Housing advocate warns just building more homes won’t fix affordability

B.C.’s new housing policies are meant to spur the creation of thousands of new homes every year, but without a close eye on who is buying those homes, financialization of the housing sector will continue to affect affordability, federal housing advocate Marie-Josée Houle warns.

In order to truly address housing affordability, especially for renters, Houle says governments need to make large-scale investments in purpose-built rental housing and implement vacancy controls.

“In B.C. you have rent control, however, you don’t have vacancy control, and I know government gets squirrelly when we start talking about vacancy control because [landlords] are pretty against it,” Houle told BC Today.

Housing Minister Ravi Kahlon rejected the idea of vacancy control during an appearance at the Union of BC Municipalities conference in September, noting that the province was advised against the policy by its rental housing task force in 2018.

If governments are not willing to protect renters directly, Houle says spending big on public housing is the way to go.

“If you look at it from multiple perspectives, [non-market housing] really is the best use of taxpayers’ funds when thinking about addressing the crisis of housing affordability and the housing crisis in general.”

Since assuming the role of Canada’s inaugural housing advocate last year, Houle has sounded the alarm about the financialization of housing in Canada as investors profit off the housing shortage. Her office estimates about 30 per cent of rental housing across the country is currently owned by “institutional investors,” including real-estate investment trusts (REITs), which are known for buying up rental buildings, evicting tenants and drastically increasing rents to maximize profits.

When Premier David Eby announced the $500-million Rental Protection Fund in January, he singled out REITs for their “predatory model” of profit, saying they treat housing as an investment vehicle at the expense of low-income British Columbians.

The fund is a positive step, Houle said, but larger investments in non-market housing are needed.

“The intentions are certainly there, however, I think there’s going to need to be some very deep thought on how the investments are targeted,” she said of B.C.’s housing policies.

Houle says the province needs to engage with vulnerable renters and people experiencing homelessness “to ensure that the policies are getting it right, rather than making assumptions about what people need.”

The upzoning policies passed this fall are expected to help create between 216,000 and 293,000 homes over the next decade.

UBC sociology professor and housing demographer Nathanael Lauster believes creating more homes will reduce the supply shortage that makes housing so attractive to investors.

“If we get rid of this massive housing shortage that we have right now in B.C., where we have very, very low vacancy rates, that really reduces the power of landlords to raise rents in the first place, and it gives renters a lot more choice,” said Lauster, who is among the modellers hired by the province to determine the impact of this fall’s housing legislation.

Houle unequivocally disagrees.

“Canada will not be able to build our way out of this housing crisis,” she told the federal human resources committee in May. She believes that affordability will continue to be an issue as long as housing prices are dictated by the market.

In order to crack the affordability problem, governments need to invest in non-market housing, prevent rental housing from falling into the hands of investors and protect tenants through measures such as vacancy control, Houle argues.

“Research shows that between 20 and 30 per cent of purpose-built rental is financialized,” she said, adding that some neighbourhoods — often low-income ones experiencing gentrification — have attracted much higher levels of corporate investment in new housing. “This has resulted in the displacement of people because it has become unaffordable, and it’s had a huge impact on the surrounding businesses and the informal economy.”