price to Income reflects relatively low need, mostly affects the aspirational middle class, and Vancouver looks awful in comparative perspective (at least within North America). Since it affects the middle class & Vancouver does pretty terrible compared to elsewhere, this crisis sucks up most of the attention in Vancouver’s debates, despite reflecting relatively low need compared to the rental and homelessness crises.

Crisis #4: Return to Investment is unlike the other housing crises insofar as it reflects a more general crisis involving finance. Correspondingly, I place it as the lowest of needs, and it tends to affect an investor class already most protected by their assets. Recently, at least, Vancouver’s housing market has provided a very good return on investment. No real crisis here (despite recent attempts to set in motion a property tax revolt).

I’ve tried to cram as much of the history of reactive housing policy as I could into describing the barriers channeling supply and demand, with particular reference to Vancouver. Each letter describes a partition in markets and also acts as a policy lever. The letters identifying each lever / barrier are ordered in rough historical fashion. When was each barrier or lever put in place? Meanwhile, the arrows follow the production of housing from its monetary backing (capital – in green) through its development (in blue) to one of the four major forms of housing described above, and finally to its end use (consumption) as non-market, primary rental, secondary rental, resident owner-occupation, and empty or other.

It’s complicated! And I’m still leaving a lot out (e.g. non-profit organizations) and simplifying in places (e.g. treating resident-owners as strongly distinct from investors).

Nevertheless, a few points are worth making:

1) there is no such thing as a singular “housing market.” Instead there are many little sub-markets and non-markets produced by the layering of policies.

2) sub-markets are still connected to one another, but the connections are shaped by policies and determine how processes like “filtering” are variously enabled to work.

3) this reflects real concerns that there can be a “right” and “wrong” kind of supply. The overall history of housing policy insures that there really are different kinds of supplies that end up addressing different kinds of crisis. At the same time, supplies and crises do relate to one another. The trick is that the relationships aren’t at all straightforward, and some kinds of supply (e.g. condos) have been made more flexible than others.

4) earlier and wider ranging policies (e.g. A & B, covering tax, finance and land use) can have really wide-ranging effects on how housing works. For instance, shifting from extensive to intensive land use policies potentially unlocks a wide range of new housing stock that could help address all kinds of housing crises. Later policies tend to have more limited effects, carving off new little sub-markets (e.g. Accessory Dwelling Units) and specifying their links to other little sub-markets. But these links can be important!

5) sometimes the effects of policies can be complementary or conflict, depending upon the crisis at hand. For instance, Empty Home Taxes (policy lever F) diminish the range & value of benefits for investment (crisis #4, lowest need), but encourage the channeling of existing supply toward resident-owners (crisis #3, low need) and rentals (crisis #2, high need), ideally benefiting both the middle and working class. By contrast, a broader tax on use of housing for investment (policy lever A) without any exemption for rental tenancies would channel even more existing supply toward resident-owners (crisis #3, low need), but possibly exacerbate the options available for renters (crisis #2, high need). Rental restrictions within strata associations do the same thing. One concern with enabling the stratification of ADUs (policy levers D & G) – currently limited to rentals – is that it may have a similar effect, pitting the working class and middle class against one another.

6) am I already at six?!? I have lots more to say about this working model, which I began sketching months ago just to begin thinking through some of housing policy change we’ve seen and continue to see in Vancouver. With luck, I’ll work toward turning it into a paper! But as it is, this blog post is already too long. What’s your working model look like?