Anshu Arora LLM, MSc, PMP

Gentle densification through the expanded development of multiplex residential structures will now be permitted across much of Vancouver’s single-family neighbourhoods city-wide. During Thursday’s public hearing, Vancouver City Council unanimously approved City of Vancouver staff’s multiplex framework of “Adding Missing Middle Housing and Simplifying Regulations” — a policy direction that originated from a member motion from the previous makeup of City Council.

This will enable homeowners and builders to construct a strata ownership multiplex of up to four units on a standard single-family lot, up to five units on a mid-size single-family lot, and up to six units on a larger single-family lot. The general idea is that these homes will be relatively more affordable than single-family detached houses. For larger strata multiplexes with a floor area ratio (FAR) density in excess of a floor area that is 0.7 times larger than the size of the lot, the project would be subject to paying the municipal government a fixed-rate density bonus contribution fee or allocating one unit for below-market ownership at a 50% discount of market price for middle-income households. Up to eight units would be permitted on a single-family lot if all units are used for secured purpose-built market rental housing.

In all scenarios, the maximum density is 1.0 FAR for the assortment of configurations, which can reach no more than 37.7 ft in height with three storeys. The policy will also shrink the maximum building floor area size of a single-family detached house on a lot by 14% in relation to the lot size, with the density transferred to the laneway house by increasing the maximum building floor area by as much as 56%. There were some concerns over the potential impacts this could have on multigenerational households who prefer to live in the same primary residence. For example, in real terms, for a standard single-family lot size of 33 ft wide (street frontage) and 122 ft long (deep), the house structure’s maximum floor area would drop from the current limitation of 2,800 sq ft to 2,400 sq ft.

In addition to the densification, the policy overhauls Vancouver’s single-family zoning districts by consolidating nine different zoning districts into just one.

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New measures are coming to B.C. that will help create more housing as the Province speeds up permitting and helps build more secondary suites for rent.

“People in our province deserve a decent place to live they can actually afford to rent or buy, but a chronic housing shortage and long permit approval times are frustrating that achievable goal,” said Premier David Eby. “Our government is taking action. We’re making it easier and faster to get provincial permits to build new homes, and offering financial support for people who could build a suite they can rent out at more affordable rates. We’ve got lots to do, which is why we’re focusing on initiatives like these that make a real and tangible difference for thousands of families.”

The first action focuses on speeding up the permitting process through the launch of a one-stop shop that eliminates the need for multiple permitting applications across different ministries. The Single Housing Application Service (SHAS) will help deliver more homes faster by creating a simpler permitting application for homebuilders. The service will help clear permitting backlogs, while maintaining environmental standards. With the introduction of SHAS, the Province expects permit timelines to be reduced by two months.

The SHAS connects homebuilders to “navigators,” dedicated staff in the Ministry of Water, Land and Resource Stewardship, who guide applicants through all stages of permit applications, act as the single, dedicated point of contact for all information related to homebuilding permits and co-ordinate permitting decisions across ministries. The second initiative centres on secondary suites and comes ahead of planned legislation this fall to make secondary suites legal throughout the province, and a pilot incentive program to help homeowners build secondary suites.

To help homeowners navigate this process, the Province has launched a new comprehensive guide, titled Home Suite Home. The guide provides people with the information to prepare to build and manage a rental suite in British Columbia. This follows recent steps to make improvements at B.C.’s Residential Tenancy Branch, including more timely dispute resolutions.

“We’ve heard from a lot of homeowners that they would love to create a rental suite on their property, but find the process to build and manage one confusing and time-consuming,” said Ravi Kahlon, Minister of Housing. “Our new Home Suite Home guide and secondary suite pilot program will clearly and concisely provide homeowners with the information they need to make an informed choice on whether adding a rental unit is right for them.” These initiatives are part of the Province’s Homes for People action plan. Announced in spring 2023, the plan builds on record investments in housing since 2017, and sets out several actions to deliver the homes people need in a shorter timeframe, while creating more vibrant communities throughout B.C.

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A new global real estate report suggests that real estate in Canadian metros Vancouver and Toronto is finally out of the bubble risk.Published Wednesday, the annual UBS Global Real Estate Bubble Index discusses deflating real estate bubbles worldwide.

Only two cities in UBS’s watchlist remained in the bubble risk category this year — Zurich and Tokyo — down from nine spots in 2022. Thankfully, no Canadian cities made the cut. “Between mid-2019 and mid-2022, real prices in Vancouver increased by 25% and by almost 35% in Toronto, while household leverage rose at a fast pace,” reads the report. It also notes that since mid-2022, the real estate markets in these cities have moved closer to balancing, removing Vancouver and Toronto from the bubble risk category to the “overvalued” category.

