Let’s Visit the Airport!

So, what’s happening at the airport these days?

Here in Vancouver (or more specifically, Richmond), I discovered that YVR actually posts some of their data. This is great! I’m going to look at their recent passenger data to get a sense of two things. First, how much air travel into and through Vancouver has grown in recent years. Hello globalization! Second, how much air travel into and through Vancouver has shrunk in recent months. Hi there world-wide pandemic!

Let’s take a look, first at annual data, which YVR has posted from 1992 on. Of note, this series begins just YVR completed its international terminal expansion in 1996. Also, the series starts after Vancouver’s first global party event (Expo 86), but before its second (2010 Olympics), both of which are mentioned in YVR’s declarative history of the airport.

YVR1

The data cover all “enplaned and deplaned” passengers, so everyone coming through YVR for air travel. They break down the passengers by domestic, transborder, and other international travel. From 1995 onward, they also helpfully break out Asia-Pacific and European passengers from other miscellaneous international. My working assumption is that passenger categories mostly mirror YVR’s organization of flight destination information, so that Domestic covers all flights within Canada, Transborder covers flights to the USA, Asia-Pacific covers flights to Mainland China, Hong Kong, Taiwan, India, the Philippines, Japan, South Korea, New Zealand, and Australia, and Europe covers flights to the EU plus the UK. Misc. Intl. covers everyone else, but probably mostly picks up flights to Mexico and the Caribbean / Central America. Of note, there’s enough ambiguity in labeling that it’s possible flights to Mexico fit in the Transborder category instead, but I’ll assume we’re just talking about the immediate border there.

The big patterns are dramatic growth in passengers between 1992 and 2019. There are waves to the growth, which really seems to kick off in earnest with the expansion of the international terminal in 1996 before retracting a bit by 2003, then expanding in near linear fashion till the recession of 2009. From there, once again we’re back into a dramatic rise until… well… 2020. Where we don’t yet have full data, but needless to say, we expect we’ll see a drop. Once all the data’s in, we’ll probably end up somewhere back in 1992 territory. We’ll have a look at monthly data in a moment, but first let’s also point out two other patterns.

First, despite the name-check of the 2010 Olympics in airport marketing materials, we see no real evidence that 2010 was anything special for passenger traffic. It fits right about where we’d expect it to be on the ten-year rise between 2009 and 2019.

Second, the growth in passenger air travel through YVR has been widespread. It’s not driven by any one category of destination. But the rise of globalization is apparent. Domestic air travel between 1992 and 2019 more than doubled. But transborder travel nearly tripled and other international passengers nearly quadrupled over the same time period. Other international passenger travel is only broken down by Europe, Asian Pacific and other categories from 1995 on. Here we can see that the rise in Asian Pacific destinations leads international growth, but the growth remains widespread. Of note: seats for Hong Kong appear to be only the second most common destination outside of Canada, just behind seats for Los Angeles. Despite Hong Kong’s extensive ties to Vancouver, it’s hard to make out for certain any particular upswing in flights to the city surrounding its handover to China in 1998.

Back to the present! Let’s zoom in on 2019 to 2020:

YVR2

There’s our pandemic effects! Normally February begins the climb back to summer travel highs. Instead, March saw a big drop with quarantine restrictions put in place, and the drop only got bigger in April. Since then there’s been a very modest recovery into May and June, which likely continued into July (data forthcoming). After a couple of months of quiet, I can certainly hear the jets back in the sky again. But they’re still not carrying very many passengers.

Here’s 2020 again, looking at percentage of 2019 monthly passenger data by category:

Jan Feb Mar Apr May Jun
Domestic 99% 102% 56% 4% 6% 13%
Trans-border 97% 96% 44% 1% 1% 2%
Asia Pacific 99% 76% 45% 5% 4% 7%
Europe 108% 108% 62% 2% 1% 1%
Misc. Int’l 113% 118% 62% 1% 2% 5%

We can see that the biggest recovery, so far, is in the Domestic category. Not surprising, given that the provinces have lifted most of their quarantines against travel within the country. Canada continues to impose a travel restrictions for other international travel. But the next biggest recovery is for flights between Vancouver and Asia Pacific, where COVID recoveries so far tend to look the strongest. Misc. Int’l flights, continue, but travel to the US and Europe remains almost non-existent. At least as of June (Europe began lifting travel restrictions in July). Of note, of course, we’re still experiencingair travel related exposures (h/t Jens).

Every decent human being is looking forward to the end of the pandemic. But do we want air travel to come roaring back to where it was? There are lots of things to think about, like the emissions associated with air travel. But there’s also little doubt that here in Terminal City, air travel is now how an enormous proportion of our visitors arrive and how many Vancouverites get around. So no matter what, it’s worth keeping an eye on the airport.

Lots for Sale

I’m currently enjoying Desmond Fitz-Gibbon’s Marketable Values: Inventing the Property Market in Modern Britain. It’s a fascinating book on how British real estate was transformed from estates granted and traded in private transactions bound by custom (think of landed nobility but also the Commons pre-enclosure) into something that could be bought and sold at auction and described in terms of a market, mostly over the course of the late 18th and 19th Centuries.

I was curious about this book for lots of reasons, not least because it seemed British property practices often spread to colonies, as in Canada. But as described by Fitz-Gibbon, this was actually a two-way street, and experiences in real estate at the peripheries of Empire also often informed practices back in England.

At any rate, the book and related projects have me re-examining the creation and marketing of properties here in Vancouver. Head on over to the Vancouver Archives and search for “lots” to have a look. We can see maps of surveyed properties to be sold and advertisements for the land that would become the City of Vancouver. Crucially, all of this property was created from unceded land claimed by the Crown in an enormous act of theft amid a series of pandemics spreading across BC’s First Nations. Locally, the Musqueam, Squamish, and Tsleil-Waututh held lands that were carved up into properties to be granted or sold by the Government of British Columbia.

Let’s take a look. The first lots for sale show up for the townsite of Granville in 1870, some 16 years prior to the (renamed) City of Vancouver’s incorporation (archival links: left, right). The lots, carved out of the government reserve, cover old Gastown between Carrall, Hastings, Cambie, and Water St. The latter remains mostly underwater in the map, but the surveyors imagined the future land that now extends beyond Water. Note the disregard for existing buildings outside of lot lines in the map! Several lots (circled) had already been sold or otherwise issued grants of ownership.

