The Non-capitalist Solution to the Housing Crisis

Olympic Village is your classic Vancouver neighborhood see you all check outdoor athletic store check big boxy glass buildings check and crazy expensive housing oh you better believe that's a big check renting an Olympic Village is not cheap for example a two-bedroom apartment in that building behind me will cost you forty two hundred dollars a month a two bedroom in this building five thousand dollars a month a two bedroom unit in this building rents for forty five hundred dollars a month and just across the street a two-bedroom unit in that building rents for nineteen hundred dollars how's that possible who's behind this and could that be the subject of this video [Music] change [Music] so how is this building so affordable well it's really quite simple it doesn't make money let me elaborate this building is owned by the athletes Village housing Co-op a non-profit Cooperative like the name suggests the co-op isn't trying to make a profit from this building so it sets rents that only cover the building's operating costs things like heat water electricity taxes mortgage payments and maintenance the building next door is a condo and that two-bedroom unit is owned by an individual or Corporation who very much wants to make some money from their housing so they can rent it out for well really whatever price they can get any money they make on top of their own operating costs is profit they can pocket for themselves sorry I just explained you how landlords work the condo is an example of Market housing the price is set by the highest bidder The Athlete's Village Co-op is an example of non-market housing the rent is set by just how much it costs to provide the housing why does housing like this exist well it's because many people and organizations recognize that housing is you know a need and so they choose to provide housing without trying to make a profit in some cases there are Charities such as churches and YMCAs who decide to build housing as part of their larger Mission their non-profit organizations specifically for housing they're often own multiple properties and rent them out like a regular landlord their non-profit co-ops where a group of hippies I mean people collectively own and manage a building and rent it themselves then there's housing that's provided by the government through agencies like BC housing and Within These categories there are all kinds of specializations such as housing for seniors single moms refugees and oh even Korean seniors well I guess I know my retirement plans now is it always affordable housing well that part's a bit more complicated cutting out profits can certainly make rents a bit cheaper but at the end of the day it still costs a lot of money to build and operate any building some non-market housing does receive subsidies to make its rents really affordable but without those subsidies non-market housing rents start out pretty comparable to Market rents take for example Handler housing as a new non-market Housing Development by the Oak Ridge Lutheran Church it didn't receive major subsidies so it charges 2400 for a two-bedroom which is you know not exactly cheap but what can make Handler housing more affordable is time panel or housing is in an up and coming neighborhood called Oak Ridge in a decade or so this will likely be a major city center where art transcends museums music travels freely style comes naturally beauty is all around and dance is part of life Wow anyways a regular landlord here would be foolish not to hike up their rents but Handler housing would keep the rents more or less the same and over time that would make its rents relatively affordable that's why the athletes Village Co-op seems so affordable now 1900 for a two bedroom was actually pretty typical for Olympic Village back when it was built in 2010 but today the co-op is still charging more or less the same amount while its neighbors have hiked up rents year after year but there's one more thing that happens with even more time you see athletes Village Co-op and handle our housing took out bank loans to construct their buildings so much of the rent you pay here goes towards paying off those loans so what happens when they finish paying their loans well the housing becomes cheap like really cheap that's been the case for this Co-op from the 1980s where rents for a two-bedroom are only a thousand dollars a month and the reason why is because it's fully paid off its loans and that is why many believe non-market housing could be an answer to the housing crisis rents all over the province are skyrocketing and in Vancouver they're up 23 from last year like people are renting dens and solariums for about a thousand dollars for those who are trying to rent in this market non-market housing promises a home at a stable price right now and an affordable price in the long term but hold on are we really making housing affordable for everyone here or just the people who are lucky enough to get into non-market housing if you look at athletes Village Co-op and pretty much any other non-market apartment in this city there are weightless it's really difficult to get in and it makes sense it's cheaper than Market housing so this initially made me feel pretty uneasy about non-market housing it's great for the people who can get in but what about everyone else could it ever be a solution to the broader housing crisis well it turns out actually yes let's say you build a lot of non-market housing like thousands of units no tens of thousands of you know hundreds of thousands of units all over the city you build and build and build until non-market housing is a huge player in the housing market there are no wait lists no lineups no shortages if you want to live in non-market housing you can well then you might end up with something like Vienna in Vienna 60 of the population lives in non-market housing regardless of their income and that has created an interesting effect on the larger housing market when there is an abundance of non-market housing private landlords have to compete with non-market housing for the same tenants they can't afford to inflate rents because people will just apply for the non-market housing next door where rents can be as low as 251 Euros a month this is known as an integrated or unitary housing market where non-market housing is so ubiquitous that it actually keeps rents in the private sector from increasing too quickly in fact you can measure this effect in places that have lost non-market housing in Amsterdam the share of non-market housing has been steadily declining since the 2000s and with less non-market housing to stabilize the market rents have rapidly increased I think that's the ultimate potential of non-market housing why it's very much a solution to the broader housing crisis because when we build enough of it it actually stabilizes rents in the overall housing market but that is definitely not the case here in Canada non-market housing makes up just about five percent of the housing in our country and at those rates it has little to no influence on The Wider housing market so how do we change that how do we build more non-market housing well it helps to understand how non-market housing is built let's say you want to build non-market housing what you first need is land some non-profits like churches already have land and sometimes the government can offer you public land for free or very cheap but if those options aren't available well that's no reason to worry because at the end of the day all you really need to build non-market housing is a positive can-do attitude and money you need money even if you own your own land you still need to build something on it and construction