Ben Rabidoux.

• A look inside the rental homes of Senakw’s first completed tower, with tenants now moving in. Kenneth Chan, Daily Hive.

• Inside Sen̓áḵw As Phase One Nears Completion. Howard Chai, The Realist.

• See Vancouver’s Sen̓áḵw towers, from the inside out. Denise Ryan, Vancouver Sun.

• New rental buildings in Vancouver mark fresh start for Squamish Nation – and might be what the market needs. Salmaan Farooqui, Globe and Mail.

• The skyscrapers that NIMBYs and zoning couldn’t stop. Planet Money.

• How the Squamish struck gold in Vancouver. Anya Martin, Works in Progress.

Salmaan Farooqui:

The project’s first three towers will add 1,400 rental units – more than half of the number of purpose-built rentals that hit the market in Vancouver in 2025. The site will eventually house 6,000 units.

Andrey Pavlov, a finance professor at Simon Fraser University, said Vancouver managed to add just 2,300 purpose-built rental units last year, which the city boasted as the highest in four decades.

It was “celebrated like a huge number” but was “absolutely nothing,” Mr. Pavlov said, noting Seattle once built just under 18,000 rental units in 2018 in comparison.

Senákw’s unsubsidized apartments will be more upmarket with modern finishings and amenities such as a gym, spa and pool. But Jenn Podmore Russell of Nch’kaý said the introduction of 6,000 rental units in the coming years will free up cheaper homes that might have been occupied by high-income renters because they didn’t have choices like Senákw.

Howard Chai provides the asking rents for the market rentals: about $5.50 per square foot, reflecting its location close to downtown.

Rents will start at $1,690 for studio units, $2,275 for one-bedroom units, and $3,505 for two-bedroom units.

Studio units will range from 310 to 375 sq. ft, one-bedroom units from 410 to 685 sq. ft, two-bedroom units from 625 to 850 sq. ft.

Anya Martin provides a good description of the status quo:

Despite this massive demand for housing, and its dense urban core, most of the city looks as it did decades ago. Vancouver pioneered single-family zoning in Canada: the municipality of Point Grey became the first in the country to adopt such rules in 1922. When Point Grey amalgamated with Vancouver in 1929, the principle spread citywide, although initially in a relatively permissive fashion. In the 1960s, the city briefly experimented with allowing apartment towers in residential areas, but a political backlash voted in a council in 1972 that was more resistant to development. From that point onwards, Vancouver systematically downzoned, restricting building heights and locking most of its land into low-density use. Today, 52 percent of Vancouver’s residential land supports just 15 percent of its homes.

Vancouver never managed to comprehensively reverse the downzoning of the early 1970s, despite the huge pressure on housing affordability since. But it did find a way to permit intensive development in narrow strips, typically along transport corridors, while leaving the suburban expanses largely untouched. The city is dependent on such developments: property taxes are low, so almost half of its C$3.5 billion capital budget comes from developer payments. Through a mixture of fixed development fees and Community Amenity Contributions, which are negotiated during spot rezoning on a case-by-case basis, planners extract funding for parks, childcare centers, and affordable housing units in exchange for permission to build. They aim to capture 75–80 percent of the land value uplift. Because each negotiation process can be lengthy, the city prefers to allocate a small number of highly valuable permits, creating an incentive structure that favors concentrated towers, rather than gentle density across the city.

Previously:

Uytae Lee has a video (Why is it So Hard to Mass-Produce Housing?) from about a year ago, talking about some of the challenges in scaling up prefab and modular housing. One of them is financing. He explains:

Buildings are expensive to build, so most developers take out a loan from a bank to build them. Now, banks like to give out those loans in increments based on certain milestones. If you pour your foundation, you get a bit of money. Build the framing, more money. Finish the roof and cladding, even more money.

But this process is really at odds with prefab housing. Up to 80% of a prefab project is completed at the factory. So, prefab companies usually ask for a much larger payment upfront.

That results in a kind of Catch-22 situation. The prefab housing factory wants payment before the home leaves the factory, but the bank won’t release those funds unless the building is actually on the site and connected to services.

Solving this problem will require new kinds of loans from banks and other lenders.

Last month CMHC announced a mortgage insurance program, Prefab Plus, for prefab housing. Specifically, the schedule of advances is more closely tied to milestones that make sense for prefab homes.

1. First advance: Land acquisition and site preparation costs including excavation, foundation construction and septic/well installation as required.

2. Second advance: Prefabricated unit cost on delivery.

3. Third and fourth advances: Post installation and finishing costs.

Of course in Vancouver, I’m particularly interested in multi-unit projects.

Modular construction is when a housing project is built using modules that are built off-site, then transported to the property and assembled on-site. Following a successful pilot initiative, which saw insured financing provided for more than 800 new rental homes leveraging modular construction across five provinces, CMHC is expanding its multi-unit mortgage loan insurance to allow modular construction for all its multi-unit products, including MLI Select.