Lots1

 

By 1886, the railroad had been promised to the City, and in turn, Vancouver had been promised to the railroad. The Canadian Pacific Railroad (CPR) obtained enormous land grants from the province in downtown Vancouver, extending south across False Creek, in exchange for establishing their western terminus in the City. They made similar deals with nearby land owners, obtaining every third lot in the West End (famously pre-empted by the Three Greenhorns) and other districts nearby. The land was quickly cleared of trees and sold off in a speculative frenzy. One of the fires used to clear the brush famously ended up burning the whole city down shortly after its incorporation. But the clearing had to continue apace in order to sell off all the new properties being subdivided and marketed abroad.

Lots2

The maps above were printed using the same underlying survey and land subdivision plan, originally authored by CPR land commissioner Lauchlan Hamilton in 1887 (archival links: left, right), whose signature remains on each map (see more from Derek Hayes wonderful Historical Atlas of Vancouver). The more weathered map on the left is annotated and coloured to represent clearing status in 1887-1888, with lots in blue fully cleared, and lots in red just waiting the hauling off of lumber piles. On the right, the same underlying map has been turned into an international sales brochure by 1889, adding lots in Mount Pleasant and highlighting Vancouver’s location alongside travel lines and connections relative to Liverpool, Hong Kong, and Sydney.

The Provincial Government also got in on the sales, slowly releasing their own surveyed and subdivided holdings onto the market via auction. The lots auctioned below would ultimately become the Western third of Kitsilano, centred around McBride Park (archival links: left, right). Sales agents played up the advantageous location of subdivided lots and blocks within lot 540 near the CPR holdings, arguing that the CPR might install a port nearby.

Any Lot of Block not cross-lined on Map herewith, offered for Sale, WILL BE SOLD WITHOUT RESERVE – Adjoining this property the Canadian Pacific Railway Company have located their Docks, it being the nearest Ocean Shipping Point of Vancouver And the place Selected for the Commercial Traffic of the Trans-Pacific Fleet.

Joshua Davies, Auctioneer.

 

Lots3

 

Instead, of course, the CPR subdivided and sold off most of the nearby holdings within their land grant as well. The size of the grant, visible above and comprising roughly a quarter of the present-day City, says a great deal about why Vancouver’s often referred to as a “Company Town.” The company was the CPR, and its business was primarily real estate  (see further discussion in Doug Harris’s great piece on “A Railway, A City, and the Public Regulation of Private Property: CPR v. City of Vancouver“).

By 1906, some provincially owned lots remained for sale in District Lot 540. These were auctioned off with other provincially owned lots available in Hastings Townsite to the east and South Vancouver to the south and west (marked in red on left map below). Of note: western portions of South Vancouver would secede to form Point Grey in 1908, before ultimately reuniting in the amalgamated City Vancouver in 1929 (archival links: left, right).

Lots4

Provincially owned lots in the Hastings Townsite went up for auction again in 1909, as advertised in the map on the right. These were sold on the basis of their proximity to “important and extensive railway yards” associated with the Great Northern Railway and the prominent “99-foot” wide Renfrew Street. Times were given for transit options:

These lots can be reached on the 2:30 Great Northern Railway daily. After 1st April by the First Avenue B.C.E.R. cars, thence along Renfrew Street. Just here will be one of the most important suburban railway stations around the City. TERMS easy; one-fourth cash, BALANCE 6, 12, 18 and 24 months. INTEREST 7%.

Hastings Townsite would vote to amalgamate with the City of Vancouver in 1910. According to an advertisement for the vote in the Vancouver World (dug up by John Mackie):

At last women will have a voice in municipal affairs. On December 10th, if they are registered land owners, women will be able to cast a vote to say whether Hastings Townsite will be annexed by the City of Vancouver or not. In fact, everyone holding property in the said townsite will be given an opportunity. Anglo-Saxons, Orientals, Hindoos, and Africans alike, will be entitled to have a voice in such an important question.

Property ownership entitled owners to a vote in this particular municipal affair, potentially providing a voice to many groups, including most noted above, kept from voting by explicitly sexist and racist legislation at the time. Little wonder that immigrants and others facing discrimination have often devoted their energies toward purchasing property as soon as possible.

Of course, haters gonna hate. And exclusionary racists gonna discriminate by race. By 1927, the westernmost parts of Point Grey were subdivided and put up for sale. Westmount Park was advertised as The Subdivision Superb, an exclusive set of lots still tucked away North of 4th, just west of Blanca before the UBC Endowment Lands. Lots were sold not on the basis of nearby industry, but rather on beautiful views, nearness of beaches and golf courses and, perhaps most crucially, restrictions:

Realizing the necessity of guarding and conserving the character of the development of such a property as Westmount Park, the following restrictions have been placed on the sale of lots:

  1. For a period of 20 years, one residence only may be built on any one lot.
  2. No residence of a vale of less than $4,000 may be erected.
  3. No business or commercial building may be erected.
  4. No lots will or may be sold to Orientals.

In the Westmount subdivision we see covenants restricting properties to single-family residential uses directly tied up with classist and racist exclusion. A good reminder that real estate subdivision and sale simply left to the market was terrible at keeping out “undesirables.” The making of a truly exclusive neighbourhood required market restrictions and careful control over development. This particular version of “community not commodity” may have been quite useful to the exclusive agents at Orr-Hamilton Ltd. in selling the lots of Westmount Park (archival link to brochure below).

Lots5

On a happier note, let’s turn our attention to a bonus map from the Archives. Here we see Kitsilano Indian Reserve No. 6 still set aside on a map of lots in Vancouver in use from 1935 to 1940. Quoting Doug Harris, this was a time period more than twenty years after “…the City and Province induced the Squamish residents to leave the reserve” in 1913, but before “it was formally surrendered” in 1947 (p. 10). We also see the right-of-way forced through by the CPR long before this time. The Squamish reached a multi-million dollar settlement over the shady circumstances of the surrender of the Indian Reserve in 1999. Coming full-circle back to the railroad, in 2002 the Squamish won back the land that had earlier been taken as a right-of-way by the CPR. Of course this win happened only after the CPR, true to form, attempted to sell the land for redevelopment.

