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We need public development of non-market rental stock and social/supportive housing, including temporary modular housing. Our greatest housing need is for rental stock for low-to moderate-income households that is unprofitable for private-sector developers.  We need to change the assumption that private-sector developers should take the lead on building the housing that we need for people and community.  


Housing is for community not developers. Let’s look at the Little Mountain Housing site. Ten years ago the residents were removed and the buildings demolished on what was Vancouver’s first social housing site (built in 1954). The 15 acre site continues to be vacant. The community is calling on the government to #Take Back the Mountain (sign their petition) into public hands and “to build the kind of housing that people need and deserve in Vancouver.”


The City is taking a more planned approach toward approving new affordable housing (2018 Housing Strategy), including financial incentives for developers to build rental housing instead of condos. However, the construction of affordable housing is inadequate for the current needs let alone the anticipated future needs. There’s a case to be made for a more public planning model, including public land assembly, project financing and rental housing development for the large build-out we need.


How do we define “social housing” and “affordability”?  Recent Canadian Centre for Policy Alternative (CCPA) research considers affordability by looking at the hourly wage that would be required to afford an apartment and allocating no more than 30 per cent of pre-tax earnings to be spent on rent. In Metro Vancouver, a household needs a wage of $26.72 per hour to afford a one-bedroom and $35.43 per hour for a two-bedroom apartment. A person in a minimum wage job, on disability or social assistance cannot afford the current rents. 


We need a building program where priority is given to households in extreme housing

need. We need a range of housing options that work for people with different incomes and at different stages in their lives that include larger, family-sized units. The top 3 needs for public housing investment include the following:

  • Housing people who are homeless

  • Non-market rental housing that is locked in as affordable

  • Housing for seniors.


We can pay for this! CCPA has crunched the numbers.  We can move forward with a build-out program that would see the construction of 10,000 new units of non-market rentals, public housing and co-op housing per year. As an example, City Council just approved the first projects under the Moderate Income Rental Housing Pilot Program, which they approved in November 2017 to create more affordable housing. The pilot allows for up to 20 buildings where at least 20 per cent of the residential units must be set aside for "moderate income households," defined as households earning between $30,000 and $80,000 per year. It’s a start! 


Read the CCPA report, “Planning for a build-out of affordable rental housing in Metro Vancouver”.

 
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We need social housing and welfare rates enough to cover basic rent in the city. There are 2,223 homeless people in Vancouver, up only 2.2% but there are more seniors, women and those who had housing now in the homeless count. It takes political will and all levels of government to address the problem. Read more in the just released  The Vancouver Homeless Count 2019 


In 2015, Medicine Hat declared it had ended chronic homelessness. The program continues to be successful. "Our definition of ending homelessness never did include the idea that it would never exist again, and that people would never fall back into that state of homelessness," said Jaime Rogers, the manager of homeless and housing at the Medicine Hat Community Housing Society. ​"We still need emergency shelters and we absolutely have people in our community that still experience homelessness. However, anyone who experiences being homeless is for a period that is "brief and short-lived," she said. 


The Mayor of Medicine Hat calls on provinces and Ottawa to provide the funding, but then to allow municipalities to implement strategies that makes the most sense wherever they're at. He says that their homeless strategy is saving taxpayers money in  terms of declining costs of crime, health care and child welfare services. 


Housing is for community not developers. On November 30, a rally was held at what was the Little Mountain Housing site. Ten years ago the residents were removed and the buildings demolished on what was Vancouver’s first social housing site (built in 1954). The 15 acre site continues to be vacant. A rally spokesperson says, “It was a successful social housing community. Many, many thousands of people grew up and lived their lives there. The buildings could have been renovated.”  The spokesperson adds, “It’s clear that the redevelopment of Little Mountain has been a failure. We are calling on the government to #Take Back the Mountain,’ to take the Little Mountain site into public hands and to build the kind of housing that people need and deserve in Vancouver.”


Read the  Vancouver Homeless Count 2019 Report 

Learn more about the Homeless Action Strategy in Alberta 

 
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The Canadian Government is investing up to $184 million to construct affordable housing on city-owned sites. There are plans for up to 1,100 units across Vancouver to be funded through Canada Mortgage and Housing Corporation (CMHC). The first funded projct, Pierview Homes, is a 140-unit co-operative housing development  in the River District of southeast Vancouver.  Learn more about this initiative in the full article  here.

Another recent announcement is the First Time Home Buyer Incentive which launches Sept. 2. This Incentive helps qualified first-time homebuyers reduce their monthly mortgage carrying costs without adding to their financial burdens. Learn more about the program here.

Be sure to call CCEC and talk with our mortgage experts about your options. 

The Federal Government says that every Canadian deserves to have a safe and affordable place to call home. With this in mind, in 2017 they launched the National Housing Strategy and aim to cut homelessness in half.

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Reports released by the B.C. government last week reveal that of the $7 billion money laundered in BC in 2018, $5.3B (or 72%) was in real estate.  Both revealed how criminals are using real estate to clean their money. As a result, the BC Government has called for a public enquiry into the problem.