The successful pilot initiative included 605 Studio West in Calgary, an 84-unit affordable housing complex developed by Attainable Homes Calgary (AHC). AHC is a non-profit social enterprise owned by the City of Calgary focusing on improving housing affordability through the development of city-owned land. Modular construction allowed 605 Studio West to be built and occupied in under one year, whereas a comparable, conventionally built project in the same community took nearly two years to complete.

There’s a video:

More

• Reddit thread.

• A New Blueprint: How Modern Methods of Construction can help solve Canada’s housing crisis. Stephanie Shewchuk, RBC, May 2026.

• A similar report by the Fraser Valley Real Estate Board. Modular housing in Calgary.

• Brian Potter’s blog Construction Physics is entirely devoted to the question of productivity in the construction sector. He observes that there's been a lot of attempts to make homebuilding more like manufacturing. Another Day in Katerradise. A History of Operation Breakthrough.

• A recent startup that looks particularly interesting, the American Housing Corporation:

Unlike many venture-backed housing start-ups that attempt to sell new construction technology to traditional developers, the American Housing Corporation decided to vertically integrate from the start. The company buys land, manufactures building components, acts as the general contractor, and ultimately sells or rents the homes itself.

The company uses structural insulated panels — thick, energy-efficient wall sections with mechanical, electrical, and plumbing systems already installed. The panels are fire-resistant and perform like masonry or steel for buildings up to three stories. The key innovation is that the American Housing Corporation built its own press to produce panels in dimensions that fit inside standard shipping containers, allowing the company to manufacture in one location and ship economically across the country. This solves a major limitation of modular construction, which typically requires that factories be located near building sites.

A 20% Housing Drop Still Leaves Canadians Locked Out of Market. Nojoud Al Mallees, Bloomberg News, June 1. Based on polling data from Nanos.

Canadian politicians often seem worried about falling home prices. Polls suggest that they shouldn’t be.

Glaeser and Gyourko explain why homeowners don’t feel rich:

Housing wealth is different from other forms of wealth because rising prices both increase the financial value of an asset and the cost of living. An infinitely lived homeowner who has no intention of moving and is not credit-constrained would be no better off if her home doubled in value and no worse off if her home value declined. The asset value increase exactly offsets the rising cost of living (Sinai and Souleles 2005). This logic explains why home-rich New Yorkers or Parisians may not feel privileged: if they want to continue living in their homes, sky-high housing values do them little good.

Canada-wide, 66.5% of Canadians see lower home prices as a positive development. In BC, it’s 73.8%.

Jonathan Berk on Twitter:

Over much of the past decade, the City of Austin permitted more housing annually than the entire Commonwealth of Massachusetts.

In 2022 alone, Austin approved 24,227 new homes, roughly 1.5× the total number of housing units permitted statewide across Massachusetts that year.

A story in four acts as captured by local news media:

18 storeys is too high, we’d be fine with 4-6 storeys

6 storeys are too big, we'd be fine with multiplexes

Multiplexes are monstrosities, we are fine with existing post-Second World War bungalows

As a meme:

My favourite example: opposition to a garden suite (like a laneway house) in Toronto.

Garden suites and laneway suites were declared as legal “as-of-right” for property owners to build by the City of Toronto in a bylaw that passed in early 2022.

The bylaw means that as long as a proposed suite meets the criteria for size and location and is not requiring any zoning changes or “variances” it is automatically allowed. The property owner building it is under absolutely no obligation to inform or consult with neighbours about it.

The garden suite being built on the Eastwood Road site meets the city’s criteria. The neighbours said they were not informed in advance about it.

In this case, the garden suite is a two-storey one with the living space being over a garage. It meets all the legal and building code requirements and is allowed to be built – whether the neighbours like it or not.

The neighbours directly to the west of the Eastwood project have a sign on their front lawn objecting to the “monstrosity” of a garden suite being built beside their backyard.

Agenda for today’s council meeting, with links to each of the staff reports.

There’s 13 rezoning applications being considered at today’s council meeting. Because they’re compliant with the city’s Official Development Plan, there’s no public hearing required. I’ve summarized them above.

When I spoke in support of the Official Development Plan, I commented:

The main benefit of making the Vancouver Plan an Official Development Plan is that a project consistent with the ODP won’t have to go through a public hearing. Almost every public hearing turns into a kind of miniature political battle over how much housing to build. I think it makes more sense to do this when we’re deciding whether to approve or reject the citywide policy, instead of having the same battle over each and every individual project.

Seismic Risk and Risk Reduction in Existing Privately Owned Buildings. Staff report, November 2024.

Buildings Seismic Risk Reduction Action Plan. Staff report, May 2026. On the agenda for tomorrow’s council meeting.

