This post was originally published the Greater Victoria Chamber of Commerce's Winter 2019 edition of Business Matters magazine.
Benito Malengera is new to Victoria, recently arrived from Alberta. He’s young, earns a great living and is beginning to think of settling down to start a family. He recently moved to James Bay with his girlfriend, but his experience finding a home to rent has him second-guessing a life in Victoria.
“It was brutal, really, really brutal,” he says. “I work full-time and I spent pretty much a full week of my time filling out applications and then there would be five people waiting in line (to view a unit).”
He looked at 18 places before reaching a deal.
“It was almost like a job interview,” he says of meeting potential landlords. “I never had to deal with that until I came to Victoria.”
Perched on the Pacific, next door to one of the most coveted wilderness areas on earth, our region has the amenities of an international city with a Mediterranean climate and our quality of life is the envy of most of the world.
People want to live here, and, as a result, Greater Victoria’s real estate prices have more in common with mega cities like Toronto and Vancouver than population peers such as Halifax or Saskatoon.
Those who were lucky to have picked up property before the real estate rush are sitting on gold. Houses are up an average of 42 per cent over three years, while condos jumped 52 per cent. However, those who have yet to enter the market are left scrambling to find somewhere they can afford based on wages that have not kept pace with housing costs.
“Greater Victoria real estate has always sold at a premium price, but we have entered a new paradigm that has disrupted the ability of our economy to reach its potential,” says Greater Victoria Chamber of Commerce CEO Catherine Holt. “The biggest challenge we hear about from businesses is how difficult it is to attract and retain employees. That’s why advocating for affordable workforce housing is such a high priority for us.”
People born in Greater Victoria who dream of continuing their life here face a steep hill without significant financial help. However, childhood homes are often part of parents’ retirement plans and priced out of reach of the next generation. If they want to stay in Greater Victoria as adults, they’re faced with moving to the suburbs or leaving the region altogether.
It’s a similar story for new blood arriving on our doorsteps eager to fill job openings and start businesses. The lack of available and affordable housing has a trickledown effect that is squeezing out everything we love about life in the city. Child-care centres can’t afford their rent, space is too costly to use for parking lots, and we don’t have the critical mass of population needed to afford transportation solutions used in megacities, such as rapid transit.
Malengera works as a carpenter on Esquimalt’s town square project. He and his girlfriend live in a 1,200 square-foot condo they rent for $1,950, plus about $400 for utilities.
Fortunately, it’s a manageable cost taking up less than a quarter of his monthly earnings. His skills are in high demand right now, with the construction industry operating at a bustling pace in Greater Victoria.
He has enough saved for a down payment but is watching the market before jumping in. With home values so high, he’s waiting to see if prices drop. He’s also still weighing the benefits of living in Greater Victoria against how much farther his money would go in Alberta or Ontario.
“I’ve thought about it many times,” he says, noting that buying a home in Greater Victoria is a commitment best suited for people who are ready to invest in a long-term life in the region.
For now, Malengera is happy to do work he enjoys and live in a neighbourhood that’s close to the vibrancy of downtown. But, when the day comes to settle down, he knows the reality will likely mean settling for somewhere farther away. Asked what he would tell someone ready to start a family now, he says “I would say look outside of Victoria. Look at (the West Shore) if you don’t mind the commute. It’s much more affordable. That’s the advice I would give.”
Sarah Mitchell lives on the West Shore with her husband and their two children.
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“I rent in the West Shore area because it's halfway between my place of employment and my husband's place of employment,” says Mitchell, who works at AdrenaLINE adventure tours outside Sooke. “We used to own in Saanich but couldn't afford to purchase after selling.”
She says moving back into the core is no longer a realistic option, though leaving the region entirely has come up.
“We have considered moving up-Island, as housing costs are much lower, and there seems to be less competition for jobs outside of Victoria,” she says, noting that the lack of housing has also created difficulties for her company’s ability to find staff.
“We employ seasonally, and have started avoiding hiring people from outside Victoria, as (affordable) housing is impossible to locate, especially for those only here for the summer. One of our owners rented out a bedroom, but it wasn't a long-term solution. We have even helped people find places to park their van or RV overnight, and once employed and supported someone who lived on a beach.”
Letting our market economy find the balance between supply and demand would work, if the problem was simply about the supply of homes. However, the issue is the cost of land, and no one is building more of that in Greater Victoria. The cost of materials and even labour are relative, no matter where in BC you build a house.
“I'm not sure of the solution,” Mitchell says “More housing options would be nice. All the new housing seems to be condos — but we want outdoor space of our own. Density is important to lower footprint, but perhaps mixed with commercial property to avoid cramping people in?”
