A house under construction between others that have been completed in Squamish, B.C., on Aug. 30, 2021.DARRYL DYCK/The Globe and Mail
The district of Squamish, B.C., has delivered thousands of housing units to meet its growing population and continues to streamline its approvals process. Facing rapid growth, it has done an admirable job of delivering sufficient supply of new housing to its community. With thousands of new units, it follows then that housing prices should have at least softened.
Instead, the district experienced one of the greatest bump-ups in prices in B.C.
“We are using all the tools in the municipal toolbox to deliver more supply and we are seeing that come on line … But we are not seeing that actually translate into a reduction in prices – either in rent or purchase prices. It’s actually going the other way,” acting mayor Jenna Stoner said.
“Building stuff is important, and we are happy to share what it is we have been able to do in Squamish. But none of them are a silver bullet. We are not seeing the results we want, to bring those prices down. There are lessons we have learned with other municipalities but it’s not as simple as building more homes.
“Prices continue to go up the more houses we build – and that’s partly the demand factor, and so many things go into that demand factor.”
The assessed value of a detached Squamish home was up 35 per cent, according to B.C. Assessment data released in January. Strata units went up 29 per cent. As for rents, the vacancy rate had improved since 2019, when it had a 0.3-per-cent vacancy rate, according to CMHC. In 2020, it climbed slightly to 1.4 per cent, a small improvement. But rental rates had increased by an average of 9 per cent between 2020 and 2021, according to data provided by Sea to Sky Community Services Society. A few years ago, Squamish was the very affordable option to Vancouver. Now, a two-bedroom downtown condo rents for around $2,500 a month.
The district of Squamish, which sees growth of about 600 to 700 people a year, approved 800 residential units in 2020 alone.Martin Knowles/Siga
As a result, people may be moving to Squamish, but they are also leaving, says Ms. Stoner, a millennial-age resident who is seeing friends forced to leave because of rising costs.
Last week, the Union of B.C. Municipalities (UBCM) released a report that pushed back against idea that the continued delivery of market-rate housing, without other significant interventions, will solve the affordability crisis.
No one could accuse Squamish of artificially constraining supply by failing to approve developments. The district, which sees growth of about 600 to 700 people a year, approved 800 residential units in 2020 alone, which would accommodate about 2,000 people, Ms. Stoner said. They’ve also regulated short-term rental, fast-tracked rental projects, incentivized affordable rental housing and waived fees for gentle density in single-family house zones. They have an official community plan that has identified three new neighbourhoods for an additional 12,000 people, plus employment space. But financing, supply chain issues and labour shortages all play a role in delivering affordable housing.
“Simply because you can build, it doesn’t mean that the supply and demand economic model is actually holding true. The only folks I have heard say that we can build our way out of the affordability crisis have been developers,” Ms. Stoner said.
Burnaby, B.C., is eager to build, but stymied by funding gap
The district has asked the province for demand-side measures to help them out. It formally requested to be included among municipalities whose residents are expected to either declare or pay the province’s annual speculation and vacancy tax and the foreign buyer tax. Those demand-side measures were introduced to cool rampant speculation that had been continuing in urban areas throughout the province, but Squamish wasn’t included.
Ms. Stoner says the town is being marketed by the real estate industry as a place where they don’t have to pay those taxes.
“I have personally seen developers and real estate agents use that as a marketing tool – that we are not included in the foreign buyer tax. We don’t really have super great data in terms of what impact that is having in our market, but the fact that it’s being used as a marketing tool is concerning to us. There seems to be reluctance from the province to expand that program, and it’s having unintended consequences for those of us that are on the periphery of municipalities that have been included.”
The assessed value of a detached Squamish home was up 35 per cent, according to B.C. Assessment data released in January.DARRYL DYCK/The Globe and Mail
The census data cited in the UBCM report referred to major census metropolitan areas, and the new housing units that had come onto the market in those areas versus the change in population numbers. Completion of new dwellings had kept pace in Vancouver, Victoria, Kelowna and Prince George, but the district of Squamish stood out from all the rest.
