There has been lots of drama in the current Calgary housing debate — from Ukrainian refugees complaining that Canada’s freedoms are not enough, to both the federal and provincial governments showing up to get a photo-op or two. However, if the language and obtuseness of the Housing and Affordability Task Force (HATF) didn’t signal imminent failure, then a quick look at the facts and recommendations will..The problem facing Canada in general and Calgary in particular, is a problem of excess housing demand. This is a result of national immigration policies and people expressing their jurisdictional preferences for places to live..Calgary has attracted people who want a ‘future’ and a place to work. "Alberta is Calling" has been incredibly effective in increasing migration to Alberta. And say what you will about Danielle Smith's presence on the national stage, the people on the street in the rest of Canada are looking at Alberta as a place of hope. Pierre Poilievre’s ascendancy is due in large part to speaking to things that really matter to most Canadians. And many of those see Alberta as a place that will allow them to pursue their dreams..This excess housing demand will not go away..Internationally, the war in the Ukraine has divided the world into two camps, those aligned with the BRICS nations (Brazil, Russia, India, China and South Africa,) and those with NATO. The sanctions against the export of Russian oil and gas never really worked and will be further undercut by the building of pipelines from Russia to China..OPEC+ where the “+” means Russia, has just indicated their pricing preferences in a post-COVID 19 world. The bottom line is that there will not be another oil price induced recession in Alberta, and so people will continue to come..As outlined in my op-ed last week, the real culprit in frustrating an adequate supply response to this excess demand is the suppression of greenfield housing development. With its weak-kneed announcement this week, the province of Alberta essentially punted, in being a meaningful player in housing policy..This may be good politics, as it means the City of Calgary will fall flat on its face and a year from now Mayor Gondek and the more woke councillors will be less popular than ever. Maybe then Smith can step in and make some substantive changes..In the meantime things will get worse..Affordability (this is a technical term which compares the median house price in the city with the median salary) a year from now will worsen as all housing prices will increase and the median salary will decrease, because recent Calgary immigrants will not be earning the big oil salaries..The HATF targets may well be met but they are so ridiculously low so as to be laughable. Outcome 1 (from the May 4 summary) is “Boost development by 1,000 more market (“unsubsidized”) homes beyond what is normally (definition?) built in a year, and at least 3,000 non-market (i.e. subsidized) affordable homes a year.”.So you may well ask how many units are “normally built in a year” because without this, how will you know if you have reached the target? The most recent housing review published by the City shows that the total houses (including apartments) completed in the first half of 2023 is up by over 1500 (annualized) units to 10,940 compared to the “decade average” (presumably 2020-2022) of 9,400. So without doing anything we are nearly 40% (1500/4000) of the way to the target. Methinks it won’t take much of an increase to claim we have met the objectives of the new policy. Also it will take nearly 6.5 years to move the 85,000 unaffordables into affordable housing. But this is just if demand does not change and the salary distribution of the employed does not change. Not likely..Speaking of the objectives or targets of the new policy. We went from 30 ‘actions’ on six ‘recommendations’ and 3 ‘outcomes’ on May 4, to ~65 ‘actions’ on 11 ‘objectives’ and 5 ‘outcomes’ in the most recent report. Confused? You are not alone..Reporters are now just referring to the whole mess as “about 70 actions. ” Nothing wrong with a little bit of creep on actionable items but why 65? Why not 50 or 80, or even the original 30? Are the citizens of Calgary really interested in how the details are to be sorted out between the administrators and the politicians? This makes the ‘strategy’ largely incomprehensible..What is frustrating is that there is no ranking of the anticipated effects of these “about 70 actions” upon the policy objectives. Normally we would expect in any cost/benefit analysis that any policy change would assign an estimate of how much of the objective would be achieved through any one policy change. But not here. If action 2.C.3 is completely achieved but 3.A.4 cannot be done we have no idea how that will affect the building of the addition 4000 units..It seems the most contentious recommendation is the “up-zoning” of the entire city. Up-zoning is intended to allow for more infill development in existing neighbourhoods that are currently zoned predominantly single-family detached homes. It is this policy that causing a group of councillors to balk at the package. What they are afraid of is a home builder buying two big lots in Mount Royal and building a 20-30 unit apartment building with no additional parking..They shouldn’t be worried. This will never happen because the land price of those two lots are the highest in the entire city. If a builder has this sort of project in mind he will go to Cochrane where land prices are less so it is easier to ensure the profit margins necessary to make the project profitable. No apartment dweller is going to pay double or more just for a Mount Royal address. They will be happy to pay a lot less and commute from Cochrane to Calgary..Further, in the districts that already have up-zoned regulations, the effect has been merely to up-scale the neighbourhood. Lower cost single family housing has been bought to provide two more upscale infill units. These then appeal to upwardly mobile professionals who don’t actually need affordable housing. This is exactly the opposite of the intended effect..The political fireworks on these issues are far from over. Luckily for the politicians the average voter will never even understand the issues, much less determine whether the policies have been successful or not..For me, my little half duplex just went up about $100K last year, which about offsets the inflationary erosion in the rest of my portfolio. For the other 70% or so of Calgary households that own their residences we are more than happy with Council’s incompetence!.William D. Marriott is a retired economist who specialized in public policy analysis of the oil and gas industry.
