A Change of Scene: Can BC Lure People out of the Concrete Jungles?

2024-02-22 11:45 AM

Analysis: Jason Cheng

As housing prices continue their moon missions into the stratosphere in big cities along the west coast, a popular hotspot to demonstrate how ridiculous prices have gotten in the post-COVID era is Vancouver. With the high home costs and ever-increasing general cost of living with a minimal response from the BC government, a popular suggestion has been to move out of the city, where home prices are on their death spiral. But, the people answer back that all the jobs are in the city, it's too costly or inconvenient to uproot lives to the countryside, or that they have family or friends in the city. So, taking all of this into mind, what are the BC government's options to get people moving out of the big city to try and alleviate the housing crisis?

1. Enhancing Transportation and Infrastructure

Pros: One of the primary strategies that could get people moving out of the city is to improve transportation and infrastructure in rural or less densely populated areas. By enhancing public transport networks and road connectivity, the government can make these areas more accessible, reducing commute times to urban centers. This should hopefully make it easier and more convenient for people to move out of the city, and to come back temporarily if need be.

Cons: However, this strategy requires substantial long-term investments and a detailed understanding of demographic trends. There's also the risk of overdevelopment, which could lead to environmental degradation and a loss of the low prices and environment that may have drawn people to these areas initially. Overall, the high cost and commitment needed may cause the BC government to balk.

II. Investing in Local Economies

Pros: Bolstering the economy of rural areas by supporting local industries, encouraging innovation, and creating job opportunities can naturally attract people to move. When individuals can find good-paying jobs outside the cities, the incentive to relocate increases significantly. After all, the prospects of jobs is why people stay in the city in the first place.

Cons: Economic revitalization of rural areas is a long-term project that requires a lot of money, with no guarantees of success or exact predictable outcomes. It demands not only substantial financial investment but also a high degree of cooperation from local communities and businesses, which might not always be forthcoming or equal.

Enhancing Social Infrastructure

Pros: Investing in the social fabric of rural communities by improving access to healthcare, education, and recreational facilities can make these areas more attractive to potential residents. High-quality services can diminish the urban-rural gap, making the decision to move more palatable.

Cons: Similar to enhancing transportation and infrastructure, improving social infrastructure is financially demanding and time-consuming. It also requires ensuring that the growth in services keeps pace with an increasing population, and that the social growth is sustainable and equitable to avoid overburdening existing facilities and medical workers.

Providing Incentives

Pros: If material benefits like strong local economies or better roads don't sweeten the deal, money will. Financial incentives, such as tax credits or subsidies for first-time home-buyers willing to purchase in rural areas, or benefits for companies that relocate their offices to less crowded regions, can be powerful tools to get people out of the city. These initiatives can make moving more attractive for individuals and businesses alike, potentially leading to a much more palatable prospect for big-city livers.

Cons: This approach raises questions about equity and the allocation of resources. There's also the risk that incentives might not be attractive enough to encourage a significant move or could disproportionately benefit higher-income individuals, thereby not addressing the core issue of housing affordability for all income levels. Also, this is also not necessarily a surefire way to attract people.

Conclusion

Encouraging people to move from cities to rural areas in British Columbia is a strategy fraught with many complexities. While there are tons of clear benefits to spreading the population more evenly across the province other than housing prices, such as reduced urban congestion, the logistical and economic challenges of doing so cannot be overlooked. Each potential strategy requires a huge amount of careful consideration of its economic, environmental, and social impacts, and success hinges on a balanced and holistic approach. Ultimately, if the BC government wishes to accomplish something like this, it will be extremely hard to pull off.

The Housing Ministry's Day 1 Report

2024-02-21 8:00 PM

Analysis: Ava Pierson

It was a productive yet quiet day within the Housing Ministry. A majority of Provinces and Territories seemed to be in agreement about issues such as increasing the amount of shelters for victims of domestic violence, both women and men.