Lots6

So it is that the peculiarly shaped parcel of land pictured above – extending beneath and around the Burrard Bridge kind of like a big curvy triangle – was returned to the Squamish Nation (archival link). It’s now under development planning as Sen̓áḵw, a massive project aiming to create some 6,000 dwellings, largely much needed purpose-built rental, all tucked in around the Burrard Bridge. See detailed renderings here.

All in all, it’s way too easy to fall into the trap of naturalizing property as currently recognized on land titles in Vancouver. To forget how it was stolen in the midst of successive pandemics, marked off by survey line, written down on paper, then granted or sold off to the highest bidder. We need reminders. Which is one of many reasons to support the City of Vancouver Archives and all their wonderful digital imaging work. They’ve kept the receipts!

Projections and Self-Fulfilling Prophecies

jointly authored with Jens von Bergmann at MountainMath

 

When people want to live in your city, how many should you let in? On the one hand, this is a moral question. Do you have an obligation to people who don’t already live here? On the other hand, it’s a moot question. At least in Canada, cities don’t have the power to control migration.

BUT WAIT! Cities DO have power over how many new dwellings to allow. This actually changes our moral question a bit. Cities can’t keep people out, but because they have power over dwellings, municipalities can control how many people get to remain in. As a result, if you don’t allow any new dwellings when people want to live in your city then rich people will generally outbid poor people for the housing that’s left.

It may be the case that municipal politicians are fine with rich folk replacing the poor folk in their cities while their own housing rapidly appreciates in price. Why let any new housing get built? “No thanks, we’re full!” But they can’t always SAY this. Especially in cities full of renters that generally support progressive and inclusive values.

So what to do? Two paths are readily available. One: transform the moral question (“isn’t it terrible that developers make money off building housing?”) Two: turn the moral question into a narrow technocratic one instead. Let’s explore this latter option a bit more, because it’s really interesting and sits well within our wheelhouse (mathematician and demographer).

Here in the City of Vancouver, a new motion was just launched, titled Recalibrating the Vancouver Housing Strategy (RVHS). There are some good initiatives in this motion, but the main thrust and motivation is to turn the moral question of how many people get to remain in Vancouver into the narrow technocratic question of how do we forecast population growth? As any demographer can tell you, this can be tricky, especially when it comes to forecasting for municipalities. But there’s a naive kind of work-around some people use when they don’t follow demographic techniques and concerns very closely and don’t want to think too hard about the question at hand. They simply turn the population forecast into a projection forward from how a city grew in the past.

This is a neat trick! Especially if you’re in a city that’s limited new dwellings in the past and thereby kept its population growth to a minimum and you want to keep it that way. “The evidence suggests we haven’t been growing very fast, so we shouldn’t add much more housing.” With a little bit of hand-waving, the number of dwellings allowed by the city is reimagined as something that can be tailored to meet the forecast rather than the central determinative factor of the forecast.

Is this the kind of thing that could happen in Vancouver? Before we get into the motion, let’s just quickly look at Vancouver’s recent past. We know prices and rents rose rapidly through 2016 (and beyond), which is pretty good evidence that we didn’t add enough housing for the people who wanted to live here all by itself. But how did the City of Vancouver grow relative to the rest of the region? It grew more slowly. (“No thanks! We’re full!”) Did we lose poor people and replace them with rich people as a result? Yap, this is exactly what has happend in the City of Vancouver, which has lost lower and middle income people, and gained high-income people, at a faster pace than the surrounding Metro area.

2005-2015_rel_change-1

 

The Motion

Now let’s get back to that RVHS motion, starting with part A:

THAT Council direct staff to revisit the Housing Vancouver Strategy targets to align with historical and projected population growth based on census data.

This is a vague statement. There are, of course, many ways to “align” something (Dungeons and Dragons fans may be immediately reminded of the nine different alignments readily found therein). There are also many ways to project population growth. These often rely upon multiple sources of data. Birth rates, death rates, age structure, labour market statistics, and net migration rates serve as typical baseline sources of information for demographers, and are usually gathered from all manner of data (e.g. vital statistics, surveys, policy-based immigration projections, etc.) rather than simply historical census data. So how is the author of this particular motion imagining more specific alignments and projections? The answer can probably be found in the WHEREAS sections 4 and 5:

Population growth has been consistent at approximately 1% per annum over the past 20 years according to Statistics Canada census data. Based on this historical trend, a similar growth rate for the coming decade would amount to a population increase of around 66,000. In the City of Vancouver, the average household size is 2.2 individuals per dwelling unit (or “home”);

The target of 72,000 new homes across Vancouver in the next 10 years multiplied by 2.2 would mean a population increase of 158,400 – more than twice the historical rate. A projected historical rate of population growth would imply instead a need for roughly 30,000 new housing units over the coming decade;

We’ve left the refined techniques of demography behind here, as well as the determinative forces of births, deaths, and moves. Indeed, people pretty much disappear and their dwellings get only scare-quotes as homes. But let’s follow the math we do get and try and understand what projecting past trends means in terms of numbers (leaving aside if we agree that things went splendid and we should just keep going the same way). Let’s try and reproduce the estimation of new housing units assuming we hold the 20 year trends in the two mentioned metrics, population and household size, constant.

The 1% annual growth rate roughly checks out, although there have been variations.

cov-vs-metro-pop-growth-1

 

And population in the City has grown consistently at a lower rate than overall Metro Vancouver population. In fact, if the City of Vancouver had grown at the same rate as Metro Vancouver over those 20 years, Vancouver would have had 60,000 more people within city limits in 2016. But maybe people would just rather live farther out in the surrounding suburbs? Again, there are variations, but overall that is not what the price and rent data tell us.

rent-unnamed-chunk-3-1

 

People want to live in Vancouver. But they often settle for living farther out, based on the specifics of what they want and can afford. The competition for the limited number of dwellings in Vancouver drives up prices here relative to surrounding municipalities.

So what to make of the close relationship between population growth and dwelling units added? It’s a real relationship.

dwelling-pop-unnamed-chunk-4-1

 

The motion, as presented, seems to suggest that this close relationship is evidence that we’re projecting population growth really well, thereby allowing almost perfectly enough new housing to meet population needs. Is this what we’re doing? Well, no. In fact, the amount of new housing allowed sets a cap on population growth that can only be exceeded by increasing household size (which in many cases cities have also made illegal)1 or decreasing the number of empty dwellings.