Risk = probability x impact. It’s difficult to plan for events that are low-probability, but high-impact. The next big earthquake is a good example. According to Natural Resources Canada, there’s a 20% chance of a major earthquake occurring here in the next 50 years. From the November 2024 report, Appendix A:

Modelling shows that a large earthquake could result in nearly 6,100 heavily damaged buildings, leading to over 1,350 severe injuries and fatalities, the disruption and displacement of over one-third of residents and workers for more than three months, and over $17B in direct financial losses. Even a less intense earthquake, like the one used in the 2019 VanSlam earthquake exercise, could leave as many as 25,000 residents and workers disrupted or displaced for more than three months and cause as many as 200 severe injuries and fatalities.

Risk assessment based on building type:

The current report makes the following recommendations:

• Set up a technical working group.

• Create a public inventory of at-risk buildings.

• Set up a voluntary seismic upgrade program, intended to support incremental safety improvements so it’s not just all-or-nothing.

• Consider redevelopment to reduce risk - a new building will be safer than an old one built before seismic standards.

• Make changes to Vancouver’s building regulations to improve earthquake safety.

• Pay particular attention to impacts on vulnerable populations, like people living in SROs (rooms rented without a kitchen or bathroom, now illegal to build). “Nearly all SROs were built fifty years prior to the introduction of seismic design into Vancouver’s building code, making them amongst the most critically at-risk buildings in Vancouver.”

• Improve post-earthquake recovery, not just life safety during an earthquake.

A couple comments:

• All of the references seem to be to Anglophone jurisdictions. I didn’t see any mention of Japan, which has frequent earthquakes. Apparently buildings in Japan over 20 storeys use something called base isolation, where high-rises are detached from the moving ground.

• Single-detached houses were excluded from the study. “Per the City’s directive, this study excludes 79,000 single-family homes.” According to the BC Earthquake Alliance, most structural damage for single-family homes is caused by homes sliding off their foundations.

More

Earthquake and Tsunami Preparedness Guide. BC government, March 2024.

After Great Disasters. Laurie A. Johnson and Robert B. Olshansky, 2017. A book on post-disaster recovery, including case studies from major earthquakes in Japan and New Zealand. The e-book versions (PDF and EPUB) are free.

Keaton Bessey on Twitter:

Asking rents in Vancouver down 20% from peak
per @Rentalsdotca

From the Rentals.ca May 2026 Rent Report.

In the October 2022 municipal election, each and every candidate running with Ken Sim’s new ABC party was elected: Ken Sim himself, seven city councillors (out of 10), six park board commissioners (out of seven), five school board commissioners (out of nine).

Two and a half years later, in the April 2025 by-election, the two ABC candidates came sixth and seventh.

What’s going on?

Running low on political capital

I’d describe it like this: Ken Sim was elected with a tremendous amount of political capital. Every government tends to slowly lose political capital over time, as missteps and scandals accumulate. What’s surprising is how quickly Ken Sim burned through it.

• He tried and failed to abolish the elected park board, causing a damaging split with three of his own park board commissioners, who left ABC.

• When the integrity commissioner investigated, he tried and failed to suspend her office, causing the school board chair to leave ABC.

• He’s in a messy legal battle with his former campaign manager and chief of staff, Kareem Allam, centering on allegations of drunk driving. Kareem Allam started his own party (the Vancouver Liberals, who like the old BC Liberals are not related to the federal Liberals), and is running for mayor.

• He ejected Rebecca Bligh from ABC after she criticized ABC’s ban on new supportive housing. Rebecca Bligh started her own party (Vote Vancouver) and is running for mayor.

There were also incidents that were more trivial but still embarrassing, like his shotgunning a beer in public, or appearing at the 2024 Remembrance Day ceremonies in a puffy jacket and sneakers.

Most recently, he told Chinese-language media that COPE councillor Sean Orr had been handing out illegal drugs on Christmas Day. Sean Orr is now suing him.

Retreating on multiplexes

This is presumably why ABC is retreating on multiplexes, passing a motion last week directing staff to recommend new restrictions responding to complaints.

From the text of the motion:

Residents in some neighbourhoods have raised concerns related to building massing, height, lot coverage, privacy, overlook, shadowing, tree retention, loss of green space, and impacts on views, suggesting that certain aspects of the current regulations may produce unintended consequences;

Other North American cities that have introduced similar “missing-middle” or multiplex housing reforms have undertaken iterative reviews and refinements, including adjustments to built-form controls, design standards, and transition rules, to better balance housing delivery with neighbourhood impacts;

The specific direction:

THAT Council direct staff to undertake an expedited review of the City’s multiplex housing policies and zoning regulations, informed by early implementation experience, to assess whether refinements are warranted to improve built form outcomes and neighbourhood fit, while continuing to support housing delivery objectives;

… AND FURTHER THAT the review include consideration of how existing regulations are performing with respect to building scale, massing, setbacks, tree-canopy and relationship to adjacent properties, and whether adjustments or clarifications are needed to better achieve the intended design objectives.

