Article content continued

Urban economists believe the required policy response is to increase the supply of new housing to meet the demand, rather than choking the supply with restrictive land-use regulations.

Affordable housing has been a major concern for cities that have seen their populations and economies grow rapidly. The abundance of employment opportunities in a city attract workers from other cities and countries resulting in an increase in the demand for housing.

Thus, a common thread that runs through many vibrant cities, such as London, New York, San Francisco, Toronto and Vancouver is a lack of affordable housing. And whereas Canadian cities have encountered housing affordability challenges in the recent past, other cities have grappled with these challenges for much longer and with limited success.

In a recently published article in the journal Housing Policy Debate, Vicki Been and co-authors analyze why supply skepticism exists and how to respond to it. They review a huge amount of existing research to determine whether new housing construction helps address housing affordability.

The conclusion drawn from a review of almost 100 research publications was an unequivocal ‘yes.’ “We ultimately conclude, from both theory and empirical evidence, that adding new homes moderates price increases and therefore makes housing more affordable to low- and moderate-income families,” wrote the authors.

But that’s not all. The authors also observed that the addition of new housing at market prices is a necessary but not a sufficient condition to improve housing affordability for all. Such an approach might miss meeting the shelter needs of those who have been priced out of the market. Thus, the authors advocated for government intervention “to ensure that supply is added at prices affordable to a range of incomes.”