Christopher Hume: We must value housing as more than a simple commodity

Go figure. Despite having endured a building boom that has lasted three decades and changed the face of urban Canada, we now face the worst housing crisis in the country’s history. Finding a place to live, let alone affording one, is a national obsession. From coast to coast, Canadians are fed up and stressed out.

Trying to explain this contradiction has preoccupied politicians, pundits and professionals for years, to no avail. Yes, interest rates play a role, as does inflation. But then there’s a development industry that long ago switched focus from buyers to investors. Buyers want a place to live, investors a place to park their money. This has led to a preponderance of inexpensive micro-units favoured by investors and an avoidance of larger two-and three-bedroom apartments preferred by those looking for a home, even a family home.

Statistics Canada estimates that roughly two-thirds of these undersized units are in investors’ hands. Similarly, investors own 44 percent of larger units. As University of Toronto housing professor, David Hulchanski, has pointed out, “Over recent decades governments have allowed residential properties to become a significant asset class for investors, rather than developing housing as affordable places to live.”

It’s no surprise then that condos in Canada are tinier than ever. In Toronto, the smallest unit is a 24.4 square metre (263 square feet) cube with a single room for living, eating and sleeping. Statistics Canada says the median size of a condo in Toronto is 59 square metres (640 square feet). In Vancouver, it’s 73.4 square metres (790 square feet). That’s why there’s growing demand for condos built in the 1970s and ‘80s, when developers built apartments big enough to accommodate multiple residents. Today, while residential towers are taller than ever, living spaces are smaller.

This explains why so many of these minimalist apartments have ended up as short-term rental accommodations. In Toronto, this has given rise to “ghost hotels”—whole buildings used primarily for parties and overnight guests.

Recently, interest rates and inflation have all but killed the condo market. Preconstruction sales are down at an almost staggering 80 percent. Experts blame development charges, lengthy approval processes, land transfer taxes, and planning regulations for the housing crisis. Yet all these have been factors in one form or another since the halcyon days of the industry. What has changed is not demand so much as supply.

The development industry that emerged in the 1950s and ‘60s in the wake of the great shift from city to suburb assumed control of housing once the federal and then provincial governments publicly abandoned the field. But developers operate by different priorities. For them, housing is not an end in itself, but a means to a larger end, namely profits.

There’s nothing wrong with this, of course, but unlike most goods and services provided by the marketplace—what economists like to call widgets—housing is a basic, a necessity, and, according to some, a right. When housing ceases to be available or affordable, the effects are traumatic. Adult offspring move into basements. The homeless colonize public parks, leftover spaces, and anywhere else they can pitch a tent.

The job of the housing industry may be to build housing, but it follows the money, not human need. It responds to what people can afford, not what they can’t. And so, there’s no shortage of luxury condos or suburban housing, but everything in between—from rental to affordable housing—is conspicuous in its absence.

Worse still, in an economy such as Canada’s, dominated by property owners, even the price of temporary accommodation has surpassed the means of many. No surprise a cottage industry has emerged excavating older houses to make way for basement apartments. Though viable for individual homeowners and small builders, this won’t solve the housing crisis.

Indeed, nothing short of smart government intervention, either through direct action or fiscal incentives, will suffice. Despite the good intentions, the private sector has proved itself unable to deal meaningfully with the issue. Underlying this failure is the greater need to examine a culture that views essentials such as housing as a commodity, an investable, another class of widget.

There are some exceptions to this record of failure, most notably, Toronto’s St. Lawrence Neighbourhood. Planned by and for the city in the 1970s, the wildly ambitious and hugely successful mixed-use and mixed-income project includes co-operative housing, subsidized, social and seniors housing as well as conventional rental and private ownership. It is not a particularly pretty neighbourhood, but no one questions its desirability. Half a century later, however, it remains a unique, though far from accidental civic triumph. “If the stars were aligned, they had to be pushed into alignment.” David Crombie, the “tiny perfect” former Toronto mayor who spearheaded the development, told the Toronto Star in 2014.

According to architect Alan Littlewood, the de facto planner of St. Lawrence Neighbourhood, the secret to its success was leadership. In fact, the project could not have happened without the depth of talent then available on city council and the local architectural community. What need be said about political leadership in the 21st century, except that it’s missing in action? And with three levels of government involved, undertaking something similarly daring would be impossible today.

The lesson of St. Lawrence is that the best way to build 3.9 million houses by 2031 is to put cities in control. Though far from perfect, they know best what’s needed. After all, those closest to the problem are best suited to solve it.