Canada's real housing crisis is a lack of low-cost rentals
All of the big three federal political parties in Canada are describing Canada's housing situation as being in crisis.
For Ron Kneebone, an economics professor with the University of Calgary's School of Public Policy, the definition of crisis is wrong.
“The whole discussion during the election about housing affordability has driven me nuts,” says Kneebone.
“It's not a housing crisis when you're frustrated at your prospect of having a high mortgage if you want to go and live in the suburbs. A housing crisis is when you can't pay your rent and you're going to end up on the street — that's a housing crisis. And if you want to talk about a good public policy to deal with a housing crisis, it would be doing something about the high cost of renting relative to the incomes people in the lower income levels have available to them,” says Kneebone, who has been on the board of the Calgary Homeless Foundation and has written many scholarly papers on how to alleviate the housing crunch and lift people out of poverty.
“The Liberals' and New Democrats' plans of giving the middle class more money to buy more housing, of course, only increases the price of housing, it won't alleviate it, and all parties are identifying a crisis, which is not a crisis,” says Kneebone.
“It's not a crisis that it's costing me a lot more money than I had hoped to buy that house in the suburbs and here I am stuck in my downtown condo instead. That is not a crisis. A crisis comes from me having to pay rent that I can't afford, and I'm out in the streets or in a homeless shelter,” says Kneebone.
Having said that, for many young people not already in the housing market, seeing housing prices soar month by month as a result of a shortage of supply is demoralizing and certainly a serious election issue. But it's not a crisis.
Many Canadians who are living through a housing crisis, says Kneebone, are caught in the “heat or eat” conundrum. They will choose paying their rent and forgo paying their utilities or buying food to keep a roof over their heads. Many take in lodgers to help with rental costs, get their food from food banks and are often on the cusp of losing their housing.
According to the federal NDP'S Ready for Better election platform, “average rents rose in every single province last year, and 1.6 million Canadian households spend more than 30 per cent of their income on housing. Canada has the fastest growing house prices in all of the G7, a trend that shows no signs of slowing. What this means in real terms is that families in our communities are facing constant stress and impossible choices between rent or food; living in substandard housing or relocating out of their community; or worse, the real risk of homelessness.”
The federal Liberals have, of course, had six years in government and are now promising getting more homes built, but are also bringing in home buying incentives including taxpayer money for first-time home buyers that will only cause the cost of housing to go up by increasing demand, says Kneebone.
Kneebone says the Conservative Party's focus on increasing supply by one million homes in the next three years as laid out in its Canada's Recovery Plan “is absolutely correct. If you know your demand-supply diagram, you know that an increase in supply not only provides more people with shelter but also reduces the price of shelter,” Kneebone said Wednesday during a telephone interview.
He likes the party's plan to fund more public transit, since “transit is an important part of the solution, as it makes shelter that is located farther away from employment centres a realistic option for people to rent or buy,” says Kneebone, “since a rental on the fringes of the city is much cheaper than something similar downtown.
“Most importantly, I appreciate (the Conservative's) commitment to provide incentives to the private sector to build the needed increase in supply,” says Kneebone. The Conservative plan encourages Canadians to invest in rental housing by extending the ability to defer capital gains tax when selling a rental property and reinvesting in rental housing, “something that is currently excluded.”
Kneebone says the other parties tend to emphasize — or at least hint at — the idea of government building housing. While appropriate in very limited cases — for people with high needs — this is a tried and failed policy everywhere it has been tried.
Exploring converting unneeded office space to housing is something Calgary has been looking at already. Some federal help would make it possible.
Kneebone particularly likes the Conservative party's bullet point on working with Indigenous people to develop a housing strategy.
“Indigenous people are over-represented in the population of people dealing with homelessness — the real housing crisis — and a solution to this is a housing strategy targeted toward this population.”
Like the Conservatives, says Kneebone, the New Democrats recognize the importance of increasing supply but give no indication of how this will be done, only saying they will “work in partnership with provinces and municipalities” to build more affordable units, co-op units, etc. The claim is that co-ops and non-profit housing have not been able to access funds to build, and they will fix that.
The New Democrats' plan of “waiving the federal portion of the GST/HST on the construction of new affordable rental units — a simple change that will help get new units built faster and keep them affordable for the long term,” will help with the real housing crisis.
“Most construction is done by the private sector and it is they who must be incentivized to build more shelter that people can afford to rent or buy. I know the New Democrats are reluctant to suggest they might work with the private sector but they must certainly recognize that is a key part of any solution. Co-ops and affordable housing organizations (like Horizon Housing in Calgary) do not build housing — instead, they contract with private builders to build housing. Unless we make real efforts to reduce the costs of construction faced by private builders, costs are not going to fall,” says Kneebone.
That's why all levels of government must work together to reduce red tape and regulations to help lower the cost of low-cost rental housing, which currently costs about $200,000 per door.
Vibrant communities need housing for every price point. Everyone deserves a roof over their heads. Building more affordable rental units is the best way to do that. It's time to alleviate the real housing crisis in Canada.