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Why are there no more apartments being built?

August 24th, 2008 · 1 Comment

After I posted my little vignette about the trauma of renting my basement suite (hundreds of calls from desperate people), I got a couple of comments from people who went through similar experiences recently, at either end of the rental trauma.

I also got this question from regular correspondent RossK: “Sure would be interested in reading your summing-up on the how and why it came to be that all those units are no longer being built for all those ‘desperate and very nice people’ just down the hill from you (and me) in SE False Creek.”

The simple answer that everyone in the apartment biz will tell you over and over is that the federal government got rid of certain tax provisions in 1975 that encouraged investors to put money into building apartments. Write-offs, tax breaks, whatever you want to call them. At any rate, those tax deals were what spurred a lot of the apartment-rental construction in the 1960s and 1970s. That’s what created all those three-storey wood-frame apartments you see all over this region.

No one griped about it too much at first, until the federal government also, 20 years later, decided not to put any more money into social housing. Ever since that, the stock of housing, either private or social, that rents at rates considered affordable to people who are not double-income professionals has been frozen. That would be okay if the population was also frozen, but of course, we keep adding more people every year to this country and, unfortunately, immigration officials don’t limit newcomers to those able to pay the rents in new condos. So you have more and more people of moderate incomes chasing the same number of available rentals. Result: Frenzy.

The city is getting some new rentals through investor condos — apparently about 40 per cent of all condos are rented out. But those tend to rent at prices on the high end of the scale. They’re also what’s considered unstable stock. An apartment-building owner isn’t gong to decide to take over all 30 suites in his building for his relatives or just leave them empty. But investors renting out condos may decide to take their units off the market as economic conditions or family situations change.

A lot of cities in B.C. are trying to figure out any possible way to get new rental stock onto the market. Vancouver is building its own apartments on top of the new community centre at 1Kingsway in Mount Pleasant. (City staff told me people started putting their names on the waiting lists for the building two years ago.) And housing-centre manager Cameron Gray said that the city is considering a new strategy in future megaprojects (Little Mountain, East Fraserlands and the like) of considering rental apartments to be part of the 20-per-cent affordable housing that developers are supposed to provide.

Which isn’t going to help those 99 people calling about my basement suite, who got to hear me telling them that it was already rented.

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  • Thanks Frances – insightful analysis as always. Would sure like to know if there was any lobbying that want on re: the change in Fed policies re: tax breaks and support for social housing.

    Regardless, am very glad to hear that the city is ‘considering’ adding rental housing to Little Mountain, especially given, unless I’ve got it wrong the affordability percentage there went from 100 to 11.

    Percent that is.

    (ie. 224/2000?)

    .