Interest Rates Are Rising

You’ve likely heard that the Bank of Canada has taken some aggressive steps to fight inflation. While this is an international problem, different nations are taking different approaches. Here in Canada, we’ve increased...

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I have a personal belief that provincial/state and federal governments have very little incentive to tackle housing affordability. Make housing more affordable simply runs counter to the interests of too many of their stakeholders, including the majority of homeowners that are most likely to vote. In fact, I have even gone so far to suggest that the provincial and federal governments have proactively caused housing prices to rise, regardless of the words they use in public.

While the original intention may have been to protect the economy from what happened in 2008 from happening again, government policies over the past 14 years have caused an unsustainable and destructive deterioration of housing affordability, which will likely have detrimental ramifications for future generations.

However, since municipal governments generally don’t benefit as much from rising house values, and in fact, local infrastructure can actually suffer from it, this puts our cities on the front line to tackle housing affordability, despite their limited jurisdiction.

While I was analyzing the differences between Greater Vancouver and the Fraser Valley for a previous article, I noted that 2 of the 19 cities I studied came across as anomalies. Anomalies can sometimes just be that: anomalies. Yet sometimes they can be helpful lessons. I feel this is the case with these two cities.

On one hand, the City of New Westminster seemed to do absolutely everything right when it came to housing affordability, whereas the mountain village of Whistler didn’t even try. While the latter is an extreme, I do feel that many of our region’s municipalities emulate Whistler by coming up with toothless “action plans” rather than concrete policies. While this unintentional emulation may come partially from ignorance, it all too often can be a result of political pressure from connections in the provincial government, of which many locally elected Mayors and Councillors have.


Even before the most recent real estate price boom of 2021-22, New Westminster had been challenging the trend of unmitigated rising prices. The city is arguably the hub of the region, as a geographic and even historic center for Vancouver and the Fraser Valley. Yet despite so many advantages for homeowners and investors alike, New Westminster has been able to curb a bit of the “damage” done by rising housing prices over the last 5 years.

New Westminster is surrounded by some of the region’s highest priced communities of Vancouver, Richmond and Burnaby, among others. It is also in close proximity to the Fraser Valley municipalities that are seeing the greatest price increases, such as Surrey and Langley. So why is New Westminster, ranked 16th out of 19 in single family home prices in my chart above, also only ranked 14th in escalating prices, while the rest of the nearby cities are seeing an inversion, as lower priced communities “catch up” to the higher priced ones?

Does the relatively “low” benchmark home price stick out to you amidst its surrounding neighbourhoods? It should. Is demand for the community simply lower? I would argue it isn’t. By statistics, the demand for homes in New Westminster doesn’t appear any lower than comparable neighbourhoods in the region. For example, compare it with Port Coquitlam, which saw housing prices rise +32.3% in the year and is roughly on par for similar number of sales each month with New Westminster:

With a population base of 62,000 vs New Westminster’s 83,000, it is expected for Port Coquitlam to have less sales, but as the graph above shows, these two cities mirror each other quite closely on pace, which denotes a relatively equal buyer demand.

Meanwhile, when we compare the typical price of a single family home in each of these neighbourhoods, something interesting can be seen:

Historically, New Westminster single family home prices have held a relatively significant gap over Port Coquitlam. In January 2017, this gap was over $185,000 in absolute dollars. Exactly 5 years later, in January of 2022, the Port Coquitlam single family home benchmark price eclipsed New Westminster by almost $30,000.


I argue that this is not by accident or due to lack of demand or value in New Westminster. I would suggest, instead, that it is through a series of deliberate policies by Mayor Jonathan Cote and his council. Cote’s policies were much more than just lip service to housing affordability or housing action plans that are common in cities like Abbotsford, Surrey or the Township of Langley (the latter, being my home town, continues to proactively make housing more expensive through archaic policies to satisfy the whims of populism, such as forcing more “luxury” style townhomes and rejecting more economical designs).

