Housing policy misses the resale-new homes split, says economist

Vancouver’s housing crisis is exacerbated by federal policies that are creating increased demand for mortgage debt and resale housing, says a senior economist who spent six years at the Bank of Canada and is now vice-president of policy for the Business Council of B.C.

Oxford educated David Williams, who is president of the Association of Professional Economists of B.C., said the current argument that the housing affordability crisis, or the disconnect between household incomes and the price of resale homes, is largely due to a lack of supply is flawed. That’s because it does not distinguish resale home prices from newly built home prices, which are two related but separate markets with different pressures, he says. New home prices reflect construction costs, city taxes, municipal levies and other costs, while abrupt changes in resale prices are principally driven by demand, he says.