There is broad support for decreasing the number of empty dwellings, and both the City of Vancouver and the Province of British Columbia have put in place taxes on vacant properties and their owners to do just that. Have they succeeded? Quite possibly! But compared to other municipalities, Vancouver’s vacancies (as recorded in the Census) looked relatively normal prior to the new taxes, despite persistent rumours of some mythical oversupply. After the new taxes, administrative data reveals there aren’t many taxable units left vacant at all (~1%).

What about household size? The motion suggests imposing a constant for Vancouver, expecting 2.2 people per household. But household size is not staying constant. It’s falling all across Canada, due to a combination of forces (aging of the population, declining childbearing, changes in partnership, the rise of people living alone). We also know that as people get richer, they tend to occupy more space. And, as pointed out above, Vancouver’s been getting richer.

hh-size-chunk-5-1

 

As we see, household size in the City of Vancouver has continuously declined over the years, a trend that has significant impact on the relationship between housing and population growth. Sticking with the bad assumption that past population growth should be predictive of future housing needs, we can see that we’re still going to need more housing per person than in the past. Projecting these trends forward, lazily anchored at the 2016 census data, gives an increase in population in private households of about 67,000 and a corresponding increase in 41,000 households (aka occupied dwelling units). And that is not yet accounting for the increase in population in non-private households that Vancouver has experienced, like retirement homes or similar institutional housing.

So if the RVHS motion points us toward a bad way to do population projections, then how should one do it? There are lots of models to look at, but given that people want to live in Vancouver, a key ingredient in any model should be how much housing will be allowed. Conditional on allowing a given amount of housing, we can attempt to forecast how many people will come. But this moves us back from narrow technical questions (which we’re more than happy to continue exploring in depth!) toward the central moral question at hand. How many people are we comfortable allowing to live in Vancouver? Because if we allow more housing, more people will come. And if we allow more housing, we’ll also allow more of those currently at risk of feeling unwanted in Vancouver to stay.

That begs the question: What would be the problem with allowing more housing? The last WHEREAS of the RVHS motion holds an answer to that.

A revised and more accurate understanding of demographic needs and demand will assist in properly planning for the post COVID-19 reality. Setting excessively high targets will pressure the City of Vancouver to grant significant amounts of density at a low price, in an attempt to induce housing construction approaching the HVS targets. This will cost the City of Vancouver potential revenue, and will mean that the City abandons its commitment to having growth pay for itself.

In short, housing might get cheaper. Which incidentally is quite in line the goals of the Vancouver Housing Strategy.

But there are a couple things here that need a bit more unpacking. First, from the title throughout the motion and showing up here again are mentions of planning for a “post COVID-19 reality.” To put it bluntly, this is odd. These parts of the motion caution us against assuming what comes next will reflect what came before. But, as discussed above, this is exactly the assumption the rest of the motion says we should make, resting as it does upon a very selective reading of Vancouver’s recent population growth. Weird contradiction. But then again, pretty much the same language has been employed way before COVID-19 was on anyone’s radar, suggesting that COVID-19 has just been tacked on for extra effect.

Second, the notion that “growth pay for itself” sounds quite reasonable, but it’s not clear what that means in practice. In Vancouver, new housing projects pay a variety of municipal fees, DCLs, CACs and additional engineering fees upfront, and annual property taxes thereafter. How much of the overall cost of living in the city should be charged upfront, and how much should be charged over the lifetime of the housing as property taxes? That’s a political question that Vancouver should have a discussion on.

Charging high entry fees keeps prices high, not just of new housing but of all housing. It encourages treating housing as an investment, with low holding costs (property taxes) and high barriers to increasing housing even as population pressures keep prices and rents rising.

Charging a lower entry tax and collecting a higher portion as property taxes later can lower the entry point to housing and spreads the costs out over the lifetime of the dwelling unit. This treats housing as a place to live, lowering the barriers to new housing construction and asking people to pay for city services and amenities over their time living in the city.

The (sort of) good parts of the motion

Let’s end with a few bright notes. There are some good parts to the motion! We like data and Part B asks:

THAT Council direct staff to provide annual historical data since 2000 on the number of units approved through rezoning, the breakdown of housing types that have been approved, housing starts and net housing completions, and estimated zoned capacity for the City of Vancouver.

This part of the motion is asking for better data, but it needs refinement. As it is right now it is hard to see what it will accomplish.

Number of units approved through rezoning is hard to interpret unless it is accompanied by more detail on how many of these units actually got built. Take the approved first version of the Oakridge development for example. A massive number of units got approved, yet the project died when drilling found an aquifer that precluded the project from going forward as approved. Several years later, a different proposal got approved, for the data on approvals to be useful we need to know what happened to those units.

Monthly data on housing starts is already easily available, asking the data be reproduced adds zero value and amounts to a waste of staff time.

Net housing completions is an important number, but very hard to do in Vancouver, given our high reliance on informal housing. It is still worthwhile to try and approximate this, but the motion should be clearer what part staff should focus on beyond the data on completions, demolitions and secondary suite estimates that we already have.

Estimates of zoned capacity is a great stat to get clarity on. Some vague estimate has been making the rounds for a while after surfacing in a consultant report, with next to no detail how it was derived. Having an estimate with a clear methodology would be a great addition to inform Vancouver housing policies.

Part B is a good and simple ask:

THAT Council direct staff to clarify whether the Vancouver Housing Strategy targets refer to net housing completions or gross housing completions.

Part E is mostly redundant:

THAT Council direct staff to provide detailed inventory data through the Open Data Portal4 of housing starts, development projects anticipated in the pipeline (including form and type of units), and existing zoned capacity (disaggregated by local area) to inform this work.

The open data portal already has detailed information on housing units in the pipeline. The information could be improved, but this ask is useless unless it specified how. As mentioned before, detailed information on housing starts is already easily available as open data, monthly stats by structural type and intended market, down to the census tract level. It is less helpful than the other parts above and risks directing staff resources away from other project just to replicate what’s already out there.

Bottom line

There’s no way around it. How many dwellings to allow in a city is ultimately a moral question rather than a technocratic one. Given the overwhelming evidence that people want to live in places like Vancouver, population forecasts necessarily reflect first and foremost how many new dwellings we’re willing to allow. In technical terms, it’s silly to imagine we’re meeting the needs of population growth when we’re in fact setting a hard cap on population growth. In moral terms, we come back to the central question: Are we planning for kicking poor people out? Or are we open to inviting more people in?