When 34-year-old Jonathan Cote was elected as Mayor in 2014 he had already completed his Masters in Urban Studies at SFU and had sat on Council for 3 terms, first being elected at the age of 26. After defending his thesis on Transit Oriented Developments, he ran his campaign on a unique “pro-planning” message that resonated with the people of New Westminster. His first term as Mayor would coincide with an unprecedented real estate boom that took everyone by surprise. From late 2015 to the end of the summer of 2016, single family home prices jumped in a way we had never seen in history, followed by a boom in attached homes in 2017 and 2018.

As the graph above shows, New Westminster housing prices had been quite comparable to Langley in the mid-2000s, both of which had a small gap with nearby Burnaby. The paths between New Westminster and Langley diverged following the former’s quicker recovery following the housing crash of 2008-09. The boom of 2016 hit New Westminster housing prices harder than Langley, but not nearly as much as Burnaby. The $109,000 difference between Burnaby and New Westminster in 2005 was now a difference of $500,000 by mid 2016. It was during this time that Cote and the New Westminster council passed the 2016 Family Friendly Housing Policy (FFHP), which was one of the more unique, if relatively simple, housing policies to be enacted in any community outside of the City of Vancouver.


The purpose of the FFHP was to create a more sustainable community by making sure more families, not just urban professionals, had walking access to amenities and transit. As urban planners understand, this requires more density. While many municipalities in the region understood the density part, they didn’t understand the family part. So how did the FFHP accomplish this? The policy increased the proportion of 2 and 3 bedroom condos in the city, including design standards for minimum bedroom sizes. This meant that New Westminster would have more “family-sized” condos built as opposed to the binary option that were being created in neighbouring cities. According to planners in other cities, families live in expensive single family housing, while everyone else live in less expensive condos. This ended up directing the development industry in a way that developers, who are focused on one project at a time and were building smaller and smaller 1-2 bedroom units, wouldn’t normally choose.

By adopting a policy that increased the ratio of family-sized condos, New Westminster would successfully alleviate the pressure on local single family homes in a way that other communities in the region had not. Sure, maybe a condo isn’t the lifestyle for everyone, but at least New Westminster was focused on providing an option that wasn’t really out there. Meanwhile, it also was providing the infrastructure for those families that choose a more urban lifestyle. So while New Westminster wasn’t building swaths of townhomes, which are much more expensive per unit to build and more sprawled out, it was creating walkable lifestyles for families okay with a slightly smaller, but still livable, home. Essentially, New Westminster’s answer to the “missing middle” was not lower density, pricier townhomes, but rather, larger livable apartments condos that were less expensive to build and buy.


The next policy that helped temper market values was the 2017 Renovictions Action Plan, which was enacted to stall owners who used renovations to remove renters. This mitigated the rapid rise in investments because it was becoming increasingly common, especially during a pricing boom, to use whatever legal (and often sometimes illegal) way to remove a longtime renter to get higher rents. A vicious cycle can therefore occur between the resale housing market and rental prices. The more money a landlord can get for rental, the higher the value of the property, and the higher the value of the property, the more the landlord needs to get from the rent. When housing markets rapidly rise, there often becomes a disassociation between new higher “market rent” and many long time renters that are grandfathered into lower rents, which you can only legally increase once per year at a relatively low percentage and you can’t just kick out because you want higher rents.

The problem in many areas of BC during this time is that unscrupulous landlords would use the renovations loophole to kick out the tenant and then cash out of the property, with the new owner being able to jack up the rent for the new tenant. However, New Westminster took action and proactively fought against this. This had the effect of slowing the local investment market as it became much harder to take advantage of the renovation loophole in New Westminster. Investor demand, therefore, would go to nearby Burnaby or other municipalities that escalated the vicious cycle of increasing resale real estate and rental markets. While a pure capitalist might see this as an economic failure, for those who just want a home, it ended up being much appreciated.


There were two additional housing policies that Cote and his council enacted that had a helpful effect on housing affordability, albeit likely to a lesser degree than the first two. The first of these was the Secured Market Rental Housing Policy (SMRHP) that was adopted in January 2017. The policy succeeded in providing family sized rental homes via incentives to the development industry.

