Affordable housing in Canada

In Canada affordability is one of three elements (adequacy, suitability) used to determine core housing needs. A commonly accepted guideline for housing affordability is a housing cost that does not exceed 30% of a household's gross income. When the monthly carrying costs of a home exceed 30–35% of household income, then the housing is considered unaffordable for that household. Determining housing affordability is complex and the commonly used housing-expenditure-to-income-ratio tool has been challenged. Canada, for example, switched to a 25% rule from a 20% rule in the 1950s. In the 1980s this was replaced by a 30% rule. What should be included in 'housing' costs: taxes, insurance for owners, utility costs, rent, maintenance and/or furnishings? What is meant by 'income': gross or net, one or all adults' income, children's income if any? How do sharp temporary fluctuations in income and non-cash sources of goods and services get factored in?

Housing Affordability Index

Accurate measurement of housing affordability is needed to decide if a family qualifies for assistance in housing or for a mortgage to purchase privately. While the 30% rule may be used for the latter, banks and lending agencies might require a much higher Qualifying Income before approving a mortgage. The Royal Bank of Canada Housing Affordability Measure describes a qualifying income as "the minimum annual income used by lenders to measure the ability of a borrower to make mortgage payments. Typically, no more than 32% of a borrower’s gross annual income should go to ‘mortgage expenses’ — principal, interest, property taxes and heating costs."

Affordability Problem

Housing continues to be affordable to higher income families in Canada.

CMHC deemed that 20% of Canadian households (1.7 million households) were in core housing need. These households could not find adequate and suitable housing without spending 30% or more of their pre-tax income. CMHC found that a disturbing 656,000 households (7%) spent at least half of their before-tax income on shelter in 1996, up from 422,000 households, or 5%, in 1991. While accounting for only 35% of all households, almost 70% of those in core need were renters.

Causes and Consequences of the affordability problem

One of the major causes of the affordable housing problem is the number of low-income households in Canada who are also subject to provincial and federal claw backs and taxbacks, for example, on back to work and the federal-provincial National Child Benefit (NCB).

Public Policy and Tools

Federal

Canada is one of the few countries in the world that lacks a National Housing Strategy and the only G-8 country without a National Housing Strategy. There is no coordinated strategy on affordable housing either. Housing initiatives have been introduced and funded by the federal, provincial, territorial and municipal governments, along with civil society organizations (including the charitable sector).

There has been an emphasis on increasing the overall rental supply through expensive, publicly-funded expenditure-based or tax-based incentives which do not increase the number of affordable rental units. households. Provincial governments need to step up their efforts and become a leading contributor within the Affordable Housing Framework agreement.

There has been a devolution of new responsibilities, including affordable housing, from provincial governments to municipal governments without adequate revenue tools. Municipalities need a more sustainable funding arrangement, and provinces need to play a more active role in affordable housing. By 1996 the federal government had further removed itself from affordable housing supply by transferring responsibility for most existing federal social housing to the provinces.

According to Rudy Pohl writing in 2001:

Canada alone holds the dubious distinction of having received the strongest rebuke ever delivered by the United Nations for inactivity on homelessness and other poverty issues. In 1998, the UN Committee on Economic, Social and Cultural Rights maintained that Canada’s failure to implement policies for the poorest members of the population in the previous 5 years had "exacerbated homelessness among vulnerable groups during a time of strong economic growth and increasing affluence" (p. 15). The irony was that this rebuke was given in the midst of Canada having been named for several years in a row as the best country in the world in which to live.

The United Nations Committee on Economic, Social and Cultural Rights issued a highly critical and detailed report on the Canada’s social policies in its 1998 review of Canada’s compliance with these rights (United Nations, 1998) particularly about disastrous levels of homelessness (CESCR 1998, paras. 24, 34, 35, 46) and resulting damaging effects, including damage to health (CESCR 1998, paras. 24, 34, 35, 46) and resulting damaging effects, including damage to health (CCPR 1999, para. 12), lack of adequate housing, especially for children and youth (CESCR 1998, para. 35, CRC 1995, para. 17), Aboriginal peoples (CRC 1995, para. 17).

The mayors of Canada’s largest cities, declared the lack of affordable housing a national housing disaster in 1998. The federal government responded by announcing