Of the 24 cities, Vancouver has the highest percent of population with low income; the highest percent of working poor families; and the largest and fastest growing income gap between rich and poor. Welfare income was also very low in Vancouver, and Vancouver had the second highest number of households which paid more than 30% of their income for rent and/or lived in inadequate housing. Vancouver was also worst for “community affordability.” That means that the combination of low income plus high cost of living makes the poorest fifth of Vancouver residents worse off than those in other cities.

This conclusion is based on a very simple, yet effective measure of housing affordability: the ratio of median housing prices to the median household income in each municipality (housing market). This price-to-income ratio measures how many years the median family (the one in the middle of the income distribution, where half of all families earn more and half earn less) would need to work to earn as much as the median house costs. Typically, a housing market is considered affordable if 3 (or fewer) years of household income is sufficient to purchase a home in the area.

In Vancouver, however, the median housing price – $540,900 – is equivalent to 9 years and 4 months of the median household income of $58,200 (both are measured in the third quarter of 2009). Wow, just wow.

The rest of BC’s urban areas aren’t doing much better: 4 of the 5 least affordable housing markets in Canada were in BC. In order of lowest affordability, these are Vancouver, Victoria, Abbotsford and Kelowna. The next least affordable housing in Canada is in Toronto.

If you’re curious, the 5 affordable urban housing markets in Canada are Thunder Bay, Windsor, Moncton, Saguenay and Saint John, NB.

What can we do about the rising unaffordability of housing in BC?

First off, we need our policy-makers to recognize that housing affordability is a serious problem and begin to monitor it regularly so they can measure their progress in addressing it (targets and timelines, anyone?). Here’s where I agree with the assessment of the folks at the FIPP that in Canada

housing affordability has received little or no political attention, even in the bubble markets where booms escalated housing prices to unprecedented heights.

It’s time for this to change.

What kind of policy reforms should we be looking at? The folks at the Frontier Institute for Public Policy recommend a market approach of relaxing zoning regulations and getting rid of agricultural land reserves, which they argue will reduce the price of land and thus the price of housing. Increase supply to lower prices – a standard textbook economics solution, but in this case it’s not going to work.

No matter how far you take it, eventually there are hard limits to low-density sprawl. We’ve got only so much land to fill with single family homes before we run out. Paving over agricultural land may postpone the problem for a few more years, but it’s not a long term solution. Moreover, as we prepare to face climate change and peak oil, encouraging urban sprawl may well do more harm than good. And if our world is about to get a lot smaller, paving over agricultural land would soon prove to be short-sighted.

It seems to me that we’ve left the invisible hand work its magic in the housing market long enough by now to know what it is good and bad at. It does an excellent job of providing luxurious condos with ocean views to the highest bidder (and we don’t lack millionaires in BC), but it fails miserably at providing affordable housing to the hundreds of working families. And I’m not just talking about the poor or near poor here – whose situation is dire – but about families with two earners with decent middle class jobs who are finding it more and more difficult to afford a home in the city. It’s time for governments at all levels to intervene in the market and ensure that a share of the new homes build are priced so that they are affordable for middle income families.

And since affordability is not just about housing prices, but about household incomes as well, I’d like to see some action on the income front. A couple of decades of making our labour market more “flexible” have resulted in stagnating earnings at the middle, and falling real (inflation-adjusted) earnings for families in the lower end of the income ladder. We need to address the rising income inequality and increase the economic security of the poor and modest income households. This can be done both through strengthening labour law and through re-distribution via the tax system.

But there is a new sheriff in oil town. And one bold new initiative is to end homelessness within ten years. As reported by the Wellesley Institute:

The Alberta government … released a dramatic plan to end homelessness in 10 years by committing $1.2 billion in capital investments and $2 billion in operating funding. The plan – based on the “housing first” approach (which provides immediate housing and then offers supports as required) – will lead to the creation of 11,000 new homes by 2012, according to the provincial government. Full details, including funding and implementation lines, will be released in next month’s provincial budget. Alberta’s plan – the first of its kind among the federal government and Canada’s provinces and territories – builds on top of a record of dramatic increases in affordable housing investments in recent years. Alberta cut provincial affordable housing investments in the early 1990s, as did many other provinces, but has dramatically increased investments in the past couple of years.

