Legislation Hindering the Housing Crisis Solution

Since 2017, Vancouver's rate of issued New Building Permits has declined by nearly half.

    City of Vancouver data reveals a significant decline in issued building permits across all categories.  New Building permits, in particular, have shown a downward trend of 47% since 2017. Given the city's current housing crisis, this raises the urgent question, "Why is Vancouver's rate of new building permit issuance declining in a time of need?"

    As a population grows, it's essential for construction and development to grow in tandem.  This, however, is most definitely not the case in Vancouver.  The city's population growth is far outpacing new homes being built, creating immense pressure on renters and prospective home buyers struggling with unaffordability.  At a glance, one might assume that simply building more would resolve the affordability problem.  Though it would be nice if it were as simple as that, the reality is the core of the crisis does not lie in the lack of homes, but the financial burden put on developers.  Those whom are capable of housing the population are also the ones with their hands tied behind their back.  

Anne McMullin, in the 2024 Vancouver Sun article "Anne McMullin: Three Steps for B.C.'s new government to address the high cost of building," states, "The B.C. housing crisis cannot be solved unless building costs come down."  She then addresses the weight of government decisions and how they impact projects that manifest years later, ultimately emphasizes that the newly elected NDP government needs to push legislation that eases the financial burden off the development industry. As it currently is, developers are facing high interest rates, soaring construction costs, and steep municipal fees (McMullin, 2024).  So, despite the industry being met with high demand, the steep upfront project costs and little guarantee of bringing in profit at the end, dissuades developers from taking on projects.  McMullin also notes that the projects that developers do proceed with end up being "smaller-scale wood-frame developments" that are more economically feasible.  While still adding housing supply, these small scale developments fail to meet the community's desperate needs for "large-scale, transit-oriented developments" (McMullin, 2024).

In another article, "How Metro Vancouver is Driving Up Housing Costs," Matthew Alexandris dives deeper into development cost charges (DDC), one of the biggest financial deterrents faced by developers. He explains that Metro Vancouver has shifted the cost of growth-related infrastructure, specifically the sewerage systems, off of property owners and onto developers.  By 2027, increases to the DDC for developers is set to fully roll out and is supposed to cover $11.5 billion in infrastructure updating and expansion.  This, however, is not the first instance hikes to the DDC have been imposed.  Kenneth Chan, in an 2021 article, additionally noted previous increases.  He explains that the first sewerage DDC appeared in 1997, and then escalated further in 2017, which is why we begin to see a downward trend in building permit issuances.  Alexandris and Chan both point out how problematic these increases are.  With construction costs already stretching the industry thin, the rising DDCs are further slowing the pace of new homes being built and exacerbating the housing crisis.  

Together, these three articles highlight the interwoven relationship between the development industry, government, and the housing crisis.  They clearly identify that the government's DDC increases significantly reduce the feasibility of projects, leaving developers not financially equipped to take on projects, and homebuyers short of affordable supply.  So, if progress toward alleviating stress on the housing market is to be made, the government either needs to hold the brakes on increases, or shift the sewerage tax burden off the most critical party.