Governments usually devise expensive programs to increase access to affordable housing, like the introduction of Tax-Free First Home Savings Accounts in the 2022 Federal Budget. Such programs increase the demand for housing, and that makes the problem worse. To address supply problems, housing experts call for regulatory reform – shorter, predictable waits for building permits, more reasonable costs and fees for builders and more flexible zoning regulations.
Wendell Cox is principal at Demographia, a public policy firm. He does not deny that regulatory issues restrict housing affordability, but he pays most of them little attention. He directs his concern at “urban containment” policies, which confine urban development within certain boundaries. These policies, by restricting land available for residential development, massively increase land costs within the city, along with home prices. Toronto’s Greenbelt and BC’s Agricultural Land Reserve (ALR), Cox rightly asserts, are urban containment policies.
Demographia studies housing affordability in eight countries, including Canada, the UK, the US and China. It analyses house prices in relation to income. A rating of 3 or under is affordable, 3.1 to 4 is moderately unaffordable, 4.1 to 5 is seriously unaffordable, 5.1 and over is extremely unaffordable.
In “Demographia Housing Affordability in Canada”, Cox studies 46 housing markets. In 2021, in Ontario, 14 of the 15 markets studied are severely unaffordable, as are all 7 of the BC markets studied. Metro Vancouver and Toronto, have the two highest ratings for unaffordability in Canada at 13.3 and 10.5 respectively (and are the 3rd and 8th most unaffordable markets in the eight countries Cox studies).
The two cities have dragged nearby cities with them into the extremely unaffordable categories. In BC, from 2017 to 2021, intra-provincial migration was high, Cox advises. Soaring prices pushed people out of the Metro Vancouver housing market into BC’s other cities. Anecdotally, this rings true for many of us in the Fraser Valley, Victoria, Kelowna and Kamloops. We know people who have migrated to our cities from Metro Vancouver in search of more affordable housing. All of these housing markets are now extremely unaffordable, for example, Kelowna is rated 10.1 and Kamloops is 7.5.
So, is the ALR the primary cause of BC’s severely unaffordable housing? Cox has studied many markets not using containment policies, and has found no serious deterioration in affordability, and has always found sharp deterioration where containment is added. He says that Vancouver has arguably had the most restrictive land use policies in Canada over the past 50 years. (The ALR was introduced in 1973.)
It may seem counterintuitive that the ALR, which covers a relatively small proportion of the province, would have such an out-sized impact. But there are substantial ALR lands in Metro Vancouver (though not in the city of Vancouver) and in the Fraser Valley. And there are probably additional factors that Cox does not flag, particularly in the city of Vancouver, like a finite geographical area and restrictive zoning.
A substantial amount of the usable land in most other BC housing markets (though Cox does not focus on this) is within the ALR. Most markets, then, struggle with containment policy, as well as heavy migration from Metro Vancouver. Cox’s data shows that 5 of the top 6 most unaffordable markets in Canada are in BC – Vancouver, Victoria, Nanaimo, Kelowna and the Fraser Valley. That is astonishing! It provides further evidence of the negative impact of the ALR on housing affordability.
Cox does not deny that the goals of providing a greenbelt are worthy. Similarly, we can accept the stated goals of the Agricultural Land Commission, which adjudicates the ALR, are worthy. The ALC is, “dedicated to preserving agricultural land and encouraging farming in British Columbia”.
Cox is most disturbed by the unintended social problems that accompany containment policies. He correctly argues that land costs skyrocket, as do home prices. Increasingly unaffordable housing drives the standard of living lower and creates more poverty. For Cox, that leaves a clear choice, “a modest expansion of greenfield development or greater housing poverty”. In the BC context, roll back the ALR within, and perhaps adjacent to, cities or accept extremely unaffordable housing and growing poverty. Canada’s unsuccessful housing policies demonstrate there is no other option.
Bruce W Uzelman
I grew up in Paradise Hill, a village in Northwestern Saskatchewan. I come from a large family. My parents instilled good values, but yet afforded us, my seven siblings and I, much freedom to do the things we wished to do. I spent my early years exploring the hills and forests and fields surrounding the village, a great way to come of age. My parents owned a successful general store. My siblings and I were required to help out in the business, no choices allowed there!
I attended the University of Saskatchewan in Saskatoon. I considered studying journalism at one point, but did not ultimately pursue that. However, I obtained a Bachelor of Arts, Advanced with majors in Economics and Political Science in 1982.
My career has consisted exclusively of small business, primarily restaurant and retail. I was originally based in Alberta, and then BC, first in Summerland, then Victoria and finally Kelowna (for over 20 years). I was married in Alberta, and we have two daughters, who have returned to Alberta as adults for career reasons, as did my now ex-wife. My daughters are successful, and now have families of their own.
I have maintained a healthy interest in politics throughout my adult years, and wish to put that and my research skills to work as a political columnist.