Addressing the Housing Crunch Through Increasing Supply



The cost of housing in B.C.’s major centres is rising. Demand for housing is out growing housing supply in both new builds and available rentals. As a result, B.C. residents are feeling the pressure of increased prices. The Canadian Mortgage and Housing Corporation (CMHC) states that housing starts in B.C. are relatively stable while sales are expected to grow in 2016.[1] The CMHC also projects a rise in average housing prices across the province, ranging from between $594,600 and $668,000 in 2016 to between $577,700 and $699,700 in 2017.

Not only is the price of purchasing a home increasing, but rental vacancy rates across B.C. are alarmingly low, especially when compared to other Canadian regional centres. All B.C. centres measured by the CMHC are below 1% vacancy. The next lowest vacancy rates are Guelph, Barrie and Toronto with rates between 1.2% and 1.6%. The continued trend of falling vacancy in B.C. would indicate increases in demand for rental stock, but insufficient supply growth as of late.

The rising cost of housing and lack of rental stock has been noted to be a barrier to the attraction and retention of labour in high demand regions such Vancouver, Kelowna and Victoria. With an estimated 1 million people moving to the Greater Vancouver region alone, upward pressure on prices will increase if the supply of housing doesn’t increase at a similar rate.[2]

The housing crunch in the province’s major centres is a multi-faceted issue. The nature of the problem is such that there can be no silver bullet with which to solve the problem, but many solutions working in tandem have the potential to relieve pressures currently exerted on the market. One of these solutions is to increase the supply of homes through density and housing alternatives.

The concept of increasing density is to provide more dwellings per unit of land. This allows an increased efficiency for land use and can increase housing stock for both purchase and rental. Increasing density does not have to be limited to constructing towers. Housing diversity could include building with the option for “lock off suites”, duplexes, triplexes, basement suites, carriage houses, or low-mid-rise buildings. In fact, best practices would indicate that a variety of solutions would create a more resilient housing market that allows for people of all economic backgrounds to have access to housing.

Challenges to Increasing Supply

There are barriers that exist at all levels of government. The following is not an exhaustive list of some of those barriers.

Municipal barriers differ across jurisdictions and can include long permitting times or re-zoning processes that can be easily stalled by small groups of residents. But one of the largest barriers to increasing supply of housing is the unpredictability of community amenity contributions (CACs). At the moment, municipalities have the ability to demand CACs. While CACs provide funding for necessary amenities, the value of these CACs is often unpredictable. The provincial government has published a guide of best practices on CACs, but it is not enshrined in legislation and is therefore not enforceable. In fact, the provincial government warns local governments in their guiding document: “It is important that local governments recognize the relationship between CACs and housing affordability and make efforts to balance the opportunity to obtain community amenities with the goal of helping families to secure affordable housing.”

The Strata Property Act at the provincial level allows strata to limit the amount of rentals within their jurisdiction, or even ban rentals all together.  Removing this ability from strata would result in an increase in available rental property.

At the federal level, the treatment of rental income as passive instead of active business income has also contributed to a lack of development of purpose-built rental buildings. If there were changes to the federal tax code to allow for rental income to be claimed as active income, there would be a greater incentive to build rental properties.

At all levels of government, these barriers should be re-examined as to whether or not the benefit in their specific area is worth the cost to housing.

Balancing Industrial and Residential Land Use

When looking at increasing housing supply, it is important to balance the need for economic growth through the preservation of trade-enabling industrial land. A 2015 study by Site Economics Ltd estimated that roughly 1,500 – 3,000 more acres of trade-enabling industrial lands are required in the next five to ten years to meet the demands of a growing Canadian economy. As well, diverse land uses are important for building sustainable communities. Retaining industrial land ensures high paying employment within the city core and contributes significantly to municipalities by subsidizing the residential tax base. For every $1 in taxes, industrial lands typically receive on average $0.25 in services.

Because of this need for industrial uses to provide strong economic conditions, we must look to more efficient uses of currently zoned residential land. This means increasing density and allowing for alternative housing on existing residential lands.

Protecting Equity

Housing is a complex issue that involves more than just housing supply, but includes variety of housing options, job and salary growth, and foreign investment in the region as well. In order to solve this issue, a comprehensive approach is definitely needed by all levels of government. Preferably, this approach will stabilize the market while preventing the loss of equity for current property owners. With such high demand for housing in B.C., it makes sense to incent increased housing supply through density as a preliminary measure to stabilize the market.


That the Provincial Government work with municipalities to:

  1. Identify and remove administrative barriers at all levels of government that slow increased density;

  2. Identify and implement incentives for the private sector to increase the housing supply through density, alternative and more efficient housing solutions on land that is currently zoned for residential; and

  3. Identify and implement incentives that will stimulate the diversification of housing stock.


[1] CMHC Housing Market Outlook, October 2015

[2] Metro Vancouver Regional Growth Strategy, 2011

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