Rory Kulmala, CEO of the Vancouver Island Construction Association, says the cost of housing in our region has always been more expensive than most other places in the country.
“Our market has always reflected a premium for the pleasure of living on Vancouver Island and, with rental vacancies below one per cent, the reality of this has only been exacerbated,” he says, adding that the construction industry is also dealing with difficulty attracting and retaining skilled trades.
Construction activity is very active across Canada, and workers are being gainfully employed within their own communities so there is less pressure for them to follow the work.
“Given the higher costs of housing here, people are more apt to remain in, or move to, a region with a more affordable market — particularly if they want to raise a family,” Kulmala says. “Layer this on the fact that we are seeing fewer and fewer people entering the trades, and it makes any and every opportunity to recruit talent a challenge.”
Any solution will require making more housing available, Kulmala says.
“We cannot be stalling reasonable development projects in red tape or political bureaucracy,” he says, pointing to the quagmire of dealing with 13 municipalities that can’t agree on a regional approach to the issue. “We seem to have a big city housing market with a small city economy. We need to think more long term, let the market drive the real estate requirements, get new buildings happening faster to free up older properties that might serve better at a lower rental rate.”
However, if the market is creating luxury condos that appeal to the planet’s wealthiest citizens, how do we ensure there are also homes for workers earning an average income?
Governments can’t — and shouldn’t — force employers to raise wages high enough to cover market housing costs. It should be obvious that labour costs become unfeasible if they make an organization lose money. We would squelch any incentive for entrepreneurs to take on the risk of starting up a new business dependent on employees.
A better solution already exists. Looking abroad, a few cities have managed to become shining examples of how to effectively provide affordable housing to their citizens. And they have done it by avoiding the pitfalls that the majority of other cities have fallen into. Rather than treating adequate housing as a privilege, it is a right and therefore plays a central role in government policy.
The island nation of Singapore struggled with affordable housing for decades. As the city state has become a global financial hub, it has gone through a population boom and a flood of foreign investment leading to astronomical real estate prices. Government responded by building first-rate public housing and using quotas to ensure the occupants reflected the makeup of society as a whole. More than 80 per cent of residents now live in market-controlled homes built by the government.
“Given the higher costs of housing here, people are more apt to remain in, or move to, a region with a more affordable market — particularly if they want to raise a family,”
Perhaps the most celebrated case study though is Vienna, Austria.
Before the Second World War, rent controls had curtailed housing supply. That, along with city ownership of urban land, helped create an ideal climate for non-market housing. The city government chose the top private developers to enrich the social fabric of public housing through architectural design and planning.
Homes for families and the workforce are managed by non-profit corporations and rents reflect the actual incomes of wage earners.
The experiment worked and the housing from that era has avoided many of the traps that have befallen public housing in other cities. Rather than being stigmatized as housing for the poor, Vienna’s public housing remains in high demand across all sectors of society. To be eligible, a tenant can earn up to twice the average annual income and there are enough units to house 60 per cent of residents in the city, which directly controls 220,000 housing units.
The key to the success in both Vienna and Singapore is that non-market housing is celebrated as a long-term housing solution rather than a stop gap that people should be discouraged from relying on.
In Greater Victoria, we already have many examples of non-market housing owned and operated by BC Housing, the Capital Regional District and local non-profits.
The University of Victoria provides student housing, with rents reflecting the ability of a student to afford to live there.
The Greater Victoria Housing Society has a total of 726 units of affordable housing, including three buildings with 112 units for people in the workforce with low to moderate incomes.
“We currently are constructing another 206 units — all of which would be available to those in the workforce, with varying incomes,” says GVHS executive director Kaye Melliship. “We have plans underway to add another 250-plus units in the next few years.”
It’s no surprise that the biggest challenge faced by the GHVS is funding. The cost of land is one factor, but there is also the expense of servicing as well as going through a rezoning process.
The biggest hurdle is finding grants that provide equity for projects.
“The more equity we have, the lower the operating costs (including mortgage payments) and the lower the rents,” Melliship says.
“We are going into a period of time where there are a lot of development sites being made available,” Melliship says. “If the province and federal government could increase their grant programs we could build a lot of housing that will be a great legacy for the future.”
There is no crystal ball to tell us how Greater Victoria will solve our crisis, but there is no reason to think this issue will go away anytime soon.
What is clear is that our business community will always need employees, and those workers will always need somewhere to live.
It’s time to accept that things are different now. We can’t stand by and hope things improve on their own.
Let’s embrace the challenge to find our own world-class solution to effective non-market housing and make sure we keep Greater Victoria’s economy working.
Greater victoria housing society's Workforce Housing