Overturning the ban on gas heating

That said, last week’s vote to overturn the ban on new residential natural-gas connections for heating and hot water demonstrates that Ken Sim does have the ability to push through a difficult vote.

The ban had been in place since 2022, with electric heat pumps as the main alternative. Heat pumps work like a fridge: they transfer heat from the outdoors into the home (to provide heating) or from the home to the outdoors (to provide cooling). In Vancouver, both natural gas and electricity are cheap.

Two years ago, in July 2024, council passed a motion directing staff to draft changes to overturn the ban. This only passed 6-5, with ABC’s Lisa Dominato and Peter Meiszner voting against, along with the three non-ABC councillors (Christine Boyle, Adriane Carr, Pete Fry). In November 2024, when it was time for council to vote on enacting the changes, ABC’s Rebecca Bligh joined Lisa Dominato and Peter Meiszner in voting against, and it failed 5-5.

Last week, Ken Sim was able to pass a similar motion 7-4. The four non-ABC councillors voted against (Pete Fry, Lucy Maloney, Sean Orr, Rebecca Bligh), but all the ABC councillors voted for it, including Lisa Dominato and Peter Meiszner.

From the text of the motion:

D. THAT staff be directed to pause the Energize Vancouver By-law implementation through non-enforcement as a specific means of addressing affordability in the city in advance of the review by staff, and inform strata owned buildings of this change as soon as possible.

E. THAT Council direct staff to bring back a bylaw repeal report for By-Law No. 14578, to align with baseline provincial standards and restore the ability of Vancouverites to choose a hot water heater replacement that best suits their needs.

The stated rationale for this change is to lower the cost of new housing, although my understanding is that

(1) the up-front cost for an electric heat pump is comparable to the up-front cost for a natural-gas furnace, and it’s eligible for a CleanBC rebate of up to $4000;

(2) the annual operating cost for an electric heat pump is lower than the operating cost for a natural-gas furnace; and

(3) the electric heat pump also provides cooling, while a home heated with natural gas also requires an air conditioner.

It’s also hard to square with ABC’s motion to introduce new restrictions on multiplexes, which will increase costs.

So why would Ken Sim spend his scarce political capital to overturn the gas ban, when the election is coming up and it could be reinstated by the next government? Perhaps it’s to give businesses like Fortis a direct stake in the election outcome. For Fortis, fewer customers means that the fixed costs of operating the natural-gas network are borne by a smaller number of people, and therefore the cost per customer increases, making it even less attractive.

“Planning and banning” as an alternative to carbon pricing

I don’t have anything personal against fossil fuels: they’re an abundant and concentrated form of energy that’s very useful. (Mark Jaccard calls them “concentrated sunlight.”) But at the same time, they have “externalities”: when we burn fossil fuels to drive to work, to run our natural-gas furnaces, or to fly overseas, we’re cranking up the global thermostat. It’s a classic example of a collective action problem, where the costs of action (reducing fossil-fuel use) are borne by the individual, while the benefits are distributed across a group (in this case, the entire world).

There’s four ways to respond:

• Do nothing

• Carbon pricing - recommended by economists as the least costly way to respond.

• Cap-and-trade - more complicated to administer

• “Planning and banning” - if carbon pricing isn’t politically feasible, identify more targeted policies (like Vancouver’s natural-gas ban) where the resulting reduction in greenhouse-gas emissions outweighs the cost. See Mark Jaccard’s October 2016 article, Penny wise and pound foolish on climate policy?

Ken Sim’s overturning the gas ban is basically the “do nothing” option, meaning that we end up burning more fossil fuels to heat our homes, imposing costs on other people that we don’t pay.

I’m reminded of Joseph Heath’s comments about the difference between being pro-market and being pro-business. Brad Wall does not love the market … or at least not the way I do.

Those who are pro-market are enthusiastic about capitalism because they understand the virtues of the price system. They know that a properly structured competitive market is the most effective institutional arrangement for ensuring that resources and labour flow to their most productive employment.

The key to their endorsement, however, lies not in the magic word “market,” but rather in the qualifications that precede it. The pro-market camp believes that the virtues of private enterprise lie not in the system of private property per se, but rather in the competition that a properly structured market induces among enterprises. It is this competition that drives innovation, forces productivity gains and, most importantly, generates lower prices for consumers.

Those who are pro-business, on the other hand, are less concerned about the structure of the market, and are more impressed by the incentives that ownership creates. Thus they tend to think that the virtues of private enterprise lie in the business culture that it promotes within organizations, or in the entrepreneurship that it motivates.

These two stances can lead to very different conclusions when it comes to concrete policy questions. With respect to environmental regulation, for example, those who are pro-market are willing in principle to accept such regulations. Firms are entitled to make a profit, but not when doing so involves imposing uncompensated costs upon third parties. Government regulations aimed at internalizing such externalities are legitimate, because these regulations are simply one way of ensuring that the market is “properly structured.”

