Our family lives on a residential street that has several older apartment buildings. A few years ago, a young professional we knew who lived in one of the apartments purchased a small, moderate-priced condominium in a new downtown highrise.
This freed up an affordable unit on our street for another family. Since the condominium charges for parking and downtown has terrific travel options, he considered giving up his car.
This example illustrates three benefits of moderate-priced downtown condominiums:
• It allows more moderate income households (those earning $50,000-$120,000) to buy homes in Victoria.
• It frees up lower-priced housing where those residents previously lived, a process called “filtering.”
• It encourages residents to reduce their driving, which saves money and reduces traffic problems.
This is an important and timely issue. Victoria city council recently established a 20 per cent affordable housing requirement for large condominiums. This will benefit the households that receive the subsidized units, but increases the costs of the other units, which the city’s own studies predict will reduce the total number of housing units built here.
City councillors defended this requirement by arguing that the city does not need more “luxury” condominiums occupied by “wealthy” households.
That misrepresents the issue. Most of the units eliminated will be moderate-priced, since they are least profitable. Reducing moderate-priced housing development reduces affordability for both the moderate-income families that purchase the new units, and lower-income families that could occupy the apartments they freed up.
Extensive research proves how filtering contributes to affordability.
A study described in Daniel Herriges’s recent column, The Connectedness of Our Housing Ecosystem, (bit.ly/2W2W7w8) tracked the moving history of residents at 802 new multi-family developments in various North American cities.
It found that these new developments initiate a type of housing musical chairs, as families move into new units, creating vacancies in their previous apartments. The study found that for every 100 new market-rate units built, about 65 units are freed up in existing buildings, providing homes for up to 48 moderate- and low-income families.
This indicates that there is a conflict between Victoria’s 20 per cent affordability requirements and overall affordability goals. This policy is likely to add some affordable units each year but reduce the construction of a larger number of moderate-priced units.
The conflict is not between low- and high-income households as advocates argue, rather, it is between low- and moderate-income households.
There is a good way to reconcile this conflict: exclude moderate-priced units from the 20 per cent mandate.
The table below shows the maximum retail prices that should be excluded from inclusivity requirements. These values can be indexed to inflation and adjusted to reflect specific market conditions.
Although these are initially too expensive for most lower-income households, they are much cheaper than comparable-size detached houses, and will increase affordability through filtering and as they depreciate over time.
Unit size Maximum Price
3-bedroom $600,000
2-bedroom $500,000
1-bedroom $400,000
Bachelor units $350,000
This exclusion will encourage developers to build more moderate-price housing.
This will significantly increase housing for moderate-income households, making the region more attractive for young professionals and families with children, and will also help drive down prices for lower-income households through filtering.
By increasing downtown housing, it will also reduce regional vehicle travel and associated traffic problems and pollution emissions.
Todd Litman is a planning consultant who served on Victoria’s Task Force on Housing Affordability, and is an active member of Cities for Everyone, which advocates for affordable housing and transportation options in our region.