As usual, the code underlying the stats and graphs is available on GitHub for anyone to reproduce or appropriate for their own use. And if you want to read (much) more about how to know if you have enough housing, check our simple metrics post.


  1. For example the City of of Vancouver only allows at most one kitchen per dwelling unit and limits the number of unrelated individuals sharing a dwelling to 3 (+ 2 boarders or lodgers) to restrict sharing of homes. [return]

How many owner-occupiers can already defer their Property Taxes in BC?

We’re rolling around to property tax time, and municipalities are about to feel the COVID-19 crunch. The Mayors of Metro Vancouver have been leading an ask of the province to backstop municipal finances given that many residents and businesses may fail to pay their property taxes. Indeed, the City of Vancouver recently commissioned a survey indicating that due to job and income losses, some 25% of home owners in the city would be paying less than half of their 2020 property tax bills.

One ask from the Metro Mayors is for the province to expand it’s property tax deferral program to cover those not currently included. As they advocate:

propertytaxdefer-2

This, of course, is a big ask! But just how big? Here I want to separate out the ask for businesses and non-profits (where the ask is very big indeed), and focus on homeowners. And after all, homeowners are where the City has focused its survey. So how many homeowners are not currently covered by provincial tax deferment options?

There are two programs covered under provincial tax deferment: the regular program and the program for families with children. The regular program is open to any property owners (of a primary residence) over the age of 55, as well as surviving spouses (of any age) and persons with disabilities. The province effectively puts a lien on your property to secure the debt and charges 1.95% interest on outstanding taxes owed. The families with children program is open to anyone living with or supporting children under age 18, or children enrolled in education (e.g. university), or children with disabilities of any age, and the interest charged under this program (3.95%) is higher.

Just focusing on the two main groups covered, homeowners age 55+ and families with children, we can draw upon census data from 2016 to roughly estimate how many owner-occupied households are likely covered by existing tax deferment options. The answer: the vast majority, over four-in-five. Why? Because home owners are especially likely to be old or have children. Here are owner-occupier households in BC by age of primary maintainer and presence of children*:

propertytaxdefer-3

Overall this is good news! Most resident homeowners in BC are already covered under property tax deferment options. And the province will likely see a big uptake in deferments this year through existing programs. But those who fail to qualify also deserve provincial attention. And, of course, renters deserve a lot more attention too. I’d argue that it’s also well worth supporting expansion of the property tax deferral program more broadly since this also supports municipal finances at a very trying time. Moreover, if the province expands the program at family program interest rates, it may also help support provincial coffers down the road.

 

*- Here I lump the relatively tiny set of multiple family households into those without children, following the general household type categorization. See StatCan Table 98-400-X2016226 to play around with your own operationalizations.

So are you two a couple now? Asking for the BC Government

BC has been lauded for rolling out an assistance program for renters, unlike basically every other province. At the same time, BC’s also been criticized for the perceived inadequacy of that rental assistance program, as well as the fact that it literally goes straight to landlords. In conjunction with the temporary eviction moratorium, it would appear that the BC Temporary Rental Supplement (BC-TRS) is really aimed at supporting landlord incomes and easing tenant-landlord relations to avoid a rash of evictions once the moratorium has been lifted.

Here I want to question another aspect of the program, at least as we’ve seen it so far: What’s it got against couples?

The BC Temporary Rental Supplement, as announced today, provides $300 per single person or couple household, and $500 per household with dependents. But roommates can apply separately for benefits, and it would appear each roommate is eligible for a $300 or (if living with a dependent) $500 rent supplement. Here are relevant items from the FAQ:*

Rental_Assist_1This means the “household” definition being applied by the province – whereby roommates constitute separate households – best matches the “family” definition of the Census, whereby family is defined by a couple (married or common-law) or parent-child relationship. The Census considers roommates as members of the same household, but unrelated, and hence not members of a family.

Why does it matter? Well, what’s the distinction between roommates and a couple?** Because if you’re a COUPLE you max out at a $500 benefit with children or a $300 benefit without. But if you’re ROOMMATES, it appears you qualify for $300 each, or more if there are children involved, maxing you out at $600+. In effect, couples have their status turned against them in terms of government benefits.

Interestingly, this isn’t the first time the current BC government has zeroed in on couple status as a determinant of less than favorable policy treatment. The BC Speculation and Vacancy Tax hinges upon marital status in terms of whether overseas partner incomes get counted toward family incomes, distinguishing “satellite families” hit with higher property taxes from everyone else. In effect, if you own a home this is a huge disincentive for formalizing, declaring, or maintaining transnational relationships, at least if your partner potentially earns more than you. BC tax policy says it’s better for you to split up than stay coupled with anyone outside of Canada, just as BC renter support policies seem to tell us it’s better to be single (with a roommate) than part of a couple.

One way of looking at the government position on rentals is that couples might be considered more resilient than singles. So singles, including roommates as well as single parents (who get $500), need more help and more allowances. And as I wrote previously, with respect to rental supports this might well be correct. Singles and single parents make up the bulk of those in core housing need. I’m happy that the BC government is providing special help to those with dependents, even if I wish the amounts were higher.

HouseholdsRenting-fx2

It’s also the case, as in my past research auditing rental listings, that BC’s tipping of the scales against renting couples might actually counteract some of the beneficial treatment they usually receive in the rental market, where landlords tend to discriminate against single parents and some same-sex couples (who may, in some cases, have been taken for roommates). Finally, policy is being rolled out at a ridiculously fast speed, which is important and a success in its own right because people are in need of money now. But that speed is bound to come at a cost in terms of care in crafting policies. We’ll see plenty of mistakes and unintended consequences of fast policy roll-out in the days to come. We shouldn’t forget the urgency behind the roll-out, even as we offer up critiques and fixes.

That said, we’re left with a fun contrast. If Pierre Trudeau famously declared “there’s no place for the state in the bedrooms of the nation,” the government of BC still wants to know: are you two an item?

