The concept of “affordable housing” is considered by most Canadian governments a basic human right. But the term also obfuscates to whom related policies apply and muddies significant regional differences. Affordable housing is at best an umbrella concept for who can afford housing requiring no more than 30 per cent of family income. At its worst, it replaces the concept of social housing for those most at risk, a policy priority largely abandoned more than two decades ago. As governments retreated from social housing, however, it intensified a broader, largely successful “affordability” strategy for most other Canadians. While the Federal Government’s 2017 National Housing Strategy marks a return to social housing, broader affordability has come up against Vancouver and Toronto’s emergence as expensive global cities while government responses to a ripening economy may decrease affordability in more stable markets.
The Great Retreat J. David Hulchanski provides a clear history of the rise and retreat of government from social housing. In his 2003 paper, What Factors Shape Canadian Housing Policy, he posits first a well-entrenched “government housing system” marked by a primary sector (home ownership) and a secondary sector (supported housing). In 1972, under Pierre Trudeau’s Cooperative Federalism, the Ministry of State for Urban Affairs (MSUA) was created to facilitate social housing. Provincial hostility to cooperative federalism’s shared funding approach, however, led to MSUA’s abolishment in 1979. But it was the triumph of neo-conservatism in the 1990s, notably
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the Harris government in Ontario and the Chrétien/Martin federal government that marked the great retreat from social housing. According to Tim Sales and Josh Brandon, the Canada Mortgage and Housing Corporation’s (CMHC) public housing crashed from a high of 10,000-16,000 units annually in the 1980s to just 603 in 2012. Affordable housing strategies, on the other hand, prospered. Hulchanski documents how multiple, middle-class housing initiatives through CMHC, such as the First Home Loan Insurance Program (1992) blossomed, while Patricia Meredith and James Darroch detail in the Globe & Mail just how powerful the federal government’s early-2000s affordability strategy benefited the Canadian middle class while supporting economic stability. However, according to Jeff Everson of the Canadian Urban Institute (CUI) and author of Scaling Up Affordable Housing in the GTA, “We in Canada have taken to not speaking of social housing anymore, instead calling it ‘affordable.’ It blurs the distinction between social housing, which is largely supported by government funds, and affordable housing, which can be supported not at all or can be supported by a variety of subsidies.” The Missing and Not So Missing Middle Class Despite the 2008 recession, a decade of very low mortgage rates improved housing affordability for most middle income earners, notwithstanding Toronto and Vancouver. In an important speech last February, It Takes a Village to Build a City: Housing as a Shared Responsibility, CMHC’s president and CEO, Evan Siddall, documented their emergence
as top-25 global cities with sophisticated tech hub economies focused in their cores, generating severe affordable housing crises. As a result, two solitudes of affordability emerged. Toronto and Vancouver, where the annual average family income-to-average-residence price ratios range from eight to 11, are in a different league than most other Canadian cities with ratios as low as two to three for at least nine cities (four is traditional affordability). A 2015 Huffington Post article, Here’s The Income You Need To Buy An Average House Across Canada, found not only appropriate income-to-price ratios for many cites, but required incomes were considerably lower than in 2006 when interest rates were higher. If we separate out Canada’s two global cities, overall affordability — but not social housing — appears alive and well. But wait; in today’s economy, things change rapidly. House prices are actually now declining, particularly in Vancouver and Toronto. Good news for affordability until we consider the reasons. Higher interest rates and introduction of more stringent mortgage risk tests means “the harsh reality is that the new rules will reduce homebuyers’ purchasing power substantially,” writes Sonia Bell and Wayne Karl on the Huffington Post blog, This reflects the recent Canadian Real Estate Association’s (CREA) assessment as summarized by the Globe’s Janet McFarland: “The federal government’s new mortgage stress-test rule has destabilized weaker housing markets by making it harder for buyers to afford new homes.” Too bad, says Rob Carrick, the Globe’s personal finance columnist. “If some aspiring home buyers have
June/July 2018
2018-06-06 3:03 PM