This space beside the Chemainus library is earmarked for an affordable housing project, but it’s been delayed by financing issues. (Photo by Don Bodger)

This space beside the Chemainus library is earmarked for an affordable housing project, but it’s been delayed by financing issues. (Photo by Don Bodger)

Why there’s not enough affordable housing being built

Speculative investment skewing the market

(This column is the first in a two-part series).

The Cowichan housing market is out of control. For the majority of people who don’t have one already, any hope of owning a home is now out of reach. Even finding a rental is increasingly tough.

The benchmark sales price for a single-family home in the Cowichan region has skyrocketed in the last five years, more than doubling from $400,000 to $843,000. Meanwhile, prices for townhouses increased from $301,000 to $626,000, and condos from $170,000 to $349,000. Wages have not kept up, not even close.

The picture with rental housing is just as bleak. The vacancy rate is now below one per cent, lower than Vancouver. More than four in 10 renters in the Cowichan region are spending over 30 per cent of their income on rent and utilities, exceeding the standard threshold for affordability.

So what is the solution?

Real estate developers and many of our political leaders tell us this is simply a supply problem. If municipalities would cut the red tape and streamline approvals, they say, developers could flood the market with units, and eventually prices would come down.

But the evidence paints a different picture.

A recent report from the Union of BC Municipalities shows we are building a record number of homes, well in line with population growth.

Yet prices continue to go through the roof.

During the past five years, no other province has seen more houses built than B.C. In our most expensive cities such as Vancouver, Kelowna and Victoria, we are building houses at a faster rate than population growth.

The Union of BC Municipalities points to factors other than inadequate supply as driving the affordability crisis, including speculative investment that is skewing the market.

The main problem, their analysts tell us, is that the market is not providing the right supply. In other words, homes that average wage earners can afford.

We are seeing this in North Cowichan, where a construction boom has resulted in the municipality issuing building permits for 1,230 units during the past four years, a 120 per cent increase or more than double what was issued over the 2014-2017 period.

Despite all this new supply, fewer local people can afford to buy or rent a home.

A recent housing needs assessment undertaken by North Cowichan found that 76 per cent of local households cannot afford to buy a new single-family dwelling, 59 per cent cannot afford a new townhouse and 45 per cent cannot afford a new condo. The numbers for the rental market are just as ugly.

At the same time, data from the Vancouver Island Real Estate Board indicates the vast majority of home sales in the Cowichan region are to people from outside the community.

We are building new housing based on what this crazy market wants as opposed to what local people actually need. This was not how housing worked for our parents’ or grandparents’ generations.

How do we clean up this mess? Clearly, the senior levels of government need to be much more aggressive. But municipalities do have an important role to play in making housing more affordable for wage earners.

Stay tuned for the second part of this series, which explores how North Cowichan can tackle the housing crisis.

(Rob Douglas is a councillor for the Municipality of North Cowichan).

HousingOpinion