 

UPDATE (Apr 12, 2020):  Another interpretation (in this case my partner’s) is that the BC – TRS is geared entirely toward assumptions about how many bedrooms different kinds of households need and what the associated costs might be. The logic being that couples might only need 1BR, whereas parents with children need at least a 2BR, and roommates are (ironically) assumed to sleep in separate bedrooms, also requiring at least a 2BR. This interpretation actually mirrors the logic of the Canadian National Occupancy Standards defining the suitability aspect of the Core Housing Needs measure. Accordingly, BC-TRS payments could be designed simply to go up in response to anticipated bedroom need. I like this interpretation a lot, so I thought I’d share it too! (I hinted at the importance of considering bedroom need in my previous post on the renter benefit, only I didn’t think they’d adopt the couple assumption from the National Occupancy Standards, which I’ve also researched in the past! Kicking myself a little that I didn’t think of this interpretation first, but also patting myself on the back for settling down with someone more clever than me…)

 

*- Yeah, also your adult kids don’t qualify as roommates (item 18) and you don’t get any assistance if your landlord is also a family member (item 19).

**- As it happens, I asked just this question in my dissertation… though from a viewpoint embedded within demography (i.e. are people more likely to cohabit with an unmarried partner in response to housing shortages, making them like roommates, or less likely, making them act more like married couples?) In the context of Swedish demography, easier access to housing meant greater likelihood of cohabitation, providing evidence that cohabiting couples tended to be acting more like married couples than economizing roommates. BUT, there’s a lot of grey in there. Especially insofar as we usually leave it to people to define their own relationships.

 

 

 

BC Renters by Household Type & Need

Yesterday BC unrolled a quick support package for tenants and landlords affected by COVID-19 related job and income losses. In addition to an effective moratorium on evictions (yay!) and a rent freeze for the duration of the crisis, the province offered $500 going directly to landlords to offset rents for those with lost income. The measure appears to be aimed at preserving landlord incomes and landlord-tenant relationships even as the eviction moratorium temporarily boosts the bargaining power of tenants. Lots of details remain to be determined, including, apparently, whether the benefit applies per tenant or per unit.

Here I wanted to quickly toss out relatively recent figures for what renter households look like in BC, broken out by Core Housing Need. Data come from a quick run with Census Analyser (CHASS) for 2016.

HouseholdsRenting-fx2

Many renting households contain more than one income earner, likely making them reliant upon multiple incomes that might have been affected by COVID-related disruptions. If BC goes with a $500 benefit per unit (as opposed to per tenant), this may diminish the ability of multi-income households to make rent. On the other hand, together with the federal CREB benefits of $2000 per month for up to four months, and BC’s $1000 one-time benefit, households that have lost multiple earners will (eventually) be bringing in replacement income. In the meantime, they’re left to negotiate with landlords – who cannot evict them for nearly any reason – for the duration of the crisis.

If we look at renting households in core housing need (before the crisis), most were likely single-income earning households. Single-person households will do the same in the present crisis regardless of whether the $500 rental benefit applies per tenant or per unit. But a lot of renter households contain children and these are also over-represented in core housing needs. Notably, this included over half of all single-parent households in BC even before the COVID crisis. If the benefit applied per tenant and actually included children, it might go a long way toward diminishing the immediate crisis besetting many single parents. It might also assist couples with children, whether they’re reliant upon a single income or not.

More broadly, BC should probably consider targeting some relief at parents, who can no longer rely upon schools or daycares for childcare. But renters with children also face an additional housing burden insofar as their rents tend to be higher. After all, they’re often paying for extra room without the benefit of an extra income. The federal benefits flowing to households with multiple lost incomes will only apply once (if that) to single-parent households. BC should consider extra rent benefits for these households.

Of course, this was true before the COVID outbreak. More broadly, COVID-related policy in BC, and Canada as a whole, so far seems to be working toward putting in place hasty new patches to its old social safety net. This is a good start, but Canada also needs to patch the rips that were already there, which are being torn even further apart under the strain of the present crisis. Raise supports for children. Raise the disability rates. Put policies in place to insure that Canada’s right to housing is more than just a vague promise. If we’re all in this together – as we should be – then now’s the time to prove it by renewing the social contract for everyone. Let’s get to it.

 

UPDATE: Single person households make up a larger portion of renter households (above) than they contain in terms of total renters (below). Both are useful figures, but I earlier posted a figure with numbers based on total renters within households, rather than renter households. I’ve corrected the above to remain consistent with the language of households and avoid confusion. The slide based on total renters within household is now posted below.

HouseholdsRenting-fx1

Knock Knock Anybody Home?

co-authored with Jens von Bergmann & cross-posted over at MountainMath

Empty homes are in the news again in West Vancouver after a West Vancouver council motion asking the province for the power to levy their own Speculation and Vacancy tax.

THEREFORE BE IT RESOLVED THAT the Provincial Government provide local governments with the power to levy their own Speculation and Vacancy Tax, so that they too can address housing affordability and other community effects of vacant homes.

West Vancouver seems interested in the empty homes and not the satellite family component of the SVT, which may well be a wise choice given how messy and problematic a law defined based on spousal relationship can get.

The motion is interesting for several reasons, not just because of the focus on vacancy vs satellite families. It sets the stage by naming housing affordability as a key challenge.

WHEREAS housing affordability is a key challenge in many municipalities but particularly in the District of West Vancouver with a median house price of $2.5 million, and a rental vacancy rate of 1.2%;

As evidence the motion rightly points at the low rental vacancy rate. The ownership metric is curious though as it explicitly focuses on “houses”, excluding more affordable multi-family units from consideration. This is likely no accident, as West Vancouver has a solid track record of focusing their energy on the most expensive type of housing by permitting fewer multi-family homes than more expensive single-detached houses to be built, the latter of which often just replace older single-detached homes and do not add to the dwelling stock.

west-van-completions-1

 

The next part reads:

AND WHEREAS according to the 2016 Census, approximately 1700 homes, or almost 10% of dwellings in West Vancouver, were identified as “unoccupied”;

This is incorrect, the 2016 census enumerated 1,525 unoccupied dwelling units in West Vancouver, comprising 8.2% of the total dwelling stock. Council is only partially to blame for this misstatement, reporting on this census metric has generally been sub-optimal, to say it politely. The problem is not just about getting the number right, but more importantly understanding what the numbers mean. The census enumerates homes that are empty on census day, and homes can be empty for several reasons. Some of which are mundane and even desirable, just one “whereas” ago it looked like council wanted more unoccupied homes – that are available for rent. There are other categories of unoccupied homes that are important in enabling residential mobility, homes that are rented but not moved in yet, homes that are for sale and unoccupied or bought and not moved in yet. The US ACS tries to track down reasons why homes are unoccupied, it can be instructional to use that as base of comparison when looking at Canadian data as in the following graph based on some of our past joint work.

