How affordable should housing be?

What: As the federal government unveiled more details on its Build Canada Homes program, at least one recommendation from a group of Vancouver planners, architects and geographers appears to have been taken to heart.

An Aug. 28 letter submitted as part of the government’s engagement on the program urged Build Canada Homes, which the writers called a “once-in-a-generation opportunity,” to go beyond the supply-side approach to housing that has, in recent years, become the convention in policymaking.

Counted among the letter’s 28 signatories are the likes of UBC Housing Research Collaborative co-director Penny Gurstein, SFU City Program director Andy Yan and former City of Vancouver planner Sandy James.

What does that include?: The letter made eight recommendations that centre on building housing that is affordable, rather than building for the sake of supply, and not putting too much focus on large projects.

One of those recommendations pushed for the government to break from the definition of “affordability” that has been dominant in B.C. in the last half-decade, including as a key feature in Vancouver’s Broadway Plan.

Defining affordable: The group called for affordable units to be rented at 30% of local incomes at most. That isn’t exactly a new definition — it's been used for decades in North America, and is part of the Canada Mortgage and Housing Corporation’s criteria for “core housing need.”

But as senior levels of government have let public housing construction fall by the wayside, municipalities have leaned on private developers to subsidize rents — and that has led to a shift away from affordable housing towards below-market housing. That has meant basing rents not on incomes but on the rents that local tenants are already paying.

• Since the late 2010s, cities in Metro Vancouver have begun requiring part of a market development to be rented out at 20% below the median market rent in the area, as measured by the CMHC. East of Boundary Road, the measure is called “Burnaby affordable.” 

It got that moniker after the city made it a requirement in all four of its town centres. This was one of a suite of measures the city took following the 2018 election in response to widespread anger about the displacement of tenants in older, more affordable buildings.

Vancouver eventually followed suit. The Broadway Plan, approved in 2022, includes requirements that 20% of a development’s floor area be rented out at the same “Burnaby affordable” rents.

What is affordable?: If a unit is rented out at 20% below market medians, that definition of affordability would still leave out most people, the Vancouver Tenants Union has argued, pointing to the fall 2024 CMHC Rental Market Report.

That report places the average one-bedroom rent in Mount Pleasant at over $1,700, which adds up to $1,400 with the 20% discount. But Vancouver’s median income in 2023 was $46,300, meaning affordable rents, based on the 30% of income metric, would need to be less than $1,200 for half of the city’s population. 

That doesn’t account for the fact that renters tend to make far less than owners — in 2019, the median owner ($55,000) made more than double the median renter ($25,000). And as more market rentals are built and rented out at sky-high rates, that CMHC market median is likely only going to become even more detached from local incomes.

Why 30%?: The 30%-of-income affordability metric itself wasn’t always the standard. Its origins lie in an old saying: “a week’s wages to a month’s rent.” That was codified into laws and policies variably at 20-25% of incomes for decades, starting with the Great Depression.

Over time, that crept up to the 30% that’s standard today.

Smaller buildings, more wood: The letter also makes some more material recommendations for the federal government about how to achieve affordability. It suggests that more wood-frame buildings would not only better serve communities with more ground-oriented units, but could also be a boost for BC’s forestry sector.

And it notes that affordable housing has the best outcomes in smaller-scale, lower-density projects.

Low-density, wood-frame projects also tend to be more affordable to build — according to Altus Group, a wood-frame apartment building of up to six storeys costs 10-17% less per square foot than a 12-storey apartment building and about 25% less than a 60-plus-storey building.

What’s next: The federal government’s announcement on Build Canada Homes did make clear that its definition of affordability matched the 30% rule of thumb. But it’s yet unclear how successful the policy will be in bringing down rents to that level more broadly.

Carney has at times talked about it as a developer unto itself, which could see the government getting more seriously into the housing construction business. And with $13 billion behind it, Build Canada Homes could see large-scale construction of affordable housing become a reality.

But Carney has also called the forthcoming budget an “austerity and investment budget at the same time,” and the government has only committed so far to building 4,000 homes — with none of those coming to Vancouver, according to The Globe and Mail.

Still, it’s early days in the program, and Carney told reporters there would be “a series of additional projects across the country in the months ahead, leveraging those public assets, public lands [and] partnering with the private sector to build at scale.”