The City of Burnaby recently passed an amendment to its inclusionary rental requirements. It has now been removed from the southeast portion of the city, which, according to Burnaby Now, has one of the lowest median incomes in the city.

Here's an excerpt from the staff recommendation report that was approved in early October:

The analysis explored the impacts of increasing the density of developments in the Edmonds Town Centre area to try and improve revenues. However, the results showed that at current values, additional density is not able to offset the costs of providing the non-market housing, and that the equity needed to pursue large developments became prohibitive. As such, it is recommended that inclusionary rental requirements apply city-wide, with a delayed effective date for the Southeast Burnaby CMHC rental zone (the “SE Burnaby CMHC Zone”), until such time that inclusionary rental requirements become financially viable.

What's noteworthy about this amendment is that it acknowledges the real costs associated with non-market housing and shows how important high market rents are to subsidizing them. There's no such thing as no-cost affordable housing. In the end, somebody always has to pay.

Here is an interesting chart (source) showing housing starts in Canada, by type, between 2000 and 2023:

As recent as 2000, single-family houses accounted for 61% of total starts and multi-family housing accounted for 39%. This flipped somewhere around the financial crisis and, last year in 2023, the percentages were 23% and 77%, respectively. This is a meaningful inversion which has helped our cities become more vibrant and more conducive to non-car modes of transport.

But in this recent article about Canadian housing, Donald Wright more or less argues: so what? We've been densifying our cities for all these years, but it hasn't helped our affordability problem. Supply must not be the answer to our housing crisis.

I'm not exactly sure what he believes to be the solution, but I don't think this problem is as simple as "we've built some housing, we made our cities denser, and yet housing is still expensive -- more supply must not be the answer. Let's move on."

Among many other things, it's important to understand what kind of density we've been building. Because up until very recently, we've basically taken the position that single-family neighborhoods should never be touched, and that density should only go in very specific areas -- and only after a lengthy and expensive rezoning process has been completed.

We've designed new housing to be expensive.

But attitudes are changing all across North America. We are now starting to do two very important things: (1) we are opening up more of our cities to intensification and (2) we are now allowing more multi-family housing on an as-of-right basis. Meaning, no lengthy rezoning exercises and no risk of community opposition.

These are two fundamental changes that should alter the kind of density that gets built. And in my view, it's going to be a positive thing for Canadian cities.

Over the weekend, we spoke about how the "GTA condo market is in a state of economic lockdown." What this generally means is that the math isn't making sense to build new condominiums. And so the market is necessarily pausing.

We spoke about what this will likely mean for supply in the coming years, but I think it's also interesting to talk about this in the context of something else: unfunded inclusionary zoning.

As a reminder, inclusionary zoning is, in its most basic form, a requirement to build a certain amount of affordable housing as part of new housing developments. And what I mean by "unfunded" is that there are no subsidies or other incentives being provided to the project.

This means that the cost of providing this housing -- and there is an additional cost -- needs to be shouldered by the project, which ultimately means the market-rate units need to pay for it.

Which is why if you look at most policy studies, you'll often find recognition that, because of this economic reality, IZ tends to work better in areas where home prices/rents are higher. And again, that's because the market-rate homes need to shoulder the cost.

We have questioned, many times, on this blog, whether this is the right approach to delivering affordable housing, but I think this question becomes even more critical in our current market environment.

If the entire market is, for the most part, in a state of economic lockdown, should we really be layering on additional costs and making it broadly more difficult to build any sort of new housing? It seems counterintuitive.

For more on this topic, check out this recent Sightline article by Dan Bertolet.