“A mix of increasing financing costs and higher mortgage stress test rates tipped the scales, and prices in Vancouver and Toronto have corrected by more than 10% in inflation-adjusted terms since mid-2022,” UBS researchers said. “But demand for living space in these cities is rising steadily, and the pressure is shifting to the rental market.”

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Canada’s housing minister says the federal government isn’t ruling out changes to its ambitious immigration targets, but maintains the country should also focus on what it can do to increase housing supply when it comes to addressing current housing challenges.

Fraser said he believes the federal government has “some work to do” with its temporary immigration programs, which currently operate on the basis of demand in an “uncapped way,” but doesn’t “necessarily” need to reduce the number of newcomers who become permanent residents each year. It’s common for almost half of those individuals to already be in Canada as temporary residents, he noted.

Before making any changes, however, Fraser said the federal government would have to consult with other levels of government — since deciding which institutions take in international students is within the purview of provincial governments — as well as institutions that have “a duty to play part of a role in housing the people who come here.” He also stressed that conversations around addressing the country’s housing crisis should not solely revolve around immigration.

“It's important that when we're looking at the answer to our housing challenges, we also focus on what we can do to increase the supply,” the minister said. “I think it's essential that we remember that immigration remains one of Canada's strongest competitive advantages in the global economy.”

Fraser introduced Canada’s ambitious immigration targets in November 2022 when he was the federal immigration minister, with a goal of bringing in 465,000 permanent residents in 2023, 485,000 in 2024 and 500,000 in 2025. At the time, he said the move was necessary to ensure Canada’s economic prosperity, by helping businesses find workers to fill in labour gaps and to attract the skills required in key sectors including health care, skilled trades, manufacturing and technology.

Academics, commercial banks, opposition politicians and policy thinkers, however, have been warning the federal government the country’s high-growth immigration strategy is exacerbating Canada’s housing crisis. In a July report, economists from TD estimated that if the current immigration strategy continues, Canada’s housing shortfall could widen by about half a million units in just two years’ time. The Canada Mortgage and Housing Corp. has estimated the country needs to build 3.5 million more homes by 2030 than it is currently on track for, to help achieve some semblance of housing affordability.

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Political leaders, especially at the provincial level, have focussed their attention on two related factors that they can control through legislation. First, they argue that local planning processes and regulations slow down approvals and drive up the costs of housing. Second, they say, NIMBY (not in my backyard) attitudes from residents limit density and slow down approval processes.

Those who study the history of housing in Canada identify inadequate government commitment and coordinationover the last several decades as a key factor in the contemporary problem. With governments at all levels largely out of housing production, housing starts fell far short of demand (driving prices up). In many cities, the supply of affordable social housing units contracted as local authorities lacked the financial resources to repair them. Some affordable options — such as single-room occupancies for low-income individuals — decreased in numbers as governments dismissed them as not offering ‘the standard of housing we want to see.’

Today, land ownership around most cities is controlled (or optioned) by a small number of local firms, some of whom have the ear of government to obtain favourable treatment. Because land is a finite good, the firms that control it have little incentive to release it at a rate that would bring prices down. If they hold the land longer, they may convince governments to increase permitted densities and thus enhance returns. Hence, developers have not built tens of thousands of already permitted units, waiting instead for future opportunities.

Housing has long been seen as a vehicle for household wealth accumulation, but as interest rates fell in the wake of the financial crisis, it offered a secure investment opportunity for pension funds, insurers, and real estate investment trusts. Small-scale housing projects increasingly gave way to large-scale, high-rise towers. Companies often bought affordable apartment properties, evicted tenants for renovations, and then relet units at higher rents. During 2022 and 2023, investors bought a significant proportion of homes sold, contributing to escalating prices: in some cases, they turned single-unit homes into multiple-unit accommodations.

Despite the growing value of the real estate sector, housing starts failed to keep up with demand. In 1976, CMHC reported over 273,000 housing starts for a population of under 24 million; in 2022, only 240,600 housing starts served a population of nearly 40 million. In 2023, at a time of increasing demand, CMHC reported a decline in housing starts. Industry analysts blamed high interest rates and significant construction labour shortages for the decline. By some accounts, Canada is short 80,000 construction workers and faces more retirements in the next decade.