Those who are pro-business, on the other hand, will tend to follow Milton Friedman in rejecting environmental regulation altogether, on the grounds that it constitutes an illegitimate imposition of “social responsibilities” upon business.

For more on assessing the costs and benefits of regulations, see Joseph Heath, Cost-Benefit Analysis as an Expression of Liberal Neutrality. A common error is to only assess the costs of regulations without considering the benefits, because the costs are easier to calculate.

More

In the debate over the natural-gas ban, there was often mention of an argument by Robert Howarth that natural gas is worse for the climate than coal. Press coverage doesn’t typically mention that it’s based on a 20-year timeframe rather than a 100-year timeframe (CO2 stays in the atmosphere indefinitely, unlike methane), which seems like putting your thumb on the scale. Zeke Hausfather, May 2011.

Why is housing so scarce and expensive, and what should we do about it?

To quote Mario Polèse:

As in medicine, the essential first step to a cure is an accurate diagnosis. And as in medicine, a proper diagnosis requires combining an understanding of general laws with an understanding of the patient’s particular circumstances.

I’d describe the problem like this: Because we have lots of jobs and not enough housing, prices and rents have to rise to unbearable levels, forcing people to move away, to crowd into whatever housing they can find, or worst of all, end up homeless. Renters are protected from rent increases by rent control, but they live in continual fear of losing their housing, especially when they’re renting from an individual landlord rather than an institutional one.

Competing views

Are people sufficiently motivated to do something about this problem?

Maybe.

People are aware that homelessness is a major problem in Vancouver, but there’s a lot of disagreement about the causes and the solutions. Some commonly held views:

• Vancouver already has too many people. People should move somewhere else. (“Doing something” translates to “cutting or freezing immigration” and “blocking new housing.”)

• Rents are high because of capitalism and greed. Building more expensive market housing will just aggravate the problem, as profits feed the greed of developers. We don’t have a shortage of housing, we have a shortage of affordable housing. (“Doing something” translates to “blocking new market housing.”)

• Homelessness is caused by drug addiction or mental illness, not housing being scarce and expensive. Homeless people move here because of the weather. (“Doing something” translates to “keeping homeless people away from my neighbourhood.”)

Each of these diagnoses translates into blocking new housing: all housing, market housing, or supportive housing.

Previously:

Villages planning program. City website. Includes the draft Villages Plan (80 pages). There’s a virtual public information session on Wednesday.

The Villages Plan is intended to allow more shops, services, and housing in 17 neighbourhoods. In each case, there’s a limited high-street area with shops and services, and then low-density housing around it. The idea is to allow more housing with retail on the ground floor in the high-street area, and to allow more housing types within walking distance.

I’m curious how much opposition the plan will run into when it comes up for approval in the summer. It seems to line up pretty well with Leger’s poll in December, which found that the most popular option for growth is four- to six-storey buildings.

From the draft plan:

The main objectives of the Villages Plan are to enable a variety of building types ranging from ground-oriented multiplexes and townhouses to lowrise apartments, as well as mixed-use buildings with space for shops and services on the ground floor. Expanding housing choices in these areas will make it possible for aging residents to downsize and stay in their community, while enabling families and young people to find homes that meet their needs in many neighbourhoods across the city.

The details

In the surrounding residential area, you would be able to build a four-storey condo building (at 1.75 FSR) or a six-storey market rental building (at 2.4 FSR), either zones for R3-1 or R3-4. R3-4 appears to be new, since it’s not in the current R3 Districts Schedule. The draft report doesn’t describe the differences between R3-1 and R3-4.

Most lots would be pre-zoned by the city. The exceptions would presumably be sites where the city thinks it can extract public benefits through the spot rezoning process, like the larger “Unique Sites.”

Looking at the R3-1 constraints given in the R3 Districts Schedule:

What do the minimum site areas translate into?

• 460 square metres: about 5000 square feet, or one 50 x 100 lot. Max FSR 1.45.

• 613 square metres: about 6600 square feet, or two 33 x 100 lots. Max FSR 2.2.

• 920 square metres: about 9900 square feet, or three 33 x 100 lots. Max FSR 2.4.

• 1470 square metres: about 15800 square feet, or four 33 x 122 lots. Max FSR 2.4.

There’s a note:

To facilitate the delivery of housing, a space-saving stair design, as described in section 3.2.10 of the Vancouver Building By-law, may be considered in apartment buildings to increase building efficiency. This opportunity is anticipated to work well on sites with a frontage of 15 m (49.5 ft.) or small assemblies of a similar frontage.

But on a 50-foot lot, you can only build about 7500 square feet of floor space (1.45 FSR x 5000), or about three floors. To build 2.2 or 2.4 FSR, you need to assemble at least two or three lots.

On the “high street” itself, any new project would be required to be a mixed-use building, with retail on the ground floor. There’s new C-2D (east side) and C-2E (west side) zones. It’s not clear why the city isn’t just using the recently approved C-2A zone for local shopping areas.