Although the details of this policy are important, especially with the no stratification covenants that were attached, I will not cover these in great length. I would recommend that my reader who are in position of local authority research them on their own. What is important to acknowledge is that this did lead to further increased inventory of family sized rental homes that were secured for the long term (ie. 60 years or lifespan of the building). This differentiates itself from communities like Surrey or the Township of Langley which have only increased rental stock in any significant way for 1 and 2 bedroom units and often only for 20 years. This latter issue is extremely short sighted and will lead to stratification and loss of future rental stock.

The SMRHP did secure rental stock in multiple ways that alleviated the pressure on family-driven (eg. Millennial) homeownership. Communities that understand that housing affordability requires options are those who achieve this goal. Mayor Jonathan Cote and the New Westminster Council seemed to have understood this.


The last item worth mentioning regarding New Westminster’s ability to mitigate the North American trends better than others is their Laneway and Carriage Program which also began in 2017. The reason that this actually helped keep housing prices down might be a bit counter-intuitive. Some might ask, wouldn’t the addition of a laneway unit boost the value of a detached home? Yes, it does. However, this is the wrong question. The question should be: how many options are out there for homeowners and tenants?

As a real estate professional, I can anecdotally attest that many multigenerational families would love to combine households, but neither can afford nor want large acreage properties nor do they want to live in basement suites, which are often built with cheap finishings and offer dark living spaces.

The inability of the large baby boomer population to find housing types that are desirable and suitable is just one of the reasons that our inventory levels are struggling. I know I have served many retirement-aged couples that have decided to stay in the detached home simply because they don’t care for strata living and find the 3 storey “missing middle” townhomes not great for their lifestyles, especially those on the elder side of the generation. Laneway houses are often built with higher end finishes and offer brighter living spaces that are usually close by desired city amenities. The result is that someone who would either stay in a larger than necessary home or even purchase another home, will end up actually staying out of the “primary” market, choosing to live on the same property with family, and thus lowering the overall market demand.

Is this theory a stretch? Maybe. Sure, these combined families are willing and able to pay more for properties that allow for multiple families, but if the alternative is two families in the primary housing market instead of one, it would seem that this strategy would alleviate pressure on the market, even if it means that one particular home increased in value.


If New Westminster is the success of how one urban city has kept their housing affordability relatively in check, reversing some trends of its neighbours, then Whistler is the opposite. It perhaps isn’t quite fair to use Whistler as a comparison since it isn’t a real city. My apologies to the residents of Whistler. However, Whistler is a resort village. It’s thrown into the Real Estate Board of Greater Vancouver mostly out of geographic convenience. Therefore, I’m not going to judge the decision makers in Whistler at the same level as I would, say, the City of Surrey, since it simply isn’t fair to do so. The reason, however, that I do want to use it as a comparison is because it is important to recognize that if Whistler was a “normal” municipality that intended to house your typical population base, it would be a substantial failure - and we need to know why.


Whistler makes no intention of being a community of mostly permanent residents. It is limited by accessibility and is an exclusive tourist trap. Many wealthy investors are drawn in to park their money in the prestigious resort community. Whistler’s international profile was bolstered by the 2010 Olympics and the improved Sea to Sky Highway made access to and from Vancouver safer and smoother. In fact, 25% of BC’s Tourism Export is found in Whistler, with international visitors spending $881 million annually of the $1.2 billion total.

To service the 2.7 million unique annual visitors, many residents in relatively low paying service jobs are assisted via the Whistler Housing Authority (WHA). The WHA was created to house resort workers at subsidized below market rates. Besides the strategies implemented by the WHA, there is no housing action plan for Whistler that even pretends to mitigate rising market values. So if Whistler’s challenges are primarily limited to a resort community, what lessons can other cities take from Whistler?


There are two significant problems in Whistler that compound housing issues in the resort village that also affect more typical communities. The first is the problem of a grossly backlogged permit process. When I last checked in February 2022, Whistler’s staff were still just starting to review applications from September 2021. Additionally, unlike most other communities where housing is focused on permanent residents, only a portion of Whistler’s residential building permits are for long term residents.

