Bold moves needed now to resolve Lower Mainland livability crisis
Projected population increases will keep land prices rising in the long term, so more radical action must be taken now
Business in Vancouver
It is time to get serious about housing, transportation, regional planning and growth in the Lower Mainland.
When thinking about the region’s future and concerns about housing affordability and livability more generally, a useful starting point is demographics. B.C. government projections point to a significant increase in the combined population of Metro Vancouver and the Fraser Valley regional district over the next couple of decades, rising from almost three million today to 3.8 million by 2040 – an increase of 800,000 people. The expected rise is even larger than the 700,000 people added to the region’s population over the preceding two decades. Most of this increase was due to immigration. It is reasonable to expect this pattern will continue, especially considering the Justin Trudeau government plans to sharply boost immigration numbers in the coming years.
Given the steadily increasing population coupled with a constrained and limited land supply, it doesn’t take a graduate degree in economics to recognize the price of land in the Lower Mainland will continue to rise at a pace well ahead of inflation. Yes, there will be periods of softening prices, as currently evident in the real estate market. But over the medium and longer term, land prices are going only one way: higher.
How then to address the challenges of housing affordability, congestion, longer commute times and a declining quality of life for many residents?
Higher taxes on residential real estate to discourage non-resident demand and a greater focus on the supply of purpose-built rental housing may help, but realistically they won’t do much over time. If we are honest, there has been an inordinate amount of talk about the need to improve housing affordability with no substantive, longer-term solutions emerging from all the chatter. Instead, it is time for some bold and strategic action. It is time to develop infrastructure that supports regional connectivity, provides workers with tolerable commutes and allows for a broader array of more affordable options for would-be homeowners.
A new Fraser Valley “innovation corridor” anchored by a commuter rail system running from Chilliwack to the city of Vancouver would help address many of the region’s most pressing issues. It would also offer new opportunities for regional economic development and growth.
A rail system, perhaps like Greater Toronto’s GO train, would have many important benefits. By providing decent and predictable commute times, it would vastly expand the potential supply of more-affordable housing options. It would help alleviate traffic congestion. Sure, some degree of congestion will always plague the region. But if a rail system delivered an effective alternative to driving, policy-makers could then reasonably talk about tolls and other forms of road pricing to help manage congestion. More trips on transit and less road congestion aligns with the province’s greenhouse gas plans.
It would also provide an opportunity for some regional vision and “out-of-the-box” thinking. A well-designed rail system supports the development of a second urban business centre, something the region desperately needs if it is going to remain competitive as downtown Vancouver becomes increasingly cost prohibitive for more businesses.
Careful consideration should also be given to developing the “innovation corridor.” Rather than picking a particular industry sector to champion, government should focus on building infrastructure that enhances the benefits that will flow from having a larger and more robust regional urban agglomeration.
A new commuter rail system, of course, comes with a hefty price tag. But there are good reasons to consider making such a large and bold investment at this time. Most importantly, the long-term economic returns from this kind of transportation infrastructure are virtually certain to exceed the cost of money borrowed to finance the project, particularly when borrowing costs for the province are likely to be below 3 per cent.
It should also be noted the province’s current debt load is manageable; the government could absorb $7 billion to $9 billion in debt to help finance capital costs without pushing its debt-to-GDP ratio up to levels that would concern rating agencies.
The federal government would also participate, and a strong case can be made that it should make a substantial contribution because a disproportionate number of new immigrants will settle in the Lower Mainland.
Such a large undertaking should also embrace creative financing options. Private pension funds are looking to invest in infrastructure. There is also the opportunity for government to capture some of the resulting increase in land value to help finance capital costs. From our perspective, financing the project is manageable.
A bigger challenge may be having sufficient capacity to build the project. But the greatest hurdle of all is political will: the project will need to be conceived and implemented by the provincial government but will also require co-operation and planning across numerous municipalities.
PERSONAL REAL ESTATE CORPORATION LTD
HOMELIFE ADVANTAGE REALTY (CENTRAL VALLEY) LTD.