Cities are facing a crisis-level housing shortage. And of course, the worst impacts are on people with moderate to lower incomes.
Wealthier people can always afford homes; they simply outbid the less wealthy. It’s like the childrens’ game of Musical Chairs, but instead of the fastest children getting the available chairs, it’s the richest adults getting the available homes.
The only route to general housing affordability is via building lots of housing, of all types.* Increasing the overall supply of housing is essential to increasing the rental vacancy rate (most Victorians are renters) and to having a balanced housing purchase market. The majority of affordable homes are rent-controlled older market homes, and building more market homes is essential to the future of affordability.
We also need investment in purpose-built affordable housing in the short term. Fortunately, after decades of failure to adequately invest in affordable housing, both the Government of BC and the Federal Government are back in the game.
However, we also need that affordable housing investment to be in the right places. Why? If it’s in the wrong places, it might not be very affordable to live there. It depends on the cost of transportation.
Transportation costs vary significantly by location. In this region, the average household cost of transportation varies by over $10,000 per year (see figure below). That’s about $800 per month. That’s more than enough to turn affordable housing into “affordable” housing.
Map source: The Capital Region Housing and Transportation Cost Estimate Study
You’ll notice that this cost map is similar to this following map, showing average vehicles per household. When households are located far from destinations, without affordable transportation (transit or active transportation infrastructure), they need more cars. And ordinary cars cost several thousand dollars per year to own and operate.
When it comes to defining affordable housing, the often-used threshold is 30% of household income going to housing costs. When factoring in housing + transportation, the rule of thumb is 45%.
As the StatCan research paper “Housing and Transportation Cost Index” puts it: “The Housing and Transportation Cost Index provides a better estimate of the expenses incurred by households due to geographic location; peripheral areas that seem to have a comparative advantage due to low housing costs become less attractive once transportation costs are taken into consideration.”
So are affordable housing projects in far-flung suburban areas truly affordable?
If you’re willing to ignore the reality of transportation costs, sure! 😉
Combining housing and transportation cost here’s what you get:
* In balancing supply and demand, you sometimes hear that we should just keep people out of Victoria. It’s unclear why this non-option gets suggested – perhaps to distract people from the need to build more homes? In any event, it’s just not an option: there is a Constitutional right for people to move here from anywhere across Canada. This is a great place; people keep on moving here – thousands every year – and will continue to do so.