It should be noted that the current backlog of permits in Whistler is atypical due to suffering from a ransomware attack earlier in 2021. However, if this was a more “typical” community, there would likely have been a lot more done to catch up in the permitting process, which Whistler appears to have no real incentive to do so. However, here is an important lesson for other cities: significant slow down of the development process costs a lot of money. If a lot of developable land is tied up with only nominal taxes being received (ie. one or two “land only” assessed value vs fifty residential units), being financed by a developer, is all compounding to increase land costs.

While the province is recently seeming to take the developer’s lobby stance that we should just do away with accountability measures like Public Hearings, which often only “slow down” the development process by a couple weeks, these aren’t processes that are really costing consumers money. The slow down at city hall usually has to do with (a) the lack of staff since local cities tend to have higher expenditures than ability to raise funds and (b) the lengthy amount of bureaucratic checkboxes that need to be satisfied before municipal councils even see a project. A city hall that is committed to both efficiency and transparency simply needs to show this in their budget by making sure they have the available staff as well as systems.

Development Process


Unlike most communities, Whistler can genuinely make a case for favouring non-residents. With 25% of BC’s tourism export coming from Whistler, it is a significant economic force for the province. As previously mentioned, Whistler does not have a true housing action plan. It does what is best for the shareholders of Whistler and even the province, which is to bring in more tourists and many non-resident property owners. Wealthy international investors are obviously drawn to the resort community, with there being anecdotal evidence by my colleagues that investors use the typical loopholes to avoid the increasingly irrelevant foreign buyers tax. Let us hypothetically consider, however, if Whistler wasn’t a resort community (which of course, would radically change its residential landscape, but we are going to ignore this).

Whistler’s prices are much more highly linked to wealthy international investors than probably most communities in the region. While the number of foreign investors in Greater Vancouver are likely greatly exaggerated by the media and government, looking for a non-voting scapegoat, it is still an issue that has a significant effect in many higher end communities. However, you may ask, why would someone from another country pay a premium of 20% and not be guaranteed any money back? Why would someone pay $2.4 million for a $2 million property, losing $400,000 the moment the deal closes?

Well, the answer is, they probably aren’t. By creating such an extreme tax on foreign buyers, the BC government also incentivized these buyers to use the major loopholes that are almost impossible to close. Anecdotally, the real estate industry witnesses how foreign buyers simply use local contacts to purchase property, avoiding the tax altogether, and there is very little anyone involved can do about it. Real estate brokers and the lawyers involved have no ability to see confidential banking information. The banking and mortgage system, which logistically would be the only entities capable of doing much, has excused itself from pretty much any liability when it comes to tracking cash deposits.

The foreign buyer tax, therefore, is largely irrelevant for the wealthiest buyers. While the tax was unquestionably meant to target wealthy buyers, and the media certainly focused on the Chinese nationals, it actually ended up mostly just hurting middle class skilled immigrants from the United States or Europe who didn’t have the same sort of network as the wealthier investors.

Whistler especially plays into this target market as a playground of non-permanent wealthy residents in such an extreme way that even pricey neighbourhoods in the City of Vancouver and West Vancouver hasn’t seen.

Considering that Whistler is not a true traditional residential community and its economy relies entirely on tourism and feeds our provincial coffers in a substantial way, it may not be prescriptive to suggest that Whistler’s challenge of rapidly decreasing housing affordability on already high prices is problematic. However, the two lessons to be learned should not be dismissed: chokeholds of supply and bureaucratic stalls cost money that hits the consumer and the foreign buyer tax does not actually deter the wealthiest foreign buyers.


Municipalities are at the forefront of the challenges of housing affordability. The rising cost of infrastructure that cities are responsible for are creating challenging deficits or major gaps in services that previous generations took for granted. Yet without the resources to make concerted efforts, many municipalities feel that all they can do is just keep building as much as possible.

Housing affordability is a complicated multi-faceted issue. No one organization or government is going to be able to significantly affect a generational continent-wide trend. Yet by analyzing anomalies in the region, I believe I have shown that if elected leadership and executive city staff are truly committed to innovative solutions and avoid the pitfalls of complacency, we can alleviate some of the extreme and unsustainable rising prices.



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