West_Van_2

 

Being unoccupied on a particular day, for example Census day, does not give direct information about homes that might be targeted by an empty homes tax. The list of exemptions in Vancouver’s Empty Homes Tax or the provincial Speculation and Vacancy Tax opens another window into reasons why homes may be empty.

We can further break down the unoccupied homes the census found in West Vancouver by structural type.

west-van-unoccupied-3

 

In West Vancouver, most homes registering as unoccupied are single family homes, followed by units in suited single family homes that the census refers to as “Apartment or flat in a duplex”. This is to a large degree due to the building stock that leans heavily on single-detached homes. The two dwelling types have also been responsible for most of the growth in homes classified as unoccupied in the census.

It is helpful to also look at shares of homes in each type that registered as unoccupied, and put in context with the Metro Vancouver shares.

west-van-unoccupied-share-4

 

The shares of unoccupied homes are generally higher in West Vancouver, with the exception of row houses and highrise apartments. The shift in row houses is fairly recent, and should probably not be over-interepreted because of the small overall number of row homes. The difference in rates of unoccupied highrises likely stems from a relatively high share of rental highrises in West Vancouver.

The high share of unoccupied “duplex” units stands out. Recall that in Metro Vancouver units classified as “duplex” by the census are mostly suited single family homes. These register with the highest share of unoccupied homes throughout Vancouver, which is driven by empty secondary suites in such houses. Incidentally, secondary suites are exempt from both the City of Vancouver Empty Homes Tax and the provincial SVT.

In all of this it is important to remember that census unoccupied counts were taken back in 2016, before these taxes came into effect, and some owners will likely have changed their behaviour because of the tax and rented out or sold their previously empty home. Indeed, we now have a much more recent and much better defined dataset predicting how many problem empties are likely to be taxed by an Empty Homes Tax in West Vancouver. That dataset comes from the Speculation and Vacancy Tax itself. Worth noting: we are still in the pre-audit phase for the SVT and it is not clear how many owners are trying to dodge the tax by declaring incorrectly. But setting aside Satellite Families (where homes aren’t empty), the SVT numbers for the City of Vancouver aren’t very different from the City of Vancouver Empty Homes Tax numbers, where we are now in the third year and already have two years of complete declarations and audit cycles. So far so good.

Bottom line is that a much more reasonable expectation of the number of homes that may be targeted by a West Vancouver empty homes tax at this point is around 221, the number of vacant homes paying the SVT.

west-van-SVT-5

The next two whereas speak to revenue expectations.

AND WHEREAS the Province reported that in 2018, $58 million was collected under the Speculation and Vacancy Tax program, and that $6.6 million of that was collected from West Vancouver homeowners;

AND WHEREAS the Province of British Columbia gave the City of Vancouver the power to impose its own vacancy tax which has provided Vancouver with approximately $40 million in additional revenue;

The $6.6 million cited as being collected from West Vancouver covers both, vacant homes and homes occupied by satellite families. Only $4.1 million was collected for vacant homes in West Vancouver. The comparison the the City of Vancouver tax is somewhat irrelevant to this discussion, other than stressing again that revenue expectations is an important driver of this motion. One should note here too that the tax rate West Vancouver could charge for vacant homes is limited by a very simple calculus. Once the combined tax rate of municipal and SVT vacancy taxes exceeds the property transfer tax, owners can trigger a sale to e.g. a relative in order to pay the lower property transfer tax and be exempted from the vacancy taxes, with all the revenue accruing to the province. The City of Vancouver has hiked their Empty Homes Tax rate and is slowly approaching this limit.

Upshot

An Empty Homes Tax can be useful. It incentivizes better use of property by returning some unproductive properties back into the rental or ownership market. It generates revenue in case people are unwilling to rent out their mostly unoccupied home.

But it also comes at a cost, it can be intrusive and there are always edge cases. And it takes a sustained effort to administer fairly.

We believe that in the case of the Vancouver region the benefits generally outweigh the costs at this time. We can imagine that we might come to a different conclusion if e.g. the rental vacancy rate climbed up above 3%, but we don’t see a medium-term path leading to that.

Looking back at the City of Vancouver’s experience it seems prudent to approach an Empty Homes Tax with realistic expectations. In the City of Vancouver our Former Mayor said that the tax could free up as many as 25,000 empty units for rent, an unfortunate statement that raised expectations unreasonably high and is still being brought up when people criticize City staff for their EHT numbers not measuring up to lofty promises

The bottom line is that clear and realistic expectations are an important part of a successful implementation. It is good politics, and City staff will thank their politicians for this.

As usual, the code for the analysis is available on GitHub.

Property Tax Snacks

co-authored with Jens von Bergmann & cross-posted over at MountainMath.

 

Residential Property Taxes have been rising in Vancouver. As always, we’re seeing a lot of sturm and drang about the rise. But we think it’s ultimately a good thing. Why? Here’s three perspectives. From a fiscal perspective, property taxes pool our resources to enable our government to pursue projects and provide for the common good. They’re a big component of how we take care of each other and set priorities. From a social equity perspective, property taxes are directed at wealth, which is highly unequal in its distribution. Property taxes are also – at least around here – mostly a tax on land value, the rise in which is socially produced and largely unearned by any landowner. We should definitely be looking to redirect the massive gains in real estate wealth in this province toward the common good (Henry George for the win!) Finally, from a financial perspective, higher property taxes increase the carrying cost of treating housing like any other investment. They also work to stabilize the market to the extent they counterbalance the weight of shifts in interest rates. In this sense, property taxes and prices are endogenous.

Also worth noting: Vancouver’s property taxes are very, very low. Measured as the “mill rate” – or the rate of taxes owing per $1,000 in property value – the City of Vancouver’s rate is far below most other municipalities in BC (and further afield), especially outside the Lower Mainland.

prop-tax-1

Within municipalities, property taxes hit real estate wealth, but they’re basically “flat taxes”, set at the same proportion to property values regardless of underlying disparities. What’s more, looking across municipalities, there’s a perverse regressivity to property taxes. The wealthy people (e.g. living in Vancouver or West Vancouver) pay lower tax rates on their properties than those generally less well-off (e.g. living in Nanaimo, Port Alberni, or Prince Rupert). Measures like the School Tax, progressively applied to properties over $3 million, only partially counteracts this underlying regressivity at the Provincial scale. Still, we should be looking at more ways to bend property taxes in a progressive direction, and perhaps even use them to provide relief for income taxes. In short, we can definitely make property taxes a better tool for promoting a more fair BC.

