Supply-Side Affordability

As REALTORS® we see clients grapple with affordability every day. Sure, home prices have come down substantially from their highs of a couple of years ago, but they’re still about 40% higher than they were in pre-pandemic 2018.

Affordability problems aren’t new. Governments of different stripes have tried over the years to implement a variety of tools and policy efforts to contain price growth. As Brendon Ogmundson writes in this issue (p. 6) these policies were less than effectual. The impacts of the Foreign Buyer Tax (2016), the Speculation and Vacancy Tax (2018), and other measures like them were short-lived at best and prices continued to rise. Ogmundson points out that these policies were aimed largely at influencing the demand side of the equation. Government’s current strategy, with its focus on increasing density, is now squarely focused on the supply side with strategies like upzoning, for example, which allows duplexes, fourplexes or more to be built on single family lots. According to Nathan Zemp (see p.26) this approach could bear fruit that would eventually see costs come down. Zemp’s research shows that between 2018 and 2021, 40% to 70% of the price appreciation in properties in the Fraser Valley was attributable to the Zoning Effect, a term he coined to describe the collective impact of restrictive zoning practices such as height limits, parking requirements, administrative delays, among numerous other factors.

With policies aimed at reducing zoning’s impact, combined with potential reductions in red tape and permitting obstacles, perhaps we’ll start to see a sustained improvement in affordability. And although it may take time, it’s encouraging news for families throughout the province.