Here’s How N.B. Can Lower Prices And Create More Affordable Housing For Everyone
Jason Stephen is the Past Chair of the Canadian Real Estate Association, the current Chair of the Government Relations Committee for the New Brunswick Real Estate Association, and a REALTOR® with Royal LePage Atlantic since 1999.
We are now a year into this pandemic and we are still suffering its effects, with direct health impacts on ourselves, our family and friends. On the other hand, the last year also had unexpected consequences. New Brunswick is undergoing a renaissance in population growth and a rejuvenation of its communities.
Across the province, we are seeing new energy and growth as people from all walks of life and regions choose to call New Brunswick home. For some, this means young family members returning from Montreal, Toronto, or points further west. In others, it is people who have decided to retire to our beautiful province for its maritime way of life.
Whatever the reason, this influx of new residents is causing pressure on the housing stock across the province, from rental apartments to single-family homes. We’ve gone from “Coming Soon” to “No Vacancy.”
As a full-time realtor and former president of the Canadian Real Estate Association, I’ve spent many hours advocating for public policy in support of affordable housing and aiming to support those currently experiencing homelessness. The housing shortage impacts everyone: the most vulnerable, new Canadians, and aspiring homebuyers across the housing spectrum.
From my perspective, we need to avoid knee-jerk reactions to housing shortages or rent increases that will simply make a difficult situation worse and increase inequality. The problem of housing affordability is too complex to solve by introducing rent controls or tougher mortgage rules. Making it harder for people to get into housing does not solve soaring housing prices. That’s like trying to cure heart disease by making it harder to get doctors’ appointments.
It’s time for some practical approaches to increasing housing supply. Defensive proposals, such as rent controls or other restrictions, will discourage investment and are proven policy losers.
Prior to the pandemic, just a short year ago, we were already experiencing supply shortages and growing demand for housing. Recent demand is from newcomers but demographics play an important role in housing. There is intense demand from a millennial generation in their late 20s, 30s and early 40s that aspires to be homeowners.
And then there’s population growth – let’s not forget the significant number of new Canadians who, in normal times, come to our shores with a dream of homeownership. Taken together, these waves of demand are significant and structural, but also fueled by historically low interest rates.
Supply, on the other hand, is largely stagnant as baby boomers are not ready to downsize and new construction has not kept pace with demand. The pandemic has made the situation worse, as many are reluctant to put their homes on the market amidst the current uncertainty. Low listing supply is keeping people in their apartments longer, thus shrinking rental inventory and forcing rent increases that normally would have occurred when turning over to a new tenant.
Here are some specific ideas for creating new housing supply in a hurry.
First, we need local and outside investors to help rebuild our economy, now and post-pandemic. The quickest way to do that is to reduce regulation and lower taxes. Developers can operate in any market and so it makes sense for them to gravitate to jurisdictions that have building-friendly policies. Advertise that our province is open for business and that the government is supportive of builders who want to invest in New Brunswick. Make it known that “nimbyism” (not-in-my-backyard) will not be prioritized over construction jobs and new housing.
There are many policy ideas that would help increase the supply of new homes, including removing impediments to new buildings and renovation, such as excessive permitting and fees. For example, development charges. If a new builder must pay upfront for roads, sewers, and water before they have sold a single unit, then what’s the incentive to set up shop here? We could be taking advantage of federal infrastructure funding to put in the infrastructure needed to encourage developers to invest.
We could be making more public land available for housing. This could be useful for affordable housing, as municipal or provincial landowners can exchange the land for units that are sold or rented at a lower cost to eligible families.
This discussion involves all three levels of government. The federal government plays its role with infrastructure funding, the provincial government plays a role with training, labour and strategy, and the municipal governments play a role in encouraging developments with zoned ready land with incentives and streamlining the building process.
New Brunswick could also be looking at the creative redevelopment of existing neighborhoods as well as commercial properties affected by the Covid-19 economy. Incentives could be designed to encourage investors and developers to transform these areas into new housing opportunities.
And a uniquely New Brunswick approach would be to work together with governments and the forest sector to start building new homes using materials and innovation developed in our province. From skills development to materials procurement to building innovation, there are a host of challenges we could tackle together.
If we want this to happen, the premier should create a hard-hat panel that will bring their expertise to the challenge immediately. Put pressure on business and civic leaders to deliver. Whether it is investments into vocational training, investing in mills or smoothing the permitting process, we can only accomplish the goal of significantly increasing the housing supply if we work together and take an “all of society” approach. I’m sure I speak for all of my New Brunswick colleagues when I say that we are ready to do our part.
Focusing on supply, reducing taxes and red tape to encourage investment, and bringing expertise to the table will lead to lower prices and increase affordable housing across the entire housing spectrum, which will benefit all New Brunswickers.
Huddle publishes commentaries from groups and individuals on important business issues facing the Maritimes. These commentaries do not necessarily reflect the opinion of Huddle. To submit a commentary for consideration, contact editor Mark Leger: [email protected].