The comparison between places like Vancouver and places like Prince Rupert also helps demonstrate the endogeneity of property taxes and prices. Someone owning a $1M property in both municipalities pays different tax rates. The present value of that tax break the property in Vancouver gets above the property in Prince Rupert, assuming the spread stays constant, is $229k. That serves to inflate property values in Vancouver. Which in turn serves to depress the mill rate in Vancouver. Rinse and repeat.

Let’s briefly touch on property taxes in terms of fairness between the City’s renters and property owners. The city has been working on making itself more fair to renters, who make up the majority of its population but find their options for remaining in the city increasingly constrained. Here we want to provide a simple comparison of property owners to renters in terms of rising costs they face. What’s risen faster, rents or taxes? We also don’t want to forget about rising asset prices too! After all, most property owners have reaped enormous gains in wealth that haven’t been available to renters. Here we’ll set aside other benefits available only to owners (including homeowner grants reducing property taxes, the complete absence of capital gains taxation on sales of principal residence, and even the lack of taxation on the imputed rents home owners pay to themselves) and just look at the rise in property taxes paid and gains in property values relative to median rents over the last few years. What’s that look like?

vancouver_price_tax

Here we’ve drawn upon a representative sample of detached properties and apartment condos and used their actual property taxes paid for the property tax data, and used repeat-sales HPI for single family and apartment condo within the boundaries of the City of Vancouver. The rise in property taxes paid by owners of detached properties slightly exceeds, but otherwise more or less matches the rise in median rents over recent years. The property taxes paid by apartment condo owners has had a more complicated journey, ultimately remaining below the rise in median rents (and remember, many of those condos are being rented out!) Overall, property taxes and rents have pretty much kept pace with one another. Property values, on the other hand, are through the roof! Up until very recently, we saw especially strong rise in the value of detached houses. Rapid price appreciation in the detached market (2010-2016) pushed property tax growth higher for detached houses than for condos, who are only recently catching up. The expansion in municipal budgets has driven recent property tax growth, but it remains in line with the increase in rents being paid by representative residents of the City.

Given our low vacancy rates, there is little doubt that rents would’ve risen much quicker without provincial rent control. But regardless, rents have still kept pace with rising property taxes. We still have lots of room to raise our property taxes on all of the grounds mentioned above. We could also use more progressivity in our property tax rates, working to counteract their regressive tendencies. Unlike for renters and rising rents, the research indicates that property tax increases seldom result in displacement of home owners. That said, if property owners feel their budgets squeezed too tight, the province also provides a wealth of opportunities for deferring payments. That’s yet another benefit that’s just not available to renters. But if the province wants to start supporting tenants who need a break to catch up on their rent payments, it might help put a big dent in the sky-high proportion of BC’s residents who feel forced to move.

 

As usual, the code for this post is available on GitHub for anyone to reproduce or adapt for their own purposes.

Fun with Real Estate Wealth

Let’s take a moment to talk about real estate wealth! It might be a handy cure to perennial bellyaching about property taxes.

I’m going to pull from the public tables of Statistics Canada’s Survey of Financial Security, a great source of data on wealth in Canada. The data, asking Canadians for detailed information about their collected assets and debts, run from 1999 to 2016 (with the newest data being collected now!) And guess what? They’ve got real estate data in there! So cool. We’ve used this data before to help question the popular narrative in Vancouver that “foreign investment” in Vancouver real estate should be our primary concern (we’ve got a whole lot more domestic investors… why give them a pass?)

Here let’s just look at data on real estate wealth by overall wealth quintile (From StatCan Table 11-10-0049-01) . That means we’ll divide economic families (and those outside of such families) into five groups ordered by their total net wealth. What’s the average real estate holdings in each total wealth quintile, both in terms of their principal residence and any other real estate they might own? First let’s look at Canada as a whole, then specifically at Metro Vancouver.

Real-Estate-Wealth-Canada-Qs

Real-Estate-Wealth-YVR-Qs

Here I’m taking average real estate holdings for each quintile by multiplying the proportion of those who own the asset by the average asset value of those with the asset. You’ll notice I’ve dropped the lowest two quintiles, either because there’s not enough property holders in these quintiles to provide reliable estimates (for Metro Vancouver), or the estimates are consistently below $10k (lowest Quintile) or $100k (2nd Quintile) in all years (for Canada as a whole).

What do we see? In Vancouver, no surprise, we see very heavy real estate wealth. The upper middle (4th Quintile) here looks a lot like the top quintile in the rest of Canada. The top quintile here is loaded with wealth both from their principal residence and from other real estate holdings beyond. Effectively the property tax here is a flat tax on wealth. Hooray! We’re doing a wealth tax! And while it’s mostly flat, we actually do get a bit of progressivity in this tax, both through the provincial School Tax kicking in over $3 million and the Home Owners Grant providing relief toward the lower end.

Raising property taxes on our extraordinary unearned and unequal real estate wealth: what’s not to like?

Metrics and Bird Memes

 

Working with Jens von Bermann, I gave a talk yesterday at #HousingCentral on housing metrics! Specifically, we talked through and expanded upon our earlier joint blog post on the same topic. Click the image below to visit our full slides.

Image-Talk-HousingCentral

Included in the slides are a variety of graphics, mostly from past posts of mine and Jens’. In case you’re curious, follow the links below to find out more about them:

Rent correlation with vacancy rates

Price correlation with inventory (borrowed from YVR Housing Analyst)

Crowding measures

Urban Density

Homeless Counts

Empty Homes

Core Housing Need

and Job Vacancies

As for the conference, Housing Central is an annual shindig put on by the BC Non-Profit Housing Association (BCNPHA), including a special set of panels on research from the fine folks at the Pacific Housing Research Network (PHRN). Check the PHRN Symposium website for calls if you’re interested in presenting!

Last but not least, I took some bird pictures down along the southern edge of the Fraser River delta, and I really, REALLY want to turn them into as many housing memes as I can. So here’s me summarizing our Housing Central talk with a bird-based housing meme.

Birds-per-Post-2

Enjoy!