Home, home out of range
Housing problems and guv'mint priorities
The housing problem: It took the developers of the 147 unit development of apartment buildings and town houses in the north end of St. John’s two and a half years to clear the City’s approvals processes.
The housing problem: A buiness owner and single mom buys a home in the centre of St. John’s but discovers to her shock that the house is actually a burned out garage that belonged to a previous owner of the property behind hers. After a fire years ago, they covered over the heavily damaged timbers with drywall and paint and sold the space as a house that fronts on a street behind the main house. The house has been bought and sold a few times since.
The sounds of rats in the walls of her small house triggered the new owner to call an exterminator who inspected the ceiling and found the burned timbers of the walls and roof. A home inspector found other problems including a visible gap between the bottom of the wall on the street side of the house and foundation where the garage door used to be.
The City of St. John’s collected water and property taxes for 30 years although a check of their records during a CBC investigation in 2021 showed the property had been a garage and that there’d been no inspection of the property, no occupancy permit, nor any of the other documents normally needed to build a house within city limits. Ever. All the time someone had lived there and the city collected taxes.
The City refused to to take any responsibility for the mess but insisted that the homeowner pay for all the inspections and other work to make the house legally liveable. She was forced to hire a company and go further in debt to demolish the burned out garage.
The housing problem: The province needs 60,000 new housing units by 2030 to meet expected demand forecast by the Canada Mortgage and Housing Corporation. CMHC made the forecast four years ago when the need was for 6,000 new units a year. Lack of provincial government action - unchanged for all practical purposes in four years - means the demand would be for close to 10,000 units a year between now and the end of the decade. There’s been scarcely better than 1,000 new units a year since 2020.
The housing problem: Homeowners in Newfoundland and Labrador can pay taxes for decades on land they believe they own only to find out a perverse interpretation of a 1977 lands law by the courts allows government to claim title and force the homeowners to pay for the land as if they were occupying it for the first time at current market value or fight the government in court in a battle that will inevitably take years before there’s a final decision.
The provincial government has known there’s a problem for a decade and even after promising to fix the problem two years ago refuses to do anything because it’s cheaper and easier *for government* to ignore the issue.
The housing problem: The Premier’s Economic Recovery Team recommended in 2021 that the provincial government fix the problems with the Lands Act *and* modernise other registries that use outdated software and add weeks and months of needless delays and costs to building and selling homes.
The housing problem: Housing is a key sign of economic health, it’s 100% a provincial responsibility, and it’s also a widely varied issue but there’s no organization in the province - including the provincial government - that can give you a full picture of the whole issue.
There *are* groups that represent individual parts of the bigger housing picture - lawyers, real estate agents, home builders, the unhoused and so on - but they don’t work together to advocate to government and for the most part they stick to their very narrow individual group interests. In fact, if you look just at the groups dealing with people who are unhoused or living rough, there’s very little meaningful co-ordination among them mostly due to lack of money. Plus one of the biggest and best funded just converted in effect from an advocacy organization that could help bring folks together to a housing provider. It took over the management of the Comfort Inn project for government.
Inside government, it’s much the same with departments that affect housing operating on their own. But there’s a provincial government department for housing, you say, and there have even been two Big Name ministers in charge of it within a mere six months. Well, it’s a ministerial ghetto created to make it look like something’s happening but that really just keeps everything as it is. Don’t believe it? The picture shows the current listing on the government website of departments. Find the one that says either “housing” or “mental health and addictions.”
Outside of government, lots of housing stories make the news, even when people aren’t camping on public land. Unfortunately, in the same way that there’s no single group to deal with housing, there’s also no reliable source of unspun or despun information that lets reporters gives anyone a good overall picture. Anyone includes everyone inside or outside government, by the way and if you cannot get a good grasp of the whole picture, you aren’t likely to do anything effective.
Take a look at this story last week from CBC on the local housing market. It’s as good a story as you’ll find putting together the information that’s available but good information ain’t readily available. Heather Gillis quotes the Canadian Homebuilders Association who have been rightly banging the drum for a while now that “there are strong barriers to building more homes to meet ambitious federal targets to ease a housing crunch.”
There’s a labour shortage as CHBA focuses on but that’s only one issue that’s hindering the housing market and it's not even the most important one. All those things noted at the start of this column slow the housing market across the board.
Sending off an official trade mission to Mexico won’t fix the problem because a shortage of skilled workers is only one small part of a very big problem. Plus, there are lots of way more interesting places for Mexican workers to come than St. John’s so we’d really only attract really poor workers who cannot go anywhere else, or we’d have to pay more than we should to get them or they’ll come here, get their papers and then frig off somewhere else, or no one will come, or some combination of those four.
As for the other part of the story, it isn’t really fair to say the current housing market is hot. It's warm in done spots but overall there’s a balanced market with enough inventory to.meet demand. Five to six months of inventory for home sales is considered a balanced market. That's what we've got. There’s anecdotal evidence of some bidding wars but those are mostly at the low end of the market and they are nothing like what you see in really hot markets.
In what he says, the guy’s not wrong. Average price for a single family unit in metro St. John’s is up almost seven percent from last year, multi-family unit sales are up more than 10% year over year (they’re in really tight supply), and we are already the third biggest sales year in the decade and the year isn’t done yet.
