As rents soar in Canada and encampments spring up in cities
across the country, it is evident that the country faces a housing crisis which
to date seems intractable. Even the
recent slowdown in home prices does little to improve the situation given that
average housing prices in Canada remain just shy of $700,000 with prices varying
across the provinces. Average housing
prices in Greater Vancouver are just shy of $1.2 million while Greater Toronto
is slightly less at $1.1 million. And
while at an average of $322,000, Thunder Bay seems more affordable compared to Toronto
and Vancouver all of these averages mask the variation in prices around the
average that realistically means something half decent that you may actually like
is always substantially above the average.
However, the housing and homelessness crisis and what has
been termed the housing shortage is not really just about the price of an
average house. There are a number of
issues here. First, there is actually
not a “shortage” of houses and apartments per se as a glance at any real estate
listing in cities shows that there are always houses for sale or apartments for
rent. However, the price or rents of
those housing units are well above what individuals are either able or willing
to pay especially given the recent rise in interest rates which has increased
the cost of home ownership in particular. One could term this a crisis in affordable
housing rather than a shortage of housing. Second, there is the issue of
homelessness which has manifested itself with rising numbers of people in
cities across the country living in tents
and encampments.
Solving these issues requires a two-prong solution. First, dealing with affordable housing. The sudden drive to expand the supply of
housing to make it affordable is certainly a potential long-run solution. However, in the end building more $1,000,000 homes in suburbs, which developers
like to do because they can make a lot of money, really does
not solve that problem. Moreover a $1,000,000 new build home program does not solve the
housing affordability problem unless it is done so incompetently by the private
sector that they create a glut that drives prices down which seems
unlikely. Developers across the country
over the years have learned that you just do not build a couple of hundred
homes in a subdivision and then sell them – you build on spec with a large
deposit. Basically, every new home built
already has someone lined up for it.
The solution to the affordable housing is the building of either
rent-geared-to-income housing or the building of standardized-government
subsidized housing units (much like the Wartime Homes Program) whose design,
construction and sale is also geared to income.
One example of this is the standardized house
designs being put forth by the government of British Columbia which could
serve as a template for other provinces. This will enable homes to be built
more quickly but it could also serve as a model for lower cost housing designs.
As for rent -geared-to-income, all new apartment builds should have portions of
the building ranging from 10 to 20 percent of rent geared to low and middle
incomes with government social housing subsidies providing the incentive to
builders. This is preferable to simple erecting mega projects of low-income
apartments in neighborhoods that essentially creates clusters of low-income
individuals.
In a sense, the Ontario government’s current approach to
increasing housing supply by providing incentives and powers to municipalities to
simply expand housing stock does not follow either of the above
approaches. Take the case of Thunder Bay
where the target is to build over 2000 homes by 2031 according to the
provincial target but given that the target has been exceeded in 2023 it is now
seeking to build (with federal funding of course) 2000 homes over the next
three years. The optics tout this as a
success story and the start of a housing boom fueled by mining but the 167
units for 2023 (which exceed the target of 161) is largely driven by projects
already planned or underway and 60 of the units (plus another 60 which have
started) are apartments being marketed as “luxury” apartments. It means the rents for the smallest units
will easily be over $2000 a month. This
will not be ‘affordable” housing given the cost-of-living crisis that has
gripped the nation and its media.
Moreover, the target going forward is
ambitious given the past track record of housing starts in Thunder Bay to
date which given the cities rate of population growth to date has been modest.
The other housing crisis – homelessness. -will not be solved
by new suburban housing developments, neighborhood infill, or luxury
apartments. It is an entirely different problem all
together. The solution here is best modeled
on what has been done in Finland where a non-governmental organization (NGO)
called No Fixed Abode founded in
1986 reduced the number of homeless in Finland from 20,000 to about 3500 at
present. Note that Finland’s population is 5.5 million and there are currently
3500 homeless people estimated. In
Canada, just Hamilton Ontario with a population of 579,000 has an estimated
1,500 homeless. As well, since 2008 Finland
has also embraced another program called Housing
First which creates flats in social housing complexes that along with serving
as places to live also provide a fixed address for those requiring access to
government services and supports.
Now, Finland is not Canada and simply grafting another
country’s solution to solve your problem can generate all kinds of problems.
However, there is something here that needs to be explored. Some of all the money that is going to be
thrown at simply increasing housing stock irrespective of whether or not people
can afford it needs to be directed to what I would term Transitional Emergency
Housing. People living on minimum wage
or are evicted from apartments and have no place to live need some place to get
back on their feet. Boarding houses with
rooms to let used to be a place where people of limited means often ended up til
they got back on their feet, but no such places really exist anymore. People
who are homeless need to be housed and housed without questions being asked. Creating a complex or dispersed network of complexes of transitional emergency
housing with very small personal units combined with social support such as
a community kitchen, social workers and even a nurse practitioner and mental
health workers and basic security on site would be one way of dealing with the
homelessness crisis.
Where to locate such complexes? They need to be built on a scale that reflects
their local neighborhood and are close to where many homeless choose to locate
because of amenities – often downtown cores.
Most municipalities own land in their downtown cores that could be used
for such a purpose. They will not be cheap to operate but realistically what
else is the solution? Simply leaving the
problem to grow does not solve the problem.
Throwing money on market rent apartments and suburban subdivisions does
not solve homelessness, never mind, really create affordable housing. Using
resources in a wise and targeted way is the solution to both housing
affordability as well as homelessness. True, perhaps these are the ravings of simple economist who does not fully grasp the complexity or enormity of the problem. On the other hand, perhaps not.
