This year’s Vancouver homelessness count showed that more people than ever are living on the streets in BC’s largest city. Housing across BC is about to face even more strain with the expected mass expiration of funding for existing social housing. In the next 20 years, over 36,000 units of non-profit housing in Greater Vancouver, including co-op housing, social housing and senior housing, are set to lose their funding. Over 45% of these units will lose their funding in the next six years and the majority of them – 17,000 units – are located in the City of Vancouver.
In the four years since the financial crisis of 2008 brought a North American-wide collapse in housing prices, the Canadian government has successfully taken measures to bring real-estate prices back to their pre-crash levels. Following in the tracks of the American effort to rescue financial capital, the past four years have seen a joint effort by all levels of Canadian government to re-inflate the housing bubble by deregulating finance, extending new lines of direct investment into real-estate and lowering interest rates. The Canadian government has effectively called on the real-estate industry to lead the economy out of the recession, facing down typical historical patterns in which real-estate is the last industry to recover from system-wide crisis. Next to resource extraction, the only real growth industry in Canada since 2008 has been real-estate.
Yet today, as in 2008, the real-estate bubble is reaching a “tipping point,” according to a recent report by Canada’s Royal LePage. In cities like Vancouver and Toronto, housing prices have climbed to unprecedented levels, with Vancouver prices reaching up to 11 times the city’s average family income. The Bank of Canada has identified the Vancouver market as “ground zero” for the coming financial crisis, and from its perch at a distance, The Economist observes Canadian housing is “more overvalued than it was in America at the peak of its bubble.” All forms of debt are multiplying, but household debt in particular is currently higher in Canada than it was in the United States prior to the subprime crisis, with debt-to-income ratios reaching 153 per cent.
Federal exit from recession
In the two years following the global recession, federal banks across the world lowered interest rates in an effort to loosen the credit crunch and stimulate new rounds of investment. In September 2010, Mark Carney and the Bank of Canada lowered interest rates to 1 per cent, where they have since stayed. By the summer of 2011, the Canadian housing economy was showing obvious signs of escalation, and by June local prices moved well above their pre-recession peak. Having not only stimulated but “over-stimulated” the housing economy, Carney began issuing strong warnings about the unprecedented risk-exposure of Canadian mortgages. In reality, the central bank actually did everything in its power to continue the growing flow of cheap, low-interest money into the real-estate economy. Out of fear of exacerbating the underlying weakness of the recovery itself, the Bank of Canada took the position of searching out ways to buoy housing finance.
The already dire housing crisis in Vancouver is about to worsen with the mass expiration of funding and operating agreements for twenty-five thousand social housing units. By 2033, 99% of operating agreements across the country will have expired if current austerity measures are not reversed, amounting to $3.5b of reduced government expenditures annually. Presently there are no federal or provincial plans to initiate new or extend existing operating agreements. The forecasted federal funding for non-profit housing providers in BC for the year 2030 is zero. This process of funding-expiry has already begun, with tenants experiencing the first wave of this unprecedented withdrawal of public housing funds. Unless a popular struggle takes shape, the entire country will move in the direction of a massive loss of public housing.
Neoliberal policy makers and urban think tanks have framed this mass expiry in optimistic terms. The disappearance of funding is presented as an “emerging opportunity,” to quote a recent report by the BC Non-Profit Housing Association.  In the report, the Association explores how the opportunities of austerity can be “capitalized” upon, paving the way for the implementation of disaster capitalism. As it has often been proven under neoliberal governments, the deployment of a shock becomes the necessary grounds for the introduction of market reforms, with the ultimate goal of privatizing public assets and services. In the case of affordable and non-market housing, the disaster comes in the form of a funding expiry, for which the recommended strategies of “ensuring future viability” entail the introduction of market reforms. In a drastic change in direction, not-for-profit housing operators are slated to be phased out to make way for pro-market operating bodies.
The Mainlander is featured in the civic politics segment every Tuesday morning between 7am-8am on Vancouver Co-op Radio 102.7
This Tuesday Dec 13 2011, The Mainlander’s Tristan Markle spoke about:
a) Holborn Group’s recent plans for the redevelopment of Little Mountain
b) Mayor Robertson’s appointment of multimillionaire developer Olga Ilich as co-chair of the city’s affordable housing task force
Click here to listen