Same thing with months of inventory, which is another standard signal of a healthy retail housing market. The last four years have been relatively healthy in Newfoundland and Labrador, with houses taking about 60 days on average to find a buyer and only six months of inventory available. Four years ago, there was two years of inventory and some houses tfatxsold when the market took off had been listed on and off for three years before theyvwent. There’s about three months of inventory in multi-family units now but that shows you there’s a shortage of rental properties around as much as anything.
The chart below shows you that right now multi-family units are in high demand and the prices have spiked upward, with most sales being in units worth more than $350,000. These are buildings with basement apartments as well as small apartment buildings but understand that over all this time, we have seen relatively few of thse houses built. People haven’t been looking for them. You can see that in the left side of the chart. The years before 2014 were all the last big peak of local home sales. Low volumes and low prices because everyone was interested in single-family homes.
What those numbers don’t show you, though, and what our real estate agent buddy won’t talk about is the huge gap between the northeast Avalon and the rest of the province. The average home price is significantly lower outside the metro area than it is inside the 12 communities that make up the census metropolitan area for Statistics Canada. Pretty well every indicator tails off the further you get from St. John’s including the number of real estate agents. If there are 800 in total, then 600 of them live within a hour’s drive of the real estate board office in the east end of Sin Jawns. There are localised pockets of activity but generally, home sales mirror the decline generally going on in most parts of the province except the northeast Avalon.
What’s driving that growth in the northeast Avalon is immigration. No coincidence, no accident that the hike in sales, prices, and the jump in multi-family units lines up with the jump in population starting in 2020. That growth cones from a combination of homing pigeons coming back during COVID and the recession associated with it, some migration from elsewhere in Canada - but nowhere near what they saw in places like Halifax - and international students.
Obstacles are huge in government that prevent the housing industry from growing as it needs to. Internal disorganization, outdated ideas, software, and equipment, and a general disinterest in housing are all part of the problem. Within the provincial government, these’s a general and long-term decline in the government’s ability to figure out what’s going on, work on solutions across government lines, and deliver them consistently over time. That makes things worse and on top of it, government pork and patronage spending sucks construction workers away from the home construction business.
Externally there are lots of organizations with an interest in housing but they don’t work together and many of them are not interested in pushing government to change things. They are politically weak and ineffective.
To get the full picture you have to put those two things together with spotty economic performance to get the third big reason why we have a housing problem. There are local things that are going very well in places like western Labrador or in St. John’s. There’s some signs of growth on the west coast around Stephenville but larger and longer term trends are still working wverywhere. Government policy reinforces the tends rather than balance out growth or encourage more growth everywhere. Outside of St. John’s and fly-in/fly-out oprations in Labrador, jobs for people on the Great Northern Peninsula, the Burin, the west coast, central Newfoundland, and the southern Avalon are in Alberta, Saskatchewan, and northern Canada. Traditional local sectors are stuck with policies from a half century and more ago and the results show in the widening gap between St. John's and everywhere else.
Not surprising the neglect of housing is the same as the neglect of economic policy for new industries, or older ones like fishery, forestry, and mining. Government plays a huge role in the provincial economy and that huge role makes things look way better than they are underneath. The biggest job growth this year has been in government-related sectors like health care, education, and construction not in sustainable, private sector industries. This has been the course for the provincial economy since 2006 or thereabouts. And government’s internal operations are still like they were 20 years ago when little happened if it didn't get Danny’s attention and most things didn’t. Serial government reigns: one thing at a time, slowly, except for panic now and again.
That heavy role government plays in the economy not only distorts things, it also hinders growth and development. Policies get neglected. It takes too long to get simple things done. Government doesn’t want to get out of the way so even on something like hydrogen, government rushes in without any idea where its going and then shifts gears, changes rules on the fly, discourages things it should be encouraging, cuts off development where it could actually need development (like Labrador) and generally muck around in a counterproductive way. All of the that sluggishness drives up costs and in this highly competitive world, money goes where it can get to work fastest and make the most for everyone. Not only do housing developments take longer in Newfoundland and Labrador than elsewhere, developers have to sell more units to start making money compared to elsewhere. We are in the opposite position from where we need to be.
Think of it this way: the provincial government could only take $35 million from a fund to support new businesses and throw it into a housing fund that it scrambled to announce in a total panic because there wasn’t any demand in the economic growth part of government where the money was supposed to go. Symbolic of that was the end this year of the EDGE program, which government scrapped in favour of just giving money to companies with no strings attached in exactly the sort of desperate give-aways we know from decades of experience just don’t create economically and environmentally sustainable jobs.
In other columns, you’ll see a description of government as disconnected, incoherent, and reactive. Those all apply generally and they apply specifically to things like housing. To have a coherent housing policy, one that covers all the range of housing needs and issues, you’d need a coherent government that could produce a coherent picture of the province as it is *and* figure out where it needed to go *and* that could then decide what policies, programs, spending cuts, and so on the government need to achieve the goals. We used to have governments like that. Not any more. Not for years.
The federal government’s got a good handle on housing things with plenty of money to back it up. The provincial government is stumbling and scrambling and municipalities simply aren’t even in the game. Most municipalities are struggling to deliver basic services and some cannot staff up properly. Within the last six to eight months, municipalities as widely and wildly different as Stephenville and Pouch Cove and plenty more in between have struggled with staffing at the most senior levels.
There are huge housing problems across the province that have been there for years. We still have them because at any given time, governments always have other priorities.