The economic market price for any good is defined by the price for which a seller will sell and the price for which a buyer will buy. Market price is far from a static number. It is dependent, in the first instance, on the interplay between supply and demand. When there's more of a good than there is demand for that good, the market price tends to go down until something closer to equilibrium is reached. When there is less supply than demand, price tends to go up.
Markets are also drastically affected by, for example, government regulation and tax law that favours one good, say, condo construction, over another, rental apartment construction. Markets can be manipulated, the holy grail of monopolists everywhere. And markets, as economists like to think about them, are largely a theoretical construct. They are neither efficient nor free.
End of economics lesson.
Markets and market price are important right now because that seems to be—hopefully only in part—the metric to which the RMOW is hitching its employee-housing strategy. When the voluminous council package outlining the private developers' proposals for employee housing came out two weeks ago, all proposed rental rates were redacted. The developers' proposals had them shown, but for reasons we can only guess at, they were blacked out.
In their place was a nebulous comparison to "market" rental rates. According to Braden Dupuis' story in last week's Pique, the RMOW had been "advised" not to present the actual rates. Instead, we were told those rates were, in all cases, 20 to 40 per cent below market rates.
I'd like to know whose advice this was. I suspect it would take a Freedom of Information request or an act of God to find out, but I pose the question and hope the RMOW will be forthcoming with an answer. You know, transparency and all that palaver. But, advice aside, let's consider what that means.
At current market rates, people consider it a really good deal if they're only sharing a bedroom in a market rental with three other roommates. This pricing policy suggests they're getting an RMOW-approved deal if they're only sharing it with two others. I guess that's progress.
But it's still unaffordable.
And affordability has always been the touchstone of the RMOW's employee housing policy. So there can be no doubt this initiative charts a new course.
Unfortunately, it charts a course with the most valuable resource sitting in the municipal coffer: bed units. It wasn't that long ago bed units allocated to employee housing—Whistler Housing Authority (WHA) housing—were considered outside the bed-unit cap.
Historical aside: The bed-unit cap, Whistler's self-defined, self-imposed limit to growth, is a number that was set in the early days of the nascent resort municipality. It was based on an assessment of the valley's carrying capacity at that time. Carrying capacity is, as is the metric of bed units itself, an imprecise estimate. It takes into account such things as sewer and water capacity, ingress and egress, land mass and even quality of life.
Clearly, not counting employee-housing bed units was an unsustainable fiction. Employees flush toilets, drink water, tend to drive cars, at least sometimes, and fill up the valley to an even greater extent than people owning market homes. So they became part of the bed-unit cap, a number that has grown over the years but nonetheless is looming large in the near future.
The point of this—yes, there is one—is that every bed unit we allocate to slightly-more-affordable housing is a bed unit that becomes unavailable for truly affordable housing. And the value of every remaining bed unit becomes greater; the basic law of supply and demand. Of course, this assumes A) there is still a bed-unit cap, and B) we're not going to continue kicking the number down the road.
The reason this is important is twofold. Affordable WHA bed units are more or less locked in. They're full and they will remain full. No one living in WHA housing is ever, barring a lottery win, going to move up to market housing. As people in WHA housing age and retire from the workforce, those units will remain locked in until the current occupants move or die, neither of which is likely to happen at a fast rate. The jobs they leave will have to be filled. The people who fill them will have to be housed. The jobs they take will have to allow them to afford to rent or buy. Hence, the stock of affordable, WHA housing will have to increase just to sustain our built reality.
Which begs the question: Why are we frittering away increasingly scarce, increasingly valuable bed units on private developments that are only marginally more affordable than market rental?
And that leads us into the quagmire of why market rents are so high. Here are a couple of reasons. There has been an increase in second homeowners cashing out of the Lower Mainland and moving to what was their weekend retreat. Many are retired. Few who had suites in their Whistler home want tenants now that they're here full time and can afford not to have them. We've lost rental to them.
Aging Whistleratics who needed mortgage-helper suites when they were younger no longer need them. We've lost rental to them.
An unknown, but significant number of homeowners have turned to the black market, Airbnb. Compared to full-time tenants they can make the same, or more, income from their suites with less hassle and in fewer occupied days. We've lost rental to them.
Changes to B.C. rental rules have made it more onerous to have tenants. Some homeowners have decided it isn't worth the bother. We've lost rental to them.
The net effect of this less-than-exhaustive list of reasons, coupled with the unadulterated greed of some landlords, have driven "market" rents to where they are. And where they are is at an inexcusable level upon which to base the advisability of rental rates in employee housing built by private developers.
I'm not blaming private developers. They need rental rates that make their development work. Those rates are higher than rates charged for similar apartments by WHA.
I blame this council. The section of the Mayor's Task Force on Resident Housing hatching this plan doesn't make any sense. If Whistler didn't have its legacy land bank, if there was no more "free" land to build affordable housing on, if there was no demand for that housing, then it might make sense to turn it over to the private sector.
But we have land, we have demand and we still have bed units. We shouldn't squander them on any of these plans.
I call on the next council to right this wrong. Stop this process. Apologize to the developers whose time has been wasted and hopes raised.
And get to work building affordable housing.