costs aren't cheap so where does that money come from well like I mentioned in many cases that money comes from a loan athletes Village Co-op and Handler housing were able to get loans from Vancity Credit Union to construct their buildings in other cases the government can actually require housing developers to pay for it for example at this location the local government negotiated with the developer to build some non-market housing in exchange for the right to build more density on their land the result 233 Market condos that subsidize 30 units of non-market housing that's run by a charity called 221a but more often than not funding for non-market housing is pretty complicated for example if you look at the funding summary for this non-profit apartment in Coal Harbor you'll see that it took a mix of four different grants selling life leases for some tenants personal donations money from foundations money from fundraising events and a bank loan oh and they also got the land for ten dollars if you can't tell already raising all that money from all those different sources takes a lot of work and it's really impressive that someone pulled it off but that is not the process for how you build a lot of non-market housing so what many have rightfully concluded is that creating more non-market housing will ultimately require more Government funding and the thing is until very recently our federal government basically stopped funding this sort of housing if you look at a graph of new non-market housing units funded by Ottawa over the years you can see that there is a two decade period where almost no new non-market housing was funded at all why we stopped investing in non-market housing is a very complex story for another time but what's clear is that here in Canada we've kind of assumed that the private Market can meet our housing needs that for-profit developers will compete with each other to offer US housing at the best price without much government assistance and before we assess non-market housing as a solution I think it's pretty important that we understand that private Market first and why it's not really working out private markets are pretty good at providing consumer goods like computers and t-shirts in the sense that when people want more of these items the companies just make more it would be wonderful if housing worked that way but it almost never does when there is demand for more housing creating more of it is a complicated process but there are zoning bylaws in most cities that place heavy restrictions on how much housing can be built and any changes to those rules bring out protests from local residents who are concerned about new buildings casting Shadows blocking views or changing the character of their neighborhood for example in kit Solano a five-story development that included non-market housing ended up being so controversial that it took three days of public hearings one resident to opposed the building described it as dropping the ghetto on Kitsilano all that fuss was over a five-story building not the Burj Khalifa and it really goes to show building more housing Supply is very difficult as a result there is a scarcity of housing today vacancy rates across BC hover around 1.5 percent and at those rates landlords can basically name their price and recently this has produced a concerning Trend investors such as Pension funds rates and residual income rows have aggressively entered the housing market and in many cases these investors don't buy these properties to build new housing they buy them to take advantage of a low vacancy rate and raise rents I think this CEO of a real estate investment firm said it best we think there is a definite shortage of housing in Canada and the good news for investors is that there is no easy solution in sight he actually said that when viewed this way our housing crisis starts to look more like a feature of the private housing market not a bug so is non-market housing the fix to all this well yes and no many would argue that what we actually need to do is to fix the rules and barriers that are creating this housing shortage and I think that's totally fair in North America we make it really difficult to build any housing period And even if we decide to build a lot of non-market housing it will still run into those same barriers non-market housing still cast Shadows blocks views and changes the character of the neighborhood I think first and foremost we need to change these rules and make it easier to build housing in general but on top of that evidence suggests that it isn't really a good idea to only focus on non-market housing to fix a housing crisis because if you only focus on non-market housing you might end up with Hong Kong the government here provides 46 percent of its population with non-market housing but severely limits development in the private sector because of that private sector rents in Hong Kong are some of the highest in the world and people wait six years on average to get into non-market housing non-market housing is not a silver bullet solution that we can pursue while ignoring the rest of the housing market it's all interconnected if there's a shortage of housing in the private Market it will only place more pressures on non-market housing but with all that being said I ultimately think that non-market housing is still a critical part of fixing our housing crisis I think to some extent building housing Supply is always going to have constraints it isn't as simple as printing t-shirts and making computers it will often be fundamentally at odds with other priorities we hold in our cities yes some kind of trivial ones like protecting views but also more understandable priorities like protecting Wetlands or preventing suburban sprawl and besides there are other limits to housing Supply that are frankly outside of our control in Metro Vancouver our land is limited by mountains and water on every side that will always create the potential for housing to be scarce and for people to exploit that scarcity by making housing as expensive as possible given that reality I think we should be treating non-market housing as an important counterbalance something that limits people's ability to exploit a housing shortage in two key ways adding more Supply and setting rents that help to stabilize the overall housing market sending a reminder to all of us that housing is ultimately for people not profits okay so I'm here to put my life savings of oh several thousand dollars into my van City checking account because like I've hinted throughout this video Vancity and the Vancity Community Foundation actually play a pretty important role in helping non-market housing developments get off the ground together they created the affordable housing accelerator fund to help organizations get through the pre-construction process of non-market housing setting out to build non-market housing can be daunting before you finance your building you need to prepare designs create cost estimates and have Municipal approvals in place and that all costs money this is where the Vancity affordable housing accelerator fund comes in it provides grants expert advice and low interest loans so that non-profit organizations have the resources they need to create a strong case for their developments to date it has helped over 4 200 units of housing get built in our Province why are you back really matters and every time you deposit funds into your van City account you are literally helping new non-mark could housing projects get built in our Province pretty neat right [Music] [Music] [Music]

Channel: About Here

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Length: 16min 3sec (963 seconds)

Published: Tue Nov 01 2022