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.