The premier says, “The depth and the magnitude of money laundering in British Columbia was far worse than we imagined.”  Finance Minister Carole James says, "Housing should provide shelter, not a vehicle for proceeds of crime."  She continues, “Homes in BC are for people, not speculative investment or money laundering.”

However, is a public enquiry needed?  We have extensive material from two recently released reports.  Is there anything more we can learn?  Let’s do a quick review of what we do know.

The two recently released reports that have sparked the public enquiry are the  Combating Money Laundering in B.C. Real Estate report which puts forward 29 recommendations; and the aptly named, Dirty Money Part 2 which outlines some of the red flags that signal when illegal money is behind a real-estate purchase — including unfinanced purchases, private lending, unusual interest rates and purchases by homemakers and students.  Both documents identify numerous gaps in provincial and federal regulatory systems for keeping track of purchases and reporting suspicious transactions. 

There are many actions to be taken.  The BC Government has already taken some action that includes introducing proposed legislation called the "Land Owner Transparency Act.”  This Act would establish a public registry of beneficial owners of property in BC.  Corporations, trusts and partnerships that buy land would be required to disclose their beneficial owners in the registry hopefully ending the use of these vehicles to shield real estate purchases. Transparency International Canada highlighted Vancouver real estate in a 2016 report, concluding nearly one-third of the 100 most valuable residential properties in Greater Vancouver were owned by shell companies.

There is also the 30 Point Housing Plan – BC Document.   The main features of the plan are a speculation tax, a ramped-up foreign buyers’ tax, and a new property transfer tax:

  • The speculation tax is aimed at both the current 25,000 and future residences owned by local profiteers, out-of-province investors and “satellite families” who buy up housing stock and leave the homes empty, or vest nominal ownership in a “homemaker” or “student” who pays little if any taxes.  If it is found that the declared taxable household incomes are lower than the amount they pay in property taxes, utilities and mortgage payments; and equivalent incomes to those reported in the Downtown Eastside. CRA estimates that about $170 million in taxes went uncollected from BC real estate over the past three years. The speculation tax aims to fix this disconnect between declared income and housing wealth.

  • The existing (and largely ineffectual) 15 per cent Metro Vancouver foreign buyers’ tax will increase to 20 per cent; and

  • The new 5 per cent property transfer tax will target sales of homes worth $3 million and up.

These are the efforts underway to undo a decade of political indifference that turned Vancouver into an epicentre of fraud, scams and real estate mania.  Will this be enough?  The current picture of the Vancouver housing market is not pretty.  Here is more data.

A Globe investigation;"> published in February, 2018, uncovered how 17 underground lenders provided $47 million in drug-money mortgages and liens on 45 Metro Vancouver mansions. An RCMP intelligence report estimated that up to $1-billion from the proceeds of crime was used to purchase expensive Metro Vancouver homes.

Vancouver has become known as a free trade zone for gangland money launderers, absentee offshore real-estate speculators, Chinese princelings on the lam and globe-trotting tax frauds. Over the past decade, homelessness has doubled, at least 4,000 people are sleeping rough in the streets, and there are now 70 homeless camps across the region.

In January 2018, Vancouver showed up as the third most unaffordable city on Demographia’s list of 92 cities around the world. When it comes to cities undergoing a deterioration in housing affordability, Vancouver ends up the worst. 

At least we have a starting point and a current BC Government that has expressed their commitment to address the issues.  The Public Enquiry will release an interim report within 18 months and a final report by May 2021. The BC election is scheduled for October 2021.

We at CCEC plan to keep our members informed on developments in this area.

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The recently announced "First-Time Home Buyer Incentive" is a new way for government to stimulate demand for new housing and for mortgages, while representing the program as 'helping' young Canadians into the market.  Inducing young people into long-term debt obligations is not necessarily in their best interests. 

Under this program, the Canada Mortgage and Housing Corporation ('CMHC', a crown corporation) agrees to be a 'co-owner' of the qualifying property.  In addition, the borrower will have a CMHC insured high ratio mortgage, for which they pay a good fee.  In effect the buyer has to put up less savings to make the deal work.   

In economic terms, this kind of program brings new buyers into a market which puts upward pressure on prices.  This is one of the points made in a recent piece by Rita Trichur in the Globe.  Paradoxically, up price pressures are not benefiting new buyers who have limited debt servicing capacity. 

Additionally, the criteria for qualification may make the program irrelevant in the over-heated markets of Greater Vancouver and Toronto. The program criteria say household income may not exceed $120k, and the property value cannot exceed four-times that income (or $480k).  

Administratively, the program adds complications by introducing a new set of qualifications. In doing so it makes the process more cumbersome for a new buyer.  The program essentially reverses the constraints implemented in recent years on the mortgage insurance program which had required more direct investment by new home buyers, up to at least 10%.  Perhaps backtracking on the mortgage insurance front was viewed as politically unwise, so they've cloaked it. 

CMHC is still working out how this program will work.  However, it appears to be a pre-election gimmick more than a realistic housing program. It is unlikely to have significant beneficial impact in the cities with serious affordability problems. 

 

 

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