August 1, 2015


Bartley Kives

Columnists

Housing in crisis

City’s blowing a chance for growth

At the risk of throwing a soggy blanket over the current optimism in Winnipeg, this city is about to blow the biggest opportunity to come around in decades.

No, I’m not talking about National Hockey League tickets. That tiny window opened and closed in 13 minutes two Saturdays ago.

I’m talking about growth — the tangible variety that involves more human beings inhabiting this town, not the loosier-goosier concept of economic growth.

For the better part of the past 50 years, Winnipeg has been rightly regarded as a slow-growth city due to annual population increases of barely one per cent.

According to Statistics Canada, our growth this year is a modest 1.3 per cent, as about 9,000 more people were added to a population that stood at 684,100 almost a year ago.

The city’s population is now estimated to be 693,200. The broader Winnipeg metropolitan area — the city and surrounding bedroom communities where more than half the workforce commutes to Winnipeg — now stands at 764,200, up from 753,600 a year ago, according to StatsCan.

You would think a medium-sized metropolitan area that’s been growing slowly for decades for would be able to sustain the slow-but-steady pace.

But a bizarre thing happened over the past decade: Winnipeg’s snail-like population growth outpaced the supply of housing to the point where residential property values doubled and the apartment vacancy rate plummeted to ridiculous lows.

Between 2003 and 2010, the taxable portion of Winnipeg properties jumped from $15.1 billion to $30.8 billion. On one hand, this is great news for people who own property as well as the real-estate industry, the property-development sector and all the tradespeople and retailers that benefit from a property boom.

But the rapid increase in property values has a corollary in residential-apartment vacancy rates, which first sank below two per cent in 2000 and have now receded to 0.7 per cent.

It’s been said many times, but this amounts to a housing crisis. Many people moving to Winnipeg cannot find a place to live and many people of modest means who already live here can’t afford to remain, if they have to move, for any reason.

Part of the problem is a shortage of apartment buildings. Developers are more willing to build condominiums than apartments, mainly because condos amount to quicker profits. As well, many developers resent the rent controls in place across the province, even though property-management companies routinely exceed those controls by making legitimate improvements to their buildings.

But another major factor in the residential-housing crisis is condo conversions, which are driven by the high housing prices and provide a fantastic opportunity to make a quick buck. The conversion of apartments to condos has exacerbated the housing crisis, but Manitoba’s laissez-faire regulatory regime actually encourages them.

In most other provinces, apartment-building owners who want to convert their suites into condos must first determine what sort of infrastructure improvements must be made to their buildings, such as roof or furnace repairs. They must then create a kitty for those improvements which will then be used by future condo-buyers to pay for the upgrades.

This kitty both protects condo buyers and slows down the pace of conversions, as there is no enticement to make a quick buck. And that in turn displaces fewer apartment dwellers.

In Manitoba, the condo converters essentially do what they want. Cognizant of the problem, Winnipeg’s city council is formally urging the province to insist that condo converters place seed money in building-maintenance funds. But the provincial NDP isn't going that far.

In May, the Selinger government promised to slow the pace of condo conversions by announcing it will soon force property owners to provide more notice to apartment residents. The province also plans to place a four-year moratorium on conversions of buildings where owners have received rent-control exemptions because they fixed up entire properties.

In the meantime, Winnipeg is left with the worst of both worlds: a low vacancy rate that makes already desperate disadvantaged people even more desperate and a rent-control system that only annoys the very same property developers the city and province need to build more apartment units.

Ottawa, which hasn’t cared about housing in decades, needs to create some form of tax incentive for apartment developers. City council, which is fond of telling anyone who will listen that it should not be responsible for housing, needs to realize the low vacancy rate is not just fuelling Winnipeg’s homelessness problem, but contributing to crime. A city cannot be healthy with a large underclass of people with no acceptable place to live.

The province has even more work to do. It needs to go further on condo conversions, possibly rethink the thorny question of rent control and start thinking about housing in a broader context.

At the risk of upsetting the provincial housing orthodoxy, its current policy preoccupation with creating low-income housing quite ironically harms low-income people, because when middle-class and wealthy people have no place to live, they simply move into whatever’s available. And that means displacing low-income people.

Ergo, Winnipeg needs to stimulate the creation of all kinds of housing: homes, condos, apartments and subsidized spaces, ideally all in the same neighbourhoods, in every section of the city. I don’t believe in urban utopias, but the healthiest neighbourhoods have a mix of people, not monocultures.

The policy geeks know this. The politicians understand this. Even the developers have been raising red flags about the Winnipeg housing crisis for years.

Unfortunately, housing isn’t anywhere near as sexy as NHL hockey. But I can tell you what’s not sexy: a slow-growth city too sluggish and short-sighted to accommodate what any observer would consider very modest population growth.

bartley.kives@freepress.mb.ca

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