Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Hybrid Housing

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Miro Cernetig in this morning’s Vancouver Sun on Michael Geller‘s proposal to adopt a new method of making housing affordable. Well, not new exactly but a new for here. It has been working in the UK for some time.

It works like this: Most people — from the working class to the disabled — can no longer afford a house in Britain’s largest cities. With no grubstake from their families as a down payment, most people can only dream of ownership in the city.

This has created a hollowing out in communities, what you might call the Manhattan urban model, where service providers and the poor are forced to the margins of the city. Then someone had an idea. Why not create “staircase” loans, a sort of hybrid between taking out a mortgage and a rental lease.

A person would be able to take a quarter share in a property, say $100,000 of a $400,000 apartment. The bank, housing agency or developer would hold onto the rest and collect a portion of rent on top of the mortgage. With time, a person could up the quarter share to full ownership.

If you talk to Geller, you will quickly find the financing model can also be used in more creative ways.

Ownership could be targeted to service personnel, like firefighters and police officers, who now live outside the city where they work. Government could use the model to help the working poor get out of the rental trap. With a little creativity, it might even be used to help people on welfare move into the housing market.

The point is of course that there has been very little done in this field in Canada since the federal government got out of housing altogether. And even less in BC where the province downloaded housing to the municipalities – knowing that they did not have any source of funding to make it happen. In other words, our poorest and most vulnerable citizens were made to pay for getting the country out of deficit. Or if you prefer, defeicits were seen as a wrose problem than homelessness. Either way a cyncial abandonment of responsibility for a quick political gain. It is not my original idea, but I do subscribe to the idea that the measure of a society is how it treats its most vulnerable members. Canadians like to think of themselves as a caring and compassinate society. That is, I am afraid, a delusion.

Michael Geller is someone I like to think of as a friend. He recently twitted me for being too principled to run for office myself. Something that he is doing a a candidate for the NPA in the City of Vancouver. I do not have a vote there of course, but even if he wasn’t a highly intelligent, hard working and personable politician I would endorse him for this idea alone. Because it is long past time for politicians to start tackling issues like poverty and homelessness, and stop pretending that this is somehow beyond our power to help.

Written by Stephen Rees

October 20, 2008 at 9:29 am

Posted in housing

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5 Responses

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  1. Well said, Stephen.

    I am thinking of reserving one vote for Michael Geller in the Vancouver election, not just for his borrowed hybrid housing (hybrid mortgage?) idea, but for his work toward making a moderately sustainable community at SFU a reality. He also knows a lot about construction, contracts and finance.

    It will pain me, though, to know it is also one vote for the NPA too. But he would contribute lots to the discourse on council, though I would hope for a less angry and condescending tone than I and others have witnessed in the past.

    Meredith

    October 20, 2008 at 3:29 pm

  2. I wonder if this idea could have the unintended consequence of *increasing* the prices for available housing. In the same way that cheap money and easy terms (zero down, 40 year mortgage, for example) increased the available pool of buyers, which helped prices rise, helping more folks with marginal incomes could simply make the hunt for housing more competitive. Still, the idea has a lot of merit, so if it was implemented in a way that prevented speculative buying, it could work.

    Charles

    October 20, 2008 at 10:59 pm

  3. It’s not obvious how this works – in order for this to make houses substantially more affordable surely the rent has to be a lot less than the cost of buying. My understanding is that in a balanced housing market, this is not usually the case. So it may only work in an overinflated housing market and possibly would even help to prop that market up.

    Mark

    October 20, 2008 at 11:10 pm

  4. To Meredith, Charles and Mark. Thank you for taking the time to respond to this idea, and the kind, and ‘cautious’ words! Mark, you are correct in noting that the rent has to be less than the mortgage payment/strata fees/taxes for this to work. But, that is the case in Vancouver. As to Charles’ question, it is worth noting that this financial structure has often been used by non-profits, selling to ‘targeted’ markets, eg employees, congregants, etc. which has dampened price escalation. And Meredith, I appreciate your sentiments and concerns. I do hope that if I am elected, that I will become a uniting, rather than divisive force on Council.

    Michael Geller

    November 4, 2008 at 5:11 pm

  5. Michael

    Welcome, and thank you for the comment. I hope that now you have found your way here you will leave more comments. You may also be interested in what Hank Ditmar had to say last night – and some of his illustrations

    Stephen Rees

    November 4, 2008 at 5:37 pm


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