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Housing scarcity in Vancouver pushes up prices and rents in Surrey
Location matters: another way to improve things when workers are limited
In Vancouver, sometimes you hear the argument that it doesn’t matter if we approve more housing, or if we approve it faster: everyone’s already working flat out. In other words, labour is limited. And we can't just bring in more workers to do the work, because they need skills and training.
When it comes to producing more housing, there's a series of bottlenecks - economic viability, zoning restrictions, permitting, and finally construction.
We always want construction to be the bottleneck. This is especially true when productive capacity is limited, whether that's due to constraints on the supply of labour, materials, or capital (in the form of a higher interest rate or rate of return). We want to make the most use of our limited productive capacity: we never want workers, materials, or capital to be sitting idle because of unexpected delays in getting things approved.
Besides reducing wait times, a second way to improve productivity is to provide more flexibility in what people can build. The carpentry skills needed to build a low-rise project are pretty similar whether it's a single-detached house, a four-plex or six-plex, a townhouse complex, or a low-rise wood-framed apartment building - but it's much, much easier to get permission to build a single-detached house. In the city of Vancouver there's a lot of workers replacing old single-detached houses with new single-detached houses, who could be building multiplexes or small apartment buildings instead.
A third way is to improve productivity directly, for example by using prefab construction. Comments from Reddit:
It’s just trickling down the market. Prefab walls are used in plenty of passive homes because of the complexity. Just need to apply scale and standardization. Labour shortage is going to force less time on site and more in covered and heated spaces. Lots of forces pushing things in the right direction.
Prefab is very popular in BC for multi-family. I’ve seen 4 storey 50 unit buildings framed from slab to roof in under 2 weeks many times.
Current project - Azure 2 on the New West/Burnaby border. The sheer walls are prefab and they’re slapping those buildings up FAST.
Location, location, location
A final and more subtle way to improve things is to allow more housing where it's most scarce and expensive, so that people who really want to live in Vancouver aren't being pushed further out (e.g. to Surrey or Abbotsford), bidding up prices and rents there.
Location matters. If it didn't, we could just build a ton of housing where land is cheap (e.g. the outskirts of Saskatoon) and call it a day. Generally speaking, people want to move where the jobs are. Within a region, more people want to live in a geographically central location with access to lots of jobs, so land prices are going to be higher there, justifying greater height and density. In the case of the Lower Mainland, the housing shortage is worst in the city of Vancouver.
As Matthew Yglesias points out, when workers and capital are scarce, it's more important than ever to build housing where it's most needed.
Right now some of the housing we're building is further out than people want, as reflected in prices and rents. It's backwards that the city of Vancouver is struggling to approve a 40-storey rental building right on top of a new SkyTrain station at Broadway and Granville, while Burnaby is building 80-storey towers at Lougheed, and even Langley is building high-rises.
So we could get some improvement by allowing housing to be built where it's most needed, even if labour shortages keep us from increasing the rate at which we're building.
To temper my praise for Vancouver and its high growth rates, I should specify that while Canada is building housing in decent if not eye-popping quantities, in the regions where it’s most needed, it’s not building housing in the neighborhoods where it’s most needed. Metro Vancouver builds transit-oriented development on SkyTrain but not in its richest places: the West Side of the city remains strongly NIMBY, despite its excellent location between city center and UBC, forcing students into hour-long commutes; an indigenous West Side housing project built without needing to consult local NIMBYs is deeply controversial among those same NIMBYs.
Bottlenecks to building more housing.
Alain Bertaud. Why location matters.
What's wrong with the "regional town centres" model? If it worked, you would get fragmented labour markets. Instead you get long commutes.