The way we view housing has to evolve

originally published in the Telegraph Journal Opinions section Sep 01, 2021.

Saint John is in the middle of a major affordable housing shortage. Tenants are fearful for their future and low-income Saint John’ers are losing hope that they will ever have an affordable home. When it comes to the housing crises in our city, I hear two dominant voices: those that view housing as an investment strategy and those who view it as a home. As a general contractor and a city councillor, I view housing primarily through the lens of ensuring people have a home. Similarly, many of us view healthcare as a system to ensure people are healthy. Since housing is set to become a ballot box question this election, I thought I would spend a few paragraphs talking about the issue here in Saint John.

         The NDP, Conservatives, and Liberals are all proposing measures that will increase purchasing power for buyers, regulate foreign investment, and build more units. One glaring weakness in all of the political party’s platforms is that No party is supporting a policy that would stall or reduce the value of housing. A major problem with housing is that the value of homes/apartments have reached a height that now means many working Saint John’ers are paying more than the recommended amount of 30% of total income on shelter. This creates fragility in our community.

Those that religiously believe the market will sort this out have some nuance to respond to. Our city has set a goal to grow by 2000 people per year for the next 10 years. This is something economists like Herb Emry[1] and Don Mills[2] have said is possible. Yet we still do not have the supply to support this demand. This year Saint John doubled our residential unit production from 92 units to 184. Our construction companies are maxed and turning down work. Many contractors cannot access the labor force needed to grow their company despite paying higher wages. Where supply fails to overcome demand, prices will continue to increase. 

Labor force shortages in construction are felt across the country. We simply do not have enough people working in the industry to solve the problem of supply, no matter how much money we throw at it. The Conservatives are promising to build 1 million homes in 3 years, the Liberals 1.4 million in the next 4 years, and the NDP want to target non-profit/cooperative housing development to the tune of 500,000 new homes in 10 years. The question remains, who is going to build them? We’ve spent 30 years teaching our youth that they need to go to university and get a degree to have a good job. Now we have more Bachelor level graduates than any other G7 country. Even if we change this strategy, it will be another 10 years before we see the result. 

When we add the problem of affordability to the equation here in Saint John, we have a similar problem as the rest of Canada. Most of the units that are being built will cost between 1700-2500$ per month. Developers are building these units because the margins are more reliable. With building materials set to drop rapidly in the coming months we may see a marginal shift in the cost of building new, however, left to their own devices, developers will always pick upper-middle-class (household income of 70k+) residents to be their clients. The poorer someone is the riskier they are to investment developers.

 The Conservatives have a plan to help foreign developers invest in Purpose-Built-Rental (PBR) units and to incentivize density along transit corridors. This is a good step and PBR helps us get closer to the people who most need housing, but incentives along transit corridors proved to be a failure in Ottawa and Vancouver. When developers got the funding to densify these areas it ended up pushing the poorest citizens further to the outskirts of town where their quality of life and accessibility decreased. This could happen in Saint John if we prioritized density along our main transit corridor. What we need to do is incentivize developers to build And make lower-income Saint John’ers their clients. This could be done by regulation or by incentives, but it could be a winning strategy if this lens were applied.

Liberals have a unique approach to invest 4 billion dollars in their Housing Accelerator Fund which will help municipalities build 100,000 middle-class homes. This is a fund that rewards municipalities based on how they grow their unit construction levels. They have a suite of other investments around developing housing, but I would say that they fall victim to the same problem as the Conservatives. Who is building these new units? Who are they for?.

The NDP want to fund non-profits and cooperatives which is a proactive way of ensuring local development is targeted toward those who need it most. to hit this number, we would need many new non-profits and cooperatives to scale things. As someone who has tried to start a housing cooperative, it takes upfront investment which tends to come from a traditional lending institution or an angel investor. Traditional institutions will seldom lend to a newly minted community group or non-profit and angel investors are in short supply. Unless the NDP are willing to put a policy in place that addresses this I’m not sure how it will equate to a major shift in Saint John.

As long as housing prices soar, our population grows, and the construction bottleneck remains, the problem will become worse. We run the risk of becoming a two-tier society in which there are those with property and a growing demographic that could never own property. With hundreds of thousands of energy sector workers needing to change fields and a government that is willing to challenge the investment strategy around housing, there is a positive future outcome. We just need leadership to connect the dots. 


[1] Almos Tassonyi PHD, Herb Emry, PHD. Local Economic Development: Issues to be Considered in a strategic Plan in the City of Saint John. Potential Benefits and Pitfalls. Feb 19, 2021. City of Saint John.

[2] Mills, Don. A Few Economic Growth Ideas: Plan the Work, Work the Plan. Final Report. March 1, 2021. City of Saint John, Nb. 


Previous
Previous

Saint John and the mission of housing

Next
Next

Building with what we have