From fiscal 2007 to 2008 (the latest year for which numbers are available), Alberta’s housing investments jumped 140% to $4.57 billion – a record increase compared to other provinces. With today’s announcement, Alberta’s investments are scheduled to continue to increase. The critical details of the Alberta plan will be closely scrutinized by housing experts (more detailed analysis from the Wellesley Institute will follow), but the news has surprised more than a few housing advocates who don’t expect the Alberta government to be blazing the lead on critical social policy issues such as affordable housing. Compared to Ontario, for instance, Alberta – at about one-quarter the population – is making investments in affordable housing that are substantially higher than Ontario, which is leading to the creation of more affordable homes in that province. Much of the credit for today’s announcement goes to active and energetic housing groups in Calgary, Edmonton, Red Deer and many other municipalities which created local 10-year housing plans and then “uploaded” the requirements to meet those plans to the provincial level.

So now that Alberta is doing it, let’s hear the Liberal and NDP plans to do the same. So how about some time lines and targets? Here is what Minister Coleman had to say when we released our poverty reduction strategy (which includes homelessness but is more comprehensive in addressing poverty overall):

“We’re committed to ending it, but they say, ‘Give us a time frame.’ You know what, it’s just not possible because you don’t know how many people with mental health and addictions are coming at you at any given time, so what you do is you do the job based on the population you have.”

The response from the Leader of the Opposition was only somewhat better:

“I think those are ambitious targets. I don’t know if that’s realistic, but I think you have to start somewhere.”

Actually, we did have a good news day today, as the BC government announced $300 million in new housing investments that will create 569 units in Vancouver and 478 units elsewhere in the province. I’m waiting to see the fine print, and while acknowledging that this is a good start, it is a bit late in the game. About six years ago we flagged the problem of poverty and homelessness as something that needed to be tackled – if only because the Olympics are coming to town. Yet, only now, right before an election, are we starting to see some action, and relative to Alberta the numbers are still on the small side.

UPDATE (March 23): An email from Jenny Kwan, the NDP critic on this issue (and my MLA) informs me of a policy release two days before I made my blog post:

The NDP commitment is to end the crisis in homelessness in 5 years with annual progress reports to the legislature on how that target is being met. The primary mechanism will be investing in a new housing program with 2400 units in year one and 1200 annually to year 5 – there will be support services connected. This is a total of at least 7200 units. We will reallocate the existing $250 million B.C. Housing Endowment Fund to kickstart the expansion of social housing immediately.

The UN Special Rapporteur, Miloon Kothari, visited Canada for a few weeks in October 2007, as part of the UN’s efforts to ensure countries are living up to their international obligations to respect economic and social rights. Mr. Kothari’s mission focused on four areas: homelessness, women and their right to adequate housing, Aboriginal populations, and notably, the possible impact of the 2010 Olympic Games on the right to adequate housing in Vancouver.

The Special Rapporteur’s report is a very worthwhile read (and very concise). He emerged from his mission with very keen insights and an excellent historical understanding of Canada’s housing record. And he makes very astute observations about the jurisdictional buck-passing in Canada that blocks progress on housing.

He lauds Canada’s strong run of building new social housing between 1973 and 1993, but laments how little progress has been made since. Consequently, “While 40 per cent of all housing in the Netherlands is social housing, 22 per cent in the United Kingdom and Sweden, 14 per cent in Germany France and Ireland, and 10 per cent in Finland, Canada has only 5 per cent of its overall housing stock as social housing.” He was clearly particularly taken aback by Vancouver’s Downtown Eastside, and alarmed by the state of Aboriginal housing.

His recommendations include: that all levels of government recognize and legislate the right to adequate housing; that Canada commit to a comprehensive and coordinated national housing strategy with long-term and stable funding; re-embark on large scale building of social housing; and this:

Reducing homelessness and the number of people living in inadequate housing requires Canada to adopt a comprehensive and coordinated national poverty reduction strategy. Whilst three provinces have already taken important steps in this direction, the federal government should also be active in this area. This must include a review of the income available through social assistance and minimum wage in light of actual housing costs and a timeline for ensuring an adequate income to cover housing costs. (p. 26)

That recommendation clearly lends support to the campaign currently underway in BC, calling on provincial political parties to commit to a poverty reduction plan with legislated targets and timelines to reduce poverty and homelessness. For more on that (and to add your name to the call), see here.

Minister Rich Coleman was dismissive of many of Doyle’s findings. Nevertheless, in his response, the Minister did say some notable things I’ve not heard him say before. According to the Vancouver Sun, Coleman said that he would soon be introducing “performance targets to measure progress,” and he said his goal now is to end homelessness in five years (although it is unclear if he means street homelessness or all homelessness, an important distinction). There is no mention of legislating that goal, but I take this as some movement nonetheless. About a year ago, NDP MLA David Chudnovsky introduced a private member’s bill that would have legislated a five-year goal of eliminating homelessness, but at the time the government didn’t bite.