It’s possible that there’ll be more details in the staff report, which comes out in a couple weeks.

More

A city of Vancouver video with Josh White:

On the opposition side, CityHallWatch has a series of posts.

This was a staff recommendation that effectively said the six-story purpose built housing would not get built with 20% inclusionary below-market units because the market developers could not get financing to make it work.

I abstained because I did not have the information - for example pro formas, modelling, or sourced independent documentation - to entirely believe that claim.

For a detailed pro forma of a six-storey rental building in the Broadway Plan area, see this May 2022 report from Coriolis. You can see that after subtracting construction costs, there’s not much land lift (shown in green) to pay for below-market housing. Asking rents have declined since then, squeezing land lift further.

As a very rough guide, the value of one market rental apartment and one below-market apartment, minus construction costs, is about zero. So a 15-storey 100% market rental building is worth about the same as a 25-storey rental building with 20% floor space that's below-market (i.e. about 5 floors). That’s the kind of scale you need to make it work.

Previously:

The full video is on YouTube. Transcript:

Speaker: Tedesco, that’s like a golf course, yeah?

Chair: Are you asking me if Tedesco is a golf course?

Speaker: Yeah, I’m asking you.

Chair: Yeah. Last time I drove by.

Speaker: Okay. You don’t have to get cute. Um, so they’re not going to build any houses there cause it’s a golf course. You can’t have houses on a golf course.

Chair: Yes.

Speaker: So like, this is a way to comply with 3A, without doing any of the 3A stuff?

Chair: Yes, it is. We tried the other way, and it was rejected.

Speaker: So, but like when we’re preserving like the character of Marblehead, it’s like, it’s a bad thing. We’re selfish. We’re doing a bad thing. Like we’re not doing any housing.

Chair: Is that a question?

Speaker: Yeah, kind of. Like, are we kind of being pricks? Are we trying to do nothing? Because it seems like we’re doing nothing.

I’m not an expert on this, I didn’t even know it was a golf course. We’re trying to make sure we build no houses?

Also from Marblehead:

The Downmarket Impact of New Multifamily Housing: Evidence from a Honolulu Condo Tower. Limin Fang, Emi Kim, and Justin Tyndall, March 2026.

The construction of condominiums is often contentious. Critics argue that modern towers primarily serve investors and wealthy households, offering little to improve local affordability. For example, in Honolulu, a city councilmember, debating a 26-story condo project asked, “Where is the benefit to the Hawai'i working family?... I don’t see it with this property.” In contrast, a growing body of economic research argues that new market-rate housing supply generally enhances affordability through housing filtering, in which new units trigger vacancies in lower-priced market segments via household moves.

We present new evidence of housing filtering from one large development project. Our case is The Central, a 512-unit condominium tower in Honolulu completed in 2021.

They were able to track the previous addresses of 180 households who moved into the new building. They found that these moves freed up cheaper homes:

Price per square foot (PSF) declines across rounds relative to the project units (Round 0). Units in The Central averaged $1,152 PSF; Round 1 units averaged $715 PSF and Round 2 averaged $642 PSF. Thus, homes left behind by those moving into The Central were valued at 38% less than those in The Central, and homes in the subsequent round were 44% less than in The Central.

They also freed up larger homes:

A distinct criticism of new condominium towers is that they might fail to contribute the types of housing that are desired by the local population. We find that of the 180 homes that were vacated due to The Central, 40 are detached singlefamily homes, while the remaining 140 were units in multifamily buildings, ranging from duplexes to high-rise condominiums. Figure 6 provides Equation 1 results for two indicators of unit size (square footage and number of bedrooms) and the year of the unit’s construction. Overall, we find evidence that households, on average, downsize when moving into The Central, freeing up larger units. Panel A shows square footage results for the full sample (black dots) and for only units that actually resulted in a vacancy (gray dots).

Consumer goods vs. capital goods

Why is housing excluded from investment figures?

The answer is that there’s a basic distinction between consumer goods and capital goods. Consumer goods are things that you buy for personal use, like food or clothing. Capital goods, like a backhoe instead of a shovel, make workers more productive. It’s much, much faster to move earth with a backhoe.

Ultimately, it’s labour productivity (output per hour) that determines our standard of living. The tradeoff between consumer spending and capital spending is basically the tradeoff between consuming less now and more in the future, or vice versa.

The Economist, October 2024: American productivity still leads the world.

This year the average American worker will generate about $171,000 in economic output, compared with (on purchasing-parity terms) $120,000 in the euro area, $118,000 in Britain and $96,000 in Japan. That represents a 70% increase in labour productivity in America since 1990, well ahead of the increases elsewhere: 29% in Europe, 46% in Britain and 25% in Japan.