New construction in the community, located a one-hour drive from Metro Vancouver, had significantly outpaced population growth. Between 2016 and 2021, Squamish had seen a 30.3-per-cent increase in new dwellings, while its population grew 21.8 per cent. In numbers, the district had added 4,339 people and 2,331 dwellings in that period, according to the UBCM report, which was based on 2021 census. As of the 2016 census, Squamish had an average household size of 2.6 people.
The UBCM, which represents local governments, released its report in response to public criticism from B.C. Housing Minister and Attorney-General David Eby that municipalities needed to better address the affordability crisis. Mayors, city councillors and municipal staff have responded in recent weeks that they are unfairly being lumped together.
Ms. Stoner said she wasn’t going to start pointing fingers, and many municipalities are doing the best with what they’ve got.
“To me it’s a broad brush comment to simply say that we need to build more supply. That is frustrating to hear when we are seeing a lot of buildings being built, and prices are not coming down.”
Squamish was the very affordable option to Vancouver. Now, a two-bedroom downtown condo rents for around $2,500 a month.DARRYL DYCK/The Globe and Mail
The report cited investor behaviour as partially driving prices. Andy Yan, director of the city program at Simon Fraser University, said that 36 per cent of all Squamish dwellings are not owner occupied, which means they are likely investment properties. That figure is comparable to the City of Vancouver, which is at 34 per cent. His analysis used data from the Canadian Housing Statistics Program.
The bigger shocker, Mr. Yan said, is the percentage of recently built condos in Squamish that are not owner occupied – 64 per cent.
The UBCM report pointed out that while supply is necessary, it’s about obtaining the right kind of supply.
Kelowna a magnet for investor buyers
Secondary rental, such as investor-owned condos, is not as secure as purpose built rental. And new dwelling units do not necessarily become full-time homes for local residents. They can be left empty or used for short-term rental.
Ms. Stoner said greater subsidies for affordable housing are also necessary to protect residents from displacement. The market rental units that they are building are not accessible to the majority of her community, she says.
On paper, Kelowna also has done a decent job of keeping ahead of population growth in terms of supply. The Okanagan city had a greater percentage of total private dwellings, at 15.5 per cent, compared to total population growth of 14 per cent. However, Mayor Colin Basran has not seen prices soften, either.
“We have not seen that, which would lead me to believe that perhaps more supply is a greater need, although it’s a complex issue,” Mr. Basran said. “Just supply alone potentially isn’t going to solve it, even though it’s a big part of it.
“But the report validates what we are seeing here. It calls for the ‘right supply,’ because the number of new units in Kelowna certainly are significant, but the number of people having a hard time finding a place to either buy or rent means something is amiss.
“I think we have a pretty good idea of what that is, and it calls for more rental particularly below market rate rental.”
New Statistics Canada census data showed that Kelowna, the fastest growing census metropolitan area in Canada, was also one of the few regions to see an increase in empty or underoccupied dwellings. The city grew 14 per cent within five years, but the number of dwellings empty or underoccupied is at 7.3 per cent – the highest rate of all communities over 100,000 people in the province. That is a higher rate than Vancouver.
Dwellings not occupied by the usual residents are used as short-term rentals or part-time homes. They might also be awaiting occupancy. Kelowna is subject to the SVT, and Canadian citizens are charged 0.5 per cent for leaving a unit empty for more than six months.
Mr. Basran said subsidies are necessary to help residents who continue to struggle to find affordable housing.
Kelowna has incentivized the development of thousands of purpose-built rental units, Mr. Basran said.
“And yet the market is still tight.”
Like Ms. Stoner, the Kelowna mayor is calling on the federal government to get back into the business of providing affordable housing for its citizenry.
“We would like to see the federal government be more active getting more shovels in the ground here in Kelowna. We haven’t seen that yet. And I think that’s one of the biggest pieces that is missing.
“I know for a fact I’ve never seen a federal housing project built in Kelowna in my almost 11 years on council.”
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