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February 18, 2014

The Affordable Housing Crunch

Reuel S. Amdur

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On February 3, Carleton University held a public forum on the issue of affordable housing, featuring Carleton University professors Ian Lee and Benjamin Gianni, as well as Jennifer Keesmaat, Toronto's Chief Planner, and Brock Carlton, CEO of the Federation of Canadian Municipalities.

Lee argued that affordable housing is an issue affecting only the largest Canadian municipalities.  For that reason, and because housing is under the constitution a matter of provincial responsibility, it is a matter to be addressed locally and provincially.

On the other hand, Carlton contended that housing is a concern affecting every part of the country.  He noted that the Canadian government spends $2 billion annually on social and affordable housing, $1.7 billion of that on social housing.  That $1.7 billion is, however, at risk, as the government is allowing that expenditure to end in five years.  With somewhere between 150,000 and 300,000 Canadians homeless, Canada risks an increase in homelessness at the same time that it is tackling the problem by funding Housing First initiatives.  These initiatives involve providing housing for homeless persons and giving them supports once they are housed, rather than supporting them in shelters till they are ready to move into standard housing.  The stock of social housing is deteriorating and will do so more rapidly if funding is not available for upkeep.  Currently, there are immense waiting lists for social housing—ten years in Ottawa and seven in Peel, as examples.

We face a real crunch in the rental market.  While a third of Canadians rent, over the last 15 years only 10% of new units were constructed for rental purposes.  Developers find it uneconomical to build affordable rental units.  They much prefer to build condos.  Gianni said that in dealing with the rental crunch municipalities need to offer incentives to developers to build affordable rental units, such as tax holidays.  In order to do so, they will require provincial subsidies. 

In outlining the nation-wide scope of the housing problem, Carlton pointed to the acute shortage in the North.  In Whitehorse, people are advised not to come unless they have arranged for accommodations ahead of time.  In the West, affordable housing is just about unavailable.  Many areas that are more rural in character, with aging populations, face the need to change single family houses into rooming houses or other multi-person accommodations.  They also need to provide housing for empty-nesters.

Overall, we are facing a daunting fact: as of last November, the average housing cost was $391,820.

Keesmaat agreed with Gianni about the need for cities to provide incentives for the construction of rental units.  She also spoke of a trend among the boomerang generation of preference for living downtown, near work, and for choosing small condos.  The problem is that this choice does not fit well with new family formation.

This forum did not adequately address two fundamental issues.  First, developers are only too happy to admit that it is not economically feasible for them to build affordable rental properties.  Of course, if subsidies are handsome enough, they will come aboard.  But would it make more sense financially for government to do the building?

Next is the issue of the drive of government at all levels to keep taxes as low as possible, preferably to cut them.  The strategy, certainly at the federal level, is to make it impossible to engage in social spending.  The situation is that described by John Kenneth Galbraith: private affluence and public squalor.

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