The Affordability Gap

The question

Under what financial and regulatory conditions does small-scale upzoning under Bill 44 produce rental housing affordable to local renters in Surrey, and do those conditions currently exist?

Bill 44 requires BC municipalities to permit small-scale multi-unit housing (SSMUH) across lots that were previously zoned single-family. The policy rests on a supply-side axiom: remove the barriers and prices will fall. That leaves out the financialization of housing: the process by which real estate is absorbed into global circuits of capital, and housing comes to be held as an investment rather than as somewhere to live.

Surrey is Metro Vancouver’s fastest-growing municipality, and upzoning sharply increases the development potential of its land. If land costs rise faster than construction costs fall, the minimum viable rent needed to justify a new unit may go up rather than down. That paradox is what the thesis is built around.

Three conditions are under investigation: the financing structure that makes affordable rents viable and for which kind of developer; land ownership and price, and whether post-Bill-44 value uplift structurally forecloses affordability; and neighbourhood context, comparing a displacement-vulnerable area with a transit-speculation one.

Method

A mixed-methods design across two Surrey neighbourhoods: Newton, lower income with higher renter vulnerability, and Fleetwood, higher income and subject to SkyTrain-driven land speculation. Each stream maps onto one of the three conditions above.

1. Difference-in-differences spatial analysis. BC Assessment data for 2019, 2021, 2023 and 2025, accessed through SFU Abacus and joined by parcel ID, to measure land value per square foot before and after Bill 44. The 2019 and 2021 years establish the pre-policy trend needed to test the parallel trends assumption. Sales History tables supply real transaction prices as a market-facing complement to lagging assessed values. Upzoned lots are compared against two control groups: existing strata townhouses, which share a similar footprint but are unaffected by the upzoning, and undersized lots exempt from it.

2. Pro forma financial modelling. Four developer profiles, each carrying its own margin and cost structure but all using identical post-upzoning land acquisition costs:

   • small local builder on conventional bank financing
   • small market builder on CMHC MLI Select
   • non-profit developer on conventional bank financing, at zero margin
   • non-profit developer on CMHC MLI Select, at zero margin

   Construction costs come from the 2026 Altus Group BC Cost Guide, with a hard-cost premium applied to the MLI Select profiles for the BC Energy Step Code and Passive House standards needed to earn the points that unlock the favourable financing rate. The market profiles absorb the full municipal fee burden under Surrey’s 2025 DCC bylaw and proposed ACC bylaw; the non-profit profiles apply the waivers and reductions non-market housing is eligible for. The resulting minimum viable rent is measured against 2021 Census renter median household income at the dissemination-area level for each neighbourhood. That difference is the affordability gap.

3. Semi-structured interviews. Six, across three cohorts: two City of Surrey development planning staff, two private mid-sized builders, and two non-profit or co-op developers. The guide is built to extract the specific capital constraints and regulatory timelines that feed back into the pro forma’s baseline assumptions. Transcripts analysed using Braun and Clarke’s reflexive thematic analysis.

A fourth strand, time permitting: ownership mapping through the Land Owner Transparency Registry. BC Assessment would first isolate multi-parcel assemblies held by numbered companies; LOTR searches on those flagged parcels would then identify the controlling interest holders behind them. Set against transaction timing from Sales History, that is direct evidence of financialized holding patterns.

Why it matters

If upzoning raises land values faster than it lowers unit costs, the policy can increase supply while making individual units less affordable, not more. Every municipality now writing SSMUH into its zoning bylaw is making an implicit bet that this does not happen. It is worth knowing whether the bet is sound, and under what financing conditions it stops being one.

Target defence: Fall/Winter 2027.