YE OLDE AFFORDABILITY REPORT (CIRCA 1976)

In 1976 Gordon Soules published his book “The HOUSING CRISIS: Causes, Effects and Solutions", (Gordon Soules Economic and Marketing Research) in which he addressed the issue of the high cost of housing in Vancouver.  He sought to answer the question, "What can be done to bring the cost of housing within the reach of the lower, younger, aspiring middle class?”


The 450 page work ( $75) consists of a series of essays by 61 persons involved in one way or another with housing and includes architects, planners, developers, real estate salesman, land economists, politicians, renters, homeowners of all political persuasions. These were the 'Who's Who" of the 1970's.


Soules' methodology was to record interviews and publish the transcripts.  The list of politicians includes Mayor Art Phillips, Ald. Michael Harcourt and Surrey Ald. William Vanderzalm.  The list of consultants, architects and planners  included  David Baxter, Michael Goldberg, Norman Hotson,  Arthur Erickson, Walter Hardwick among many others.


Ten developers were also on the list as well as several mortgage brokers, officials of landlord and tenant associations, realtors, and a long list of other housing experts.


The approach taken in Soules’ study is radically different than that of the current Vancouver Council’s Affordability Report. The opinions expressed by the writers are in conflict having not been homogenized by the committee.


So, why were prices so high relative to incomes?  Everybody blamed somebody else. 


The real estate interests blamed the no growth advocates and the environmental movement.  Restrictions on development they said were rationalized by the preservation of whooping cranes. 


 Developers blamed planners and municipalities, "We really do not have planners – we have controllers," said Port Moody developer James Houston.  


Mayor art Phillips after listing the various causes of the problem said, "I maintain that the primary approach to solving the housing problem in the greater Vancouver area lies in the immediate reduction and future control of immigration….  About 50% of Vancouver's annual growth rate is attributable to newcomers from foreign lands; the other half is the result of migration of Canadians from other provinces.  We cannot – and if we could, should not – legislate the movement of Canadians within their own free country.  But we can and should control that proportion of our population pressure that is represented by the influx of foreigners."  


Alderman Michael Harcourt agreed.


This was of course before political correctness raised its obsequious head.


Soules noted that "many interviewees proposed solutions to the housing crisis that would entail, among other measures, either lowering the cost of new housing or further increasing the purchasing power of consumers so that they could afford today's high prices.”  He described as "solutions that are non-solutions: ” (1) promote the construction of smaller units; (2) lower government building and servicing standards for new housing developments."  (3) increase housing densities to reduce the dwelling unit land cost.  (4) provide government grants to housing builders for each new unit constructed.


Does that sound familiar?


These were seen by many as simplistic solutions that  would not work. The land economists said that this is because the major characteristic of urban housing markets is that prices for new and existing units are based on demand rather than actual costs of providing them.  Reductions in costs of the ingredients of the new housing have a negligible effect on prices, such savings only accruing to the landowners, since the price of residential land tends to increase by an amount equivalent to any reduction in the cost of a dwelling. 


Soules noted that if housing is constructed with no frills, or is built smaller, the buyers get less for the same amount of money.  An increase in purchasing power enables consumers to pay higher prices and this automatically increases housing demand with consequent higher land and housing prices.  


All of this is a reminder of how we compartmentalize. Today those who oppose building more roads because of the certainty that they will immediately fill up with cars, will be the first to urge that we build more smaller and cheaper houses. They must not expect that they will also fill up with people and the price will keep mounting.


Soules  predicted that if mortgage lenders allowed applicants to borrow more or if interest rates dropped, housing and land prices would only rise. 


 That is exactly what happened. 


UBC's David Baxter, lecturer on urban land economics said, "Many of today's housing problems stem from 40 years of government subsidization of home ownership.  Every program that is intended to make it easier to attain home ownership increases the demand for this form of tenure and contributes to price increases.  The price of housing is set by the total demand for a relatively fixed stock of units.  Demand is very volatile."


The present Council might want to reconsider its density kick:  Dr. Robert Collier a municipal planner who did consulting work for Vancouver and later became the Planner for West Vancouver, said, "the traditional approach to reducing housing costs has been through increasing density, so that more units can be constructed on a piece of property.  But because of the monopoly position enjoyed by landowners as a group, increasing density serves very little purpose other than to ensure that those who own the land reap higher profits. 


 As an illustration, Collier said, "The price of a typical lot in West Vancouver is about $50,000. (!)  If the density on the property is doubled, the owner does not reduce his selling price of the per unit land cost from $50,000 to $25,000; more likely it is dropped to only $40,000 or $45,000.  Thus the buyer gains very little from the densities having been increased,  but the landowner becomes richer….The greater Vancouver Regional District and the provincial government propose to increase densities in Greater Vancouver, but this would not help to solve the housing crisis because prices of higher density units would tend to rise to the high price level of single-family houses."


All of which brought to mind the comment of one of Vancouver's most successful developers of the period who described a competitor's approach to me as, "Sell 'em shit and charge 'em a little less."


The Mayor's task force can pick up a copy on Ebay for $55.