Solving Canada’s housing crisis through partnerships and purpose
If we’re going to tackle the affordability crisis, we need to think outside the box
Canada’s affordability crisis isn’t a breaking news story. Housing shortages have plagued all of our country’s major cities over the past decade and, even in the grip of the pandemic in November of last year, the housing market continued to record double-digit price increases.
But what the pandemic has done is focus wider attention on the escalating severity of unaffordability. As COVID-19 impacts the labour market and people’s incomes, more and more families are experiencing job insecurity and — in turn — housing insecurity. Finding tangible solutions to finally address the housing crisis has never been more urgent.
To put our housing crisis into context, recent research shows that one in 10 Canadian households are in core housing need, meaning that their cost of housing accounts for more than 30 per cent of the household’s total income before tax. This is occurring at a time when housing demand is outpacing supply, household incomes are remaining relatively flat and housing prices are soaring.
The importance of safe and stable housing options cannot be overstated. Adequate housing provides families with the stability needed to establish roots in their communities, to maintain steady work, or to pursue education and business opportunities. It also puts them on stronger financial footing and, in the case of affordable home ownership, allows them to build equity over the long term. For some, this means that affordable housing is key to helping break the intergenerational poverty cycle.
The case for why we should tackle the housing crisis is clear, but what’s not so obvious is the solution.
To date, the spotlight has been focused firmly on federal and provincial governments to come up with the answer, but this crisis cannot — and should not — be tackled by government alone. While governments must continue to step up and keep affordable housing at the top of the agenda, we must increase collaboration between the public and private sectors to kick-start the change that is needed.
Historically, financial institutions have shied away from investing in affordable housing options because of perceived risk or unfavourable policies. However, through partnerships between the public, private and non-profit sectors, we will not only increase investment in affordable housing, but develop innovative models that expedite the delivery of new affordable housing units.
An example of this type of collaboration in action is the new partnership between Vancity Community Investment Bank (VCIB) and national housing non-profit Habitat for Humanity. For VCIB, collaboration runs in the family. Vancity Group has a long track record of financing and supporting affordable housing and creating access to affordable homes, and supporting local communities is a priority. Since 2009, Vancity Group has funded investments of more than $1.48 billion to support the development of affordable housing stock across Canada, and has also long supported Habitat for Humanity through mortgage financing and operating loans. Now, VCIB has taken this partnership one step further.
VCIB has developed a new $30million credit facility which will allow Habitat for Humanity to finance the construction of up to 414 new and affordable homes across Canada. The Canada Mortgage and Housing Corporation (CMHC) is also providing funding for Habitat for Humanity’s affordable home building through the National Housing Co-Investment Fund.
VCIB’s credit facility has been designed to complement this government funding, further accelerating Habitat’s ability to deliver affordable housing and working hand-inhand with the government to address core housing needs.
This partnership outlines what an exciting new era of public-private financing for housing affordability can achieve. Not only does this collaboration push the boundaries of affordable housing financing, it also underscores the potential of what purpose-aligned partnerships can achieve when social impact is placed firmly at the forefront.
In the past there has been reticence toward breaking the mould of housing financing but, if we are going to tackle the affordability crisis in Canada, we need to start thinking outside of the box. A holistic and united effort is required across the public and private and non-profit sectors to really affect meaningful change in the affordable housing sector.
Financial institutions need to evolve their approach to financing to develop a more creative and tailored model. It must become the responsibility of financial institutions to take into consideration a project’s wider societal and environmental impact — instead of thinking “what are the reasons not to,” imagine what could be achieved if we started to ask “what if?”
Importantly, this is not a task financial institutions can achieve in a silo: to really create change, we need to combine the commitment of the private sector with the support of government funding to enable the work of affordable housing developers and organizations. Strong partnerships are the key to making what might seem like bluesky thinking a reality.
With a renewed focus on values and innovation in affordable housing, together we have a real opportunity to turn the tide in the battle against Canada’s affordability crisis.
VCIB has developed a new $30-million credit facility which will allow Habitat for Humanity to finance the construction of up to 414 new and affordable homes across Canada