COLIN CORNEAU/THE BRANDON SUN
Newly constructed public housing is seen near Stickney Avenue in Brandon on Friday afternoon.
Brandon’s rapid growth may put the city in an envious position, but that growth has come at a cost. In its ongoing series, the Brandon Sun is studying the city’s affordable housing crunch and how other growing communities have dealt with their housing issues. This is the fifth article in the series.
The answer to Brandon’s housing crunch could be as simple as a building and development approach already in place in Saskatoon and Regina.
"The only way to do it is with planned communities," J&G Homes president Jared Jacobson said. "Hopefully with four-party involvement because then you can have mixed uses so that it’s not low-income housing in one area, high-income housing in another. You want it blended in so that it looks like a community and feels like a community."
Jacobson said there are ways for lower-cost housing to blend in with homes with more luxurious amenities with proper planning and designs.
While many look at projects with the three levels of government providing funding, Jacobson added the homebuyer to the solution in part because of the global financial market.
"Entry level programs need three partners in the city, the province and private sector, and actually the purchaser needs to have their equity in there, too," Jacobson said. "You can’t expect to get into a house with nothing down. It’s too risky for banks given what’s going on globally and everybody has to take a part."
But to address the problem, it may require answering a different question: "How do you get more people into housing they can afford?"
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"What do you mean by affordable housing? Subsidized for rent and entry-level for purchasing. I’d split that idea into two," Jacobson said.
The question of what affordable housing is remains complex, because what is affordable for one family could be a pipe dream for another. As mentioned earlier in the series, some prefer the term attainable housing as it more accurately describes the issue.
"You really need to satisfy both (renters and homebuyers) in an everyday market because there’s always going to be renters and there’s always going to be buyers," Jacobson said. "It’s always reflective of interest rates. With low interest rates right now, it’s a good time for people to get into entry-level purchasing because it’s affordable and the interest rates aren’t projected to go anywhere for a long time."
Manitoba Housing CEO Darrell Jones said the strength of that market has had positive effects, such as more home construction activity as well as families up the housing spectrum as renters become owners.
"Manitoba has seen some of the largest growth in that area of private home ownership in the last few years," Jones said. "When we do developments for seniors housing, a lot of times, we see migration of seniors from single detached housing into this type of accommodation, which frees up those units for others. We have provided funding for up to $60,000 per unit for seniors housing."
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"The whole problem with renting is you can’t get out of it," VBJ Developments vice-president Steve McMillan said. "If you are paying $1,000 or $1,100 per month and you can’t save. And that’s more than the mortgage you’d be paying."
While McMillan said grants for entry-level homebuyers to get down payment may be a solution, Jones noted there have been many similar programs over the years.
"They create a temporary bulge in the marketplace and it typically moves people along at that time and they would have moved anyways," Jones said. "They help people that were nearing the people that could have achieved it regardless. That’s not necessarily a bad thing but it is something you need to keep in mind."
In some rural areas, surplus Manitoba Housing units have been put up for sale, with Manitoba Housing offering assistance to potential buyers.
"There, we target people under a certain income level ($60,200) that would typically have a hard time to get into home ownership on their own," Jones said. "These are housing units where we have had difficulty filling them and in communities with declining population and demand for that type of housing.
"A lot of times, it’s a single unit here and a single unit there that we see has been sitting vacant."
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Manitoba Housing has not been building entry level housing units for sale, focusing instead on the rental market and assisting with the construction of projects like Massey Manor in downtown Brandon as well as the Western Manitoba Seniors Non-Profit Housing Co-Operative on McDiarmid Drive. Other projects since 2009 have included Brandon’s needs, such as 24 units on Stickney Avenue and the Massey Building redevelopment.
Occasionally, questions have been raised on whether government investments have been made effectively, such as the Stickney Avenue property, which cost more than $280,000 per suite to build.
"That piece of land is on a bit of an incline, so there was some extra structural work that pushed up our costs," Jones said.
Jones added that using geothermal systems to heat the building also increased the capital cost, but was done to lower the overall operating costs over time.
Jacobson said those costs make some low-cost housing options unaffordable and suggested a private sector approach would have been more cost-effective. He said one of his developments in the south end of Brandon, known as Southridge, had units that ranged from $149,900 to $179,900, and units at The Landing project ranged from $189,900 to $259,900. He added that included the land costs that range in the neighbourhood of $30,000 per unit.
"The average housing cost in Brandon when (Manitoba Housing’s Stickney Avenue building) was built was around $183,000," Jacobson said. "Now we have low-income families living in affordable units that cost taxpayers more than $270,000? Does this make sense?"
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Government regulations can also affect the price of development, which are key because they are passed on to the consumer in some way, shape or form.
Where developments in Saskatoon often include linear parks that help with draining water, Brandon’s regulations don’t consider that as green space. That matters because when subdividing property, 10 per cent of it must be considered green space.
"It would be a great idea and the city is coming more on board with this, as long as it’s planned for 100-year rains the city would likely accept that," Jacobson said. "That’s the way to do it, for sure. If you get more lots on the same site, it brings the cost down."
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Jacobson said some of the land development cost increases are related to fixing old infrastructure problems and creating the new infrastructure needed for sustained growth and more subdivisions later on.
"The only key factor is you’d need to be able to afford the house once you are in it, with all of the taxes and everything else," Jacobson said. "The city requires landscaping and hard surfacing, and certain drainage issues that we are fixing from 50 years ago. So that doesn’t do anything for the cost of developing land, but it has to be done because we have to fix those problems when we are getting 100-year rains instead of 25-year rains.
"You need to have the right oversizing so you can keep going with development and not just do one parcel (of land)."
While infill developments can help maintain the density of a neighbourhood, it isn’t always cost-effective compared to a previously undeveloped site.
"The infrastructure is one thing, because you have to see if it’s all rotted out," McMillan said. "But the lots to make that kind of project work? Any lot, people are trying to sell that for $150,000 with a bulldozed house, so by the time you are done, you are $200,000 in for the lot and you haven’t built anything yet. It’s not affordable."
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Jones said while the provincial need for Manitoba Housing units is stable, a greater need exists in Brandon and some Westman communities, and more projects have been geared to deal with those needs, typically generated by stronger industrial growth.
However, Jacobson said the demand for housing, while growing, is not at the same rate as Saskatoon or other centres with resource-based booms and that a bust is less likely because of that.
He suggested a better way to relieve housing demand would be to cut red tape and improve relations between government and the private sector.
"The city and the province have to come on board and work with us and give us some new opportunities and work with us," Jacobson said. "We have the expertise and they would need to up their staffing at the city level to take care of this. At the end of the day, where would that be factored into the cost? Your taxes would go up and how are the units affordable then? You can’t sustain them."
McMillan and Jacobson said the city’s involvement would be welcomed in the affordable housing arena.
"They have never called us once to ask how we can deal with affordable housing," Jacobson said. "Not one call. That would be a start."
Republished from the Brandon Sun print edition August 4, 2012