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Bridge Beat

May 30, 2020

Seven predictions about Canadian housing in the post COVID-19 world

The world’s COVID-19 prescription can be summed up on one particularly Canadian t-shirt: “Stay the PUCK home!” Those of us with a home have pretty much done exactly that. Those of us with a home.

Saying that we have an affordable housing crisis is not new. What’s new is that COVID-19 has drawn a straight line between homelessness and public health. For the first time since the Spanish Flu 100 years ago, housing has become our primary form of healthcare.

The curve of COVID-19 infections isn’t flattened in a hospital, it’s flattened at home. COVID-19 has laid bare the fault lines in our world, and one of them is housing and we have something in the order of 250,000 homeless Canadians. 

If you don’t have a home to go to – if you can’t physically distance – then you are not flattening the curve. Municipal governments, for example, have reacted with short-term measures, by renting hotel rooms to house homeless people.

When we get back to whatever the “new normal” is, will we continue to see homelessness and housing precarity as an option? Or are we going to continue down the path COVID-19 has us on: everyone needs a home.

I am predicting – and advocating for – the latter. We have to find ways of housing more people and there are only so many ways of doing that. We can build more housing, we can increase the velocity with which housing turns over (for example, encouraging empty nesters to downsize from their 3-bedroom homes, making way for younger families), we can protect tenancies, and we can discourage empty units.

I see action on all these fronts in the coming months. However, because there was already a housing crisis pre-COVID-19, what I see coming next is not new, but rather an acceleration of trends we were already seeing, but have more urgency now.

 

  1. Residential Construction Continues

     

    The residential construction industry has been an essential service since the beginning and will continue to be. As it is, residential construction with a permit can continue and, since last week, new construction can move through servicing and excavation construction of new units will no longer be held up. This does not alone create the affordable housing that we need, but does increase the supply of new units at market rent levels.

     

     

  2. Publicly-Owned Land May be Earmarked for Housing

     

    Watch for a course change in how municipalities and other public bodies commit publicly-owned land into housing. Land that might formerly have been slated for public tender that requires an affordable housing component may now be aimed more squarely at the most vulnerable populations and committed to the creation of supportive housing for homeless or other vulnerable communities. This most likely to apply to mid-rise sites which suits a modular build. Large sites are still likely to be part of the Housing Now program and we have seen six new sites released this past week.  

    As an example of what I mean, the City of Toronto recently announced the creation of 110 units of supportive housing, at a total cost of $47M. That’s $188,000 per unit. This is a modular unit project and the intent is to build with speed and have these units up by fall. The City has newfound experience in this field through its Director of the Housing Secretariat who did exactly that in her previous gig in Vancouver.

    To be clear, I am not predicting an end to the tendering of large sites, but sites suitable for a single building seem more likely to be kept in public hands now.

     

  3. More Housing Units Built, Faster

     

    Direct construction on its own land is only one mechanism at the public’s disposal. I expect to see more regulatory intervention, too. I am not just talking about inclusionary zoning type intervention, but straight up density as well.

    Whether you want to call it inclusionary zoning or something else, expect more pressure on private development to deliver housing at below market rents or through affordable ownership methodology. This may be partnerships with nonprofits, simply running units at less than fair market rent, or using affordable ownership methods. There are many models so, development community: start taking a harder look at these options.

    And modular construction – your time has come. Modular construction is well suited to repeatable construction like a hotel or affordable housing. What needs to be cracked it coupling it with design that is both functional and contributes to the public space around it.

     

  4. Housing Velocity is a Good Thing Moreover, if we have to take advantage of opportunities to develop affordable housing, it follows that we just can’t afford to waste housing opportunities anymore. If we can build 10 instead of 8 stories, for example, we should. This is critical in developments in and around established neighbourhoods where older residents want to remain. This concept is called “housing velocity,” a planning term I learned from the smartest planner I know. Long-time residents to Toronto’s Leaside neighbourhood, for example, are prime buyers for condominiums along Laird Avenue, allowing their homes to be used as family residences. We want that to happen.

     

    Here’s another thing for sure: we can’t build units and have them sit empty. An empty unit is the ultimate financialization of housing – where its social purpose as a home is completely lost to a financial purpose.

    I do not have a problem with making money from housing, but if you buy a unit and let it sit empty because you don’t want tenants who might mess with it, you’re part of the problem. Buy a stock instead.

     

  5. Consolidation of Housing Non-Profits

     

    COVID-19 is putting pressure on non-profits in Canada. Before the pandemic, there was merger talk making the rounds. I think that will be accelerated as the non-profit community rationalizes its own assets. They should be encouraged to do so and helped along the way. There are some great organizations around to help including the Ontario Non-Profit Housing Association, Cooperative Housing Federation and Housing Services Inc.

    It’s critical that we emerge from this with a robust network of non-profits. Consolidation where appropriate and redevelopment are important to rejuvenate and expand the stock of supportive housing. To support that, look for non-profits and co-ops to borrow to grow and improve their overall housing stock through both traditional lending, government lending and long-term lending options (i.e. 30-year fixed rate) through the Housing Investment Corporation.

     

  6. Will Office Buildings Become Obsolete?

    You really have to wonder about the future of office space in a post COVID-19 world.

    I carried genuine Gen X skepticism into this pandemic about working from home – something my younger associates were clamoring for. No way they can do good work unless I am down the hall, right? Well, wrong!

    If there is one thing that COVID-19 has proven, is that many white-collar office workers can work from home just fine, thank you very much. We have the technology, cloud storage, and the cybersecurity to make it work. But there is maybe no greater unknown that what will happen to office life:

     

    • We know we can work from home, but even my millennials tell me they miss the social interaction. So, we are working from two offices in the future? And a coffee shop?

       

    • A common refrain is that there will be reduced traffic volumes and therefore, reduced air pollution. I don’t think so. I have taken public transit my whole career. Now we are talking about a second car. Want to know if commute times will increase or decrease? Watch public transit.

       

    • Even if more people work from home, will there be more space per worker in offices to respect physical distancing? Probably. Will they balance out? Who knows?

       

      What does this have to do with housing?

      If there is an oversupply of office space, and demand for housing, then there may be an opportunity to repurpose office buildings we no longer need into housing we desperately need.

      Hey, stranger things have happened.

       

  7. Housing is a Human Right

Loss of shelter is a really big deal. When I was on the board of Daily Bread Food Bank, we knew that parents would go hungry before they failed to pay the rent. It’s cold out there for one thing and, loss of home means so much dislocation for kids and negatively impacts their long-term prospects.

During COVID-19, we have said that there will be no evictions. But staying housed will not suddenly become less important when this is over. So, when a tenant cannot pay the rent due to economic reasons, my preference would be for government to step in and keep them housed. or maybe there is a transition period where they are moved to other housing. It’s better for them and better for me as a taxpayer.

There is plenty of evidence that stable housing is less costly then social services or looking to the health care system. So, why go backwards on this? Housing is a human right and the best way to respect that is to keep people housed.

I was taken with the simple way Calgarian Tim Richter put it in one of the Canadian Urban Institute’s excellent City Issues webinars. He said the first step in dealing with homelessness is to decide to house people. After that, it’s all doable.

We are out there proving that it’s doable right now. Let’s not go back.

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