Ontario was politely vocal on their thoughts regarding the 8 billion-dollar budget and whether or not it will truly be put towards these shelters and improvements, voicing concern about the money potentially being put to less pressing issues. Furthermore, Ontario argued that since 44% of shelters are in Ontario, and they have the largest population, they should receive these funds to help them create safer, more effective shelters for the less fortunate. The First Nations were, and are, mainly concerned with how 72% of their people live on crowded reserves, pushing the Federal Government to place more shelters on Indigenous reserves or even creating Indigenous-only shelters. Manitoba was in agreement with this view, as they have a very “for Indigenous people, by Indigenous people” approach. Nunavut was vocal about needing more shelters within their borders, as they only have 3 in their capital, Iqaluit. They expressed how they need more funds than Ontario to build new shelters due to the differences in amounts of shelters between Nunavut and Ontario. The Yukon was dedicated to receiving funding for their homeless population as, due to the extreme temperatures, many of the homeless people on the streets during unfortunate weather conditions are beginning to freeze to death, thus placing their need for shelters and funding above both Ontario and Nunavut.

All in all, while there was disagreement at first, the Provinces and territories eventually agreed on how the 8 billion would be distributed. Not only this, but they also came to a consensus in favour of the “For Indigenous people, by Indigenous peoples” in regards to creating living situations for the Indigenous population of Canada!

Is the Housing Bubble Over?

2024-02-21 9:30 AM

Opinion Article: Jason Cheng

I. Cause and Effect

The housing market- or as some would call it, bubble- in Western Canada tells a modern tale of contradiction. Towering demand meets a stubbornly low scarcity, spiraling costs standing starkly against the backdrop of homes that were affordable barely a decade ago. This crisis, simmering for years, has burst into a pronounced challenge, touching every tier of society- from young professionals facing prohibitive hurdles to owning homes in smaller counties, to marginalized groups enduring precarious or nonexistent housing conditions in big cities.

What's at fault? At the heart of the crisis is an undeniable demand-supply imbalance. West Canada, particularly large cities and municipalities like Vancouver, Victoria, and Edmonton, have seen their populations swell for years without a corresponding growth in housing stock. This imbalance has transformed what was once considered affordable markets into arenas of fierce competition, where prices escalate far beyond the reach of average incomes. A telling indicator, average home price, indicates a cumulative annual growth rate of 6.5% (https://wowa.ca/vancouver-housing-market), outpacing the rate of inflation nation-wide over that same period, around 2.17% year on year, and given BC's linking of minimum wage to inflation, far outpaces the minimum wage as well. While the Bank of Canada's interest rate hikes to match inflation last year caused some trepidation in prospective homebuyers, the prospect of TBC cutting interest as inflation cools has brought the coyotes back.

II. A Historical Rise

It's not just this year, last year, even before quarantine. However, it was definitely quarantine that contributed the most to the furor now enrapturing the Ontarian housing market whole. How bad was quarantine for housing? Well, even the famous 1989 Toronto housing crash looks like a kiddie wave pool next to the meteoric rise in 2020 and after.

After 2020's historically low interest rates, the heights of the home investing craze, and a global pandemic keeping families cooped up in their homes, a pandemic of its own swept housing availability across the nation.

Oh, this sounds familiar.

Let's revisit that 1989 housing market crash.

Hmm, let's see here, it was caused by historically low interest rates, buying homes was strongly societally encouraged- oh, dear.

Now, we have the advantage of hindsight with the 1989 Toronto housing crash. The analysis reports have already been written, the case studies already in textbooks, the figures immortalized on webpages. Let's stick with that TRREB figure above. Through the period from 1986-1989, the rise of the bubble, the housing prices rose to a peak of an average of ~$273,698 in system sales over the fiscal year.

And, after that, the prices never recovered. The prices fell for one year to a minimum of $197,760 in 1996, even flying far above inflation. From the system sale price in 1995, pre-bubble, inflation only takes the price from $109,094 to $155,596.

That is to say: what can we learn from 1989?

III. What Now?

The bubble has popped.

Amid the government cracking down on interest rates after the COVID economic mania, housing prices started to fall in the latter half of 2023 and the beginning of 2024. However, are housing prices really back to what they were pre-COVID, or is this merely a reprieve in a greater problem?

I believe that similar to 1989, housing prices will never recover, still soaring far and past the rate of inflation; the slowing rate of inflation after the rapid money-printing in 2020 not helping. Again, with the internet and global communication on a level completely out of 1989's league, I predict the house-buying will not slow down anytime soon. And, finally, with the lacking supply of homes in high-density communities and metro areas, prices will continue skyrocketing as long as the government does nothing to subsidize housing.

Thus, the onus falls upon the government, not just to keep housing prices stable (which they've been lacking in, given how overseas purchases of homes, ostensibly quite commonly as an investing tool, not a living one, were only blocked in 2023), but to make sure every Canadian has the wherewithal to have somewhere to live.