NDP critic Jenny Kwan, responding to last week’s Auditor’s report, said, “What we need are measurable targets, objectives and timelines.”

The CCPA is part of a growing chorus of organizations that have been calling for something very similar – a poverty reduction plan with legislated targets and timelines to reduce poverty and homelessness. So perhaps both parties are moving closer to making that commitment. Those wanting to add their voice to such a call should visit the website www.bcpovertyreduction.ca, and sign the Open Letter to BC’s political parties calling for clear targets and timelines.

BC’s Credit Union Central has published its take titled “The Bandage Budget” (read here) and it is raising some questions about assumptions being presented.

On the size of the possible deficit:

• The projected deficit in 2009/10 is small in absolute ($495 million) and relative (0.25% of GDP) terms, however, there is a higher than usual risk associated with revenue projections during a recession.
• Based on our own economic forecasts, a deficit of $1 to $1.5 billion or 0.6% of GDP in 2009/10 is the more likely outcome due to revenue shortfalls.

On employment and housing projections:

• January 2009 employment is estimated at 2,267.6 thousand persons…compared to 2009 annual average of 2,303 forecast in the budget. The latest housing starts are equally well below the budget forecast.

On financial contingencies in the budget:

• The buffer in Budget 2009 is among the smallest in recent years and is especially small when situated in the weakest economy in many years.

On future revenues:

• Revenues in 2009/10 is not likely to be realized, particularly in the personal income, social services and property transfer taxes.

If the Credit Union economists are right in their forecasts, can we expect to see a second, more realistic budget within a few months of the May election? And should we start looking for words to rhyme with budget?

A more for less approach seems to be endemic with the premier. When commenting on the federal government announcement that $50 million would be spent for housing on BC first nations reserves, Premier Campbell said “the federal money could drive the construction of ‘literally thousands of units’ in partnership with government and business” .

Now, let’s see, according to Joe Rekab construction costs for social housing have averaged $250-$260 per square foot (excluding costs for land and other charges). I guess the premier was thinking of very cheap housing. But even then the numbers do not add up.

Let’s assume that construction costs on first nations reserves would be $150 per square foot; and let’s further assume that the residents would pay $50 per square foot through their monthly rent. Further, let’s assume that the family units are small, averaging just 1,000 square feet or $100,000 in subsidized costs to build. Then the maximum number of units that could be built would be 500 ($50,000,000 / 100,000). A long way from “literally thousands of units”.

So, if the premier could not come even close to such a simple reality using conservative cost estimates, how far off could the provincial budget be from reality?

Not to worry though. Whoever wins the May election will bring down a new provincial budget. Then we will get to see how much of a ‘fudget-budget’ this really was.

Investments will be made in new and refurbished housing. We will expand supportive housing to combat homelessness and to shelter those with mental illness.

That new housing will be supported by a new integrated, personalized homelessness intervention strategy and a new community safety strategy.

Could it be that now, one year prior to hosting the Winter Olympics, the government had finally come up with a meaningful strategy to address homelessness?

I wasn’t the only one to notice. This promise made the headline of today’s article reporting on BC’s Throne Speech in the Globe: Homelessness takes centre stage in Throne Speech.

Imagine my disappointment, then, when I opened my paper copy of the 2009 Budget and Fiscal Update and found out that there was no new money to match the Throne Speech rhetoric. The only dollars attached to homelessness in particular are $30 million in 2008/09 “to acquire and renovate rental properties including 4 single room occupancy (SRO) hotels in Vancouver and 4 hotels/motels throughout British Columbia.” (p. 26).

That’s it? This amount would be woefully inadequate to meet current needs, let alone any potential increases in homelessness that may result from the economic crisis. Not to mention that these money were already announced late last year!

Instead, we are told that “Budget 2009 maintains previous funding commitments to implement new and expanded measures to help break the cycle of homelessness and support low income seniors and families.” Last I checked, previous funding commitments do not count as new investments.

To be fair, there is a line item called “Other spending” in Table 1.16 (Capital Spending) which, we are told, includes BC Housing Management Commission, Provincial Rental Housing Corporation and other service delivery agencies. It amounts to $125 million in 2008/09 and another $110 million over the next three years. Even if this all went to new social housing, and it likely does not, it would hardly solve the problem.

At the same time, the Budget doesn’t seem to include increased operating spending on housing or homelessness and the Ministry of Housing and Social Development is projected to shed 128 FTE positions in each of the next three years.

Without a funding commitment, the Throne Speech’s promise of tackling homelessness amounts to mere pre-election rhetoric. Don’t be fooled!