New housing is really expensive in Vancouver. How is new housing going to help if it’s priced out of my reach?

A:

This is a fair question. Different housing types affect affordability in different ways, and some of our members strongly prefer non-market homes to market ones. If you  That said, there are 3 main things to keep in mind for new market housing:

 

1. Newer-than-average housing is more expensive than average, almost by definition. This is unavoidable as long as people prefer newer buildings to older buildings. The good news: it doesn't stay new forever!

2. Much has been made of housing developers targeting ‘luxury’ buyers instead of average income earners. Scarcity makes it easier for them to do this – in markets where production is not capped, suppliers tend to move on to other customers after luxury demand is sated.

Take cars for example: Toyota sells both mid-range Toyota vehicles and a higher-end Lexus marque. Margins are far higher for Lexus, and they'd no doubt prefer to sell more of those. What's striking is that Lexus sales only make up about 1/10 of Toyota Canada's annual sales! They've sold all the luxury goods they can, and have moved on to more affordable products in a big way.

If we permitted significantly more homes in our desirable neighbourhoods, we'd eventually see more "Toyota" homes.

3. The benefits of new housing go far beyond the initial buyer (and are often hard to see because they are so diffuse). Wealthy households don't disappear when housing is not built for them. A household buying a new condo is not renovating an older, more affordable unit. A household accommodated on the West Side is no longer bidding up prices on the East Side.

We've criticized the zoning rules in West Point Grey for banning housing forms other than $20M+ mansions, and this is why – we're under no illusion that new townhouses and apartments in WPG would be cheap, but not building them is even worse. That pushes demand toward existing housing stock and other neighbourhoods instead.


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