A common riposte is that American productivity is exaggerated since American workers get much less holiday time than their peers abroad. But when assessed on a per-hour basis the gap remains sizeable: 73% productivity growth for American workers since 1990 versus 39% in the euro area, 55% in Britain and 55% in Japan.

To explain this productivity outperformance, it is useful to break it into a few broad, overlapping categories. The first is investment in capital. American workers, simply put, have more tools at their disposal, both the physical kind such as highways and warehouses and the intangible sort in the form of software. Non-residential investment has run at about 17% of GDP in America since the mid-1990s, consistently higher than the share in large European economies, according to John Fernald of INSEAD, a business school in France. Moreover, much American business investment is the most potent kind: spending on research and development, which sows the seeds for future growth.

Housing as a durable consumer good

So where does housing fit in?

Deny Sullivan points out that homebuilding is a form of long-term investment. It requires up-front spending on labour and materials, then provides housing for decades after that.

But from an economic point of view, housing is a consumer good, not a capital good. It’s like a fridge or a stove (a “durable consumer good”): once you build it, it lasts for a long time. But it doesn’t increase labour productivity, the amount of output you get per hour of work. As Alex Avery points out, living in a larger or nicer home is a form of consumption, not investment. So building more housing doesn’t directly increase Canadian economic growth.

Lack of housing is an economic constraint

That said, building more housing where people want to live and work does help economic growth indirectly. Lack of housing in the GTA and Metro Vancouver is a major economic constraint. We have lots of jobs and not enough housing, which means that prices and rents have to rise to unbearable levels to push people out. The result is low real wages, which translates into labour shortages.

Ricardo Hausmann and Eric Protzer:

Imagine that a city receives a positive productivity shock. Perhaps a cluster of firms becomes more innovative. Perhaps a university or hospital system reaches critical mass. At current wages, employers there want to hire more people and expand.

If housing supply is elastic, the result is straightforward. More homes get built. More workers move in. Employment rises. Output expands. Migrants gain access to better opportunities.

Workers elsewhere may also benefit as labour becomes scarcer where they live and as the booming city buys more from the rest of the country. In this world, a productivity shock in one city raises prosperity more broadly.

But now consider the opposite case. Suppose housing supply is completely inelastic because zoning is restrictive, approvals are discretionary, minimum lot sizes and parking rules suppress density and incumbent neighbourhoods resist change. Firms in the productive city still want more workers, but workers cannot move in at scale. Instead, they bid against one another for a largely fixed stock of homes. Prices rise. Rents rise. Population growth is stunted.

Another aspect of housing affecting productivity indirectly is that within the region, location is important. We’re especially reluctant to build housing in the geographic centre of the region, the city of Vancouver, where access to jobs is easiest and demand is highest. Opposition to tall buildings is much stronger in the city of Vancouver than elsewhere.

The result is like pushing down on a balloon: people get pushed further out, they spend more time commuting, and traffic congestion is worse. All of these have an impact on economic productivity, and they would improve if the city of Vancouver were willing to build more housing.

More

David Schleicher explains how housing shortages in the most dynamic US cities (like San Jose and New York) act as a major economic constraint. “Chang-Tai Hsieh and Enrico Moretti found that land-use restriction lowered aggregate U.S. growth by more than 50% from 1964 to 2009.”

Stephen Gordon has a clear explanation of how tax policy affects investment. Economic policy advice for the NDP, Part III: The GST. August 2009.

The basic idea comes down to the role of taxes in determining the rate of return on investment. If an economy has a large number of high-return investment projects, then it will have higher levels of investment and – as investment accumulates – higher levels of productive capacity. That increased capacity in turn generates higher output, employment and wages. These are assumed to be Good Things in what follows.

So consider an investment project – the sort of project that involves purchasing machinery and equipment, employing labour and producing something that people are willing to buy – that offers a rate of return of 20%. And let’s also suppose that a 20% rate of return is enough for investors to fork over their savings and let the project go through.

Suppose now that there’s a corporate income tax of (say) 30%. The gross return on an investment of $100 may be $20, but after applying 30% tax on those profits, the return sent to the investor is $20 – $20*0.3 = $14. Although the investment project is still paying out 20%, the return that the investor sees is now 14%.

The same story goes for the case in which investors pay a 40% tax in their income. A $100 investment (out of income after taxes) is a sacrifice of $100 of consumption goods. That investment may generate a return of $20, but only $20 – $20*0.4 = $12 will be available to spend. Again, the return that the investor sees is reduced from 20% to 12%.

And now suppose that both sorts of taxes are in force. After the corporate tax is applied, the $20 profit becomes $14 sent to the investor. After income taxes are applied, that $14 becomes $8.40 available for expenditure on consumption goods.

This example illustrates the problem with income taxes: they introduce a wedge between the rate of return that is generated by the investment project and the rate of return that the investor actually sees. If there are many investment projects, each with a different rate of return, income taxes can reduce net rates of return to the point where marginal projects are not carried out. Output, employment and wages will be lower than what they would otherwise have been.

Now suppose that instead of corporate or income taxes, the investor is faced with a consumption tax of – say – 100%. This means that the $100 the investor has burning in her pocket can purchase $50 worth of consumer goods. Since there are no taxes on profits or on income, the entire $20 return is remitted. That $20 can then be used to buy $10 worth of consumer goods. Since the sacrifice of $50 in consumer goods has generated a return of $10 of consumer goods, the effective rate of return is still 20%. Contrary to income taxes, consumption taxes do not introduce wedges between the rates of return generated by an investment project and the rates of return that the investor sees.

This is why the Nordic countries have had high consumption taxes (around 25%) for a long time. As small open economies, they have to pay a lot of attention to making sure that their tax policy doesn’t reduce economic growth. In contrast, the sheer size of the US economy means that it can keep moving forward with bad policies that impose unnecessary costs (like Trump’s trade war, or the Jones Act).

For a description of Canada’s productivity challenge from an economic perspective, see From Bad to Worse: Canada’s Productivity Slowdown is Everyone’s Problem. Beata Caranci and James Marple, TD, September 2024.

Fast-Tracking Rental Housing – Updates to Residential Rental Districts. Staff report, 180 pages. This is item 11 on the agenda for the May 19 council meeting.

Residential Rental Districts Schedules Design Guidelines. Policy document, 49 pages. Approved January 2022.

This is part two of a planning initiative to streamline six-storey rental projects. Part one was the C-2A zone:

Part two is intended to make six-storey rental projects more economically viable, given that costs are up and rents are declining. It’s based on a December 2025 staff report, Supporting Development Viability and Unlocking New Housing Supply. Previously:

From the December 2025 report:

To support the continued delivery of low-rise rental housing, staff are preparing updates to the Secured Rental Policy and Residential Rental (RR) zones for six-storey residential and mixed-use developments.

In RR-2 zones, where six-storey residential projects are currently required to include below-market rental units, staff propose removing the below-market rental requirement to permit six-storey 100 per cent market rental projects.

In RR-3 zones, which apply to six-storey mixed-use developments, the proposed approach would vary by location to better reflect market conditions. On the east side of the city, staff propose removing the below-market rental requirement; on the west side, adjustments to the required depth of affordability are proposed.

To summarize the current proposal: the RR-2x schedules are 100% residential (“apartments”), and can be either on an arterial street or on a local street. Coriolis did an economic analysis of three example sites, one on the west side and two on the east side, based on a snapshot of current costs and asking rents.

• RR-2A (four storeys) - no change

• RR-2B (five storeys) - allow six storeys instead of five storeys. There’s no increase in FSR: 2.4 for a mid-block site, 2.7 for a corner site. Coriolis found that this is viable on the west side, marginal on the east side.

• RR-2C (six storeys with 20% below-market) - remove, it’s not viable.

The RR-3x schedules are mixed-use, with commercial on the ground floor. They’re only allowed on arterial streets.

• RR-3A (four storeys) - no change

• RR-3B (six storeys with 20% below-market) - reduce the affordability requirement from 20% below CMHC average rents to 10% below CMHC average. Intended for the west side, where rents are higher.

• RR-3C - new schedule, six storeys with no below-market requirement. Intended for the east side, where rents are lower and there’s no room to pay for below-market rentals. FSR is 3.4. Coriolis found that this was viable for one of the east side sites, not viable for the other.

There’s four rezoning applications previously approved by council. Staff is proposing that they be updated to use the latest schedules.

Land assembly requirements: it looks like this isn’t changing. The minimum frontage is 66 feet (two standard lots) for RR-2x, 99 feet (three standard lots) for RR-3x.

Land-use restrictions & housing affordability. Dennis Wesselbaum, February 2024. Describes the results of a survey of members of the New Zealand Association of Economists.

• Q1. Do land-use restrictions in district plans reduce housing supply? (Yes)

• Q2. Do land-use restrictions in district plans reduce housing affordability? (Yes)

• Q3. Will easing restrictions in district plans tend to increase housing supply and affordability? (Yes)

Overall, there appears to be a strong consensus among economists, as represented by NZAE members responding to this survey.

• Land-use restrictions reduce both housing supply and housing affordability.

• Easing such restrictions would improve these two dimensions of the housing market.

Via Peter Tulip on Twitter.

The survey was prompted by the report of the Independent Hearings Panel on the Wellington District Plan, which was skeptical that more supply would help with affordability.

More:

• Wellington’s housing panel is out of step with the economic evidence. Stu Donovan, February 2024.

• Decisions on Wellington City Council’s District Plan. Chris Bishop (minister for RMA reform), May 2024. Basically took the side of the city council (to allow more density) rather than the panel.

• The housing economist (Stu Donovan) who tested the rental market — and watched it prove him right. Deborah Morris, the Post, January 2026. Reddit thread.