In this Housing Myth series the Vancouver Tenants' Union digs into prevailing social, cultural, and economic myths about housing. Join us and see just how flimsy these capitalist-derived myths really are.
Myth: The Housing Crisis is a supply/demand issue caused by a lack of housing supply
In conversation, online, or even on the news, you might have heard a line of reasoning that goes something like this: Housing is so expensive because there's a high demand from renters who want to enjoy our beautiful city, so the competition between renters drives the prices up. There aren't enough houses to go around since there isn't enough housing supply to meet the demand, so it is natural that housing is expensive.
Here's the thing though: conversations about increasing “supply" of housing almost always are referring to private supply.
With privately owned rental housing, landlords that own property rent it out with the goal of turning a profit. Production of privately owned housing is undertaken for profit, not to meet people’s needs. We can see this clearly in the astronomical rents being charged today, and in lackluster maintenance by landlords. When tenants complain about these issues, the landlord may often respond "just move out then". After all, if the tenant leaves, they can charge even more of the next person who signs a lease. Building more private market rentals means more private landlords and ensures rents will stay high because that is the business model. Only below-market rate public housing will ensure rents stay affordable. At the end of the day it is the private ownership and control over necessities like housing that is the root of our housing crisis, not that there is a lack of private housing overall.
Surprise! In Vancouver, we don't actually have a lack of housing. Luxury houses abound, and there actually is no lack of supply of market rate/luxury housing. There are more empty homes than unhoused people in Canada - there are more than a million empty homes! (1) The housing crisis exists because housing is not a single commodity-type (more on this later), there is a significant, qualitative difference between luxury and non-luxury housing, and we simply do not need more luxury housing. Taken in total, there is plenty of housing out there, but most of us cannot access that housing because we cannot afford it. What we're missing is non-market/public housing that is affordable to working class people.
So how do we make housing affordable enough it can be used by everyone in practice? Here's the core fact to debunk this housing myth: only below-market rate public housing will ensure rents stay affordable. In B.C., we don’t have rent control tied to the unit, so even older apartments become unaffordable as soon as someone moves, because the landlord jacks up the rent to market rates.
"FILTERING" IS FLAWED
There is another flawed argument associated with this myth called "filtering" where it is said that providing luxury housing will result in “trickle down” and benefit poor people too, in the long run. The myth goes that building private/luxury housing for higher income people will free up older rentals for lower income people. But if we study history, we know better. Trickle down economics however has never worked; "trickle down" economic policies didn’t work 40 years ago during the Reagan/Thatcher years, and they don't work today. (2,3)
Remember we used the phrase "single commodity-type" above? Luxury housing will never go off the market except in demolition, and a landlord that rents market-rate apartments will never allow low-income people to be housed in their units without charging them a rent they can't afford, or taking a hefty subsidy from the government. These things are clearly against their economic interest of the landlord class. In these market economic terms we can see that housing does not move from one type (luxury) to another (low-income, subsidised, etc). It is in this sense that housing is not a single commodity-type, and it becomes clear that increasing the supply of luxury housing will not “trickle down” to benefit lower income people! (2,3) Building more private market rentals means more private landlords seeking to profit off renters, ensuring rents will stay high because that is their business model.
In fact, there are no substantive documented examples of an excess of private market supply causing housing to become more affordable. The best local example of this is Seattle, which in recent years has built huge numbers of private market apartments, targeted to higher income renters. Eventually, once the city approached a 5-7% vacancy rate, the most expensive rents levelled out by one or two per cent, but rents started to rise again soon after. Meanwhile, the Metro Seattle area has a homeless population three times the size of Metro Vancouver. These empty luxury apartments did not help them.
In our own city, the rule applies as well. In 2020, over 11,000 condo units were added to the long term rental market in Metro Vancouver. This happened because of vacancy taxes, and because COVID-19 caused the short term rental market to evaporate. Despite this very large number of units coming onto the market at the same time, Vancouver rents remain sky-high.
The answer is clear: increasing supply of other types (luxury, market-rate) of housing cannot address our demand for homes affordable to the working class.
Want to fight for non-marketized housing for all? You can join VTU and push for rent control and dignified public housing together with thousands of other VTU members. Click here to join.
Want to read more? Check out these sources:
References
- 1.3 vacant homes in Canada - Better Dwelling
- Trickle up Housing: Filtering does work both ways - Shelterforce
- The ‘Filtering’ Fallacy - Shelterforce
- NDP Housing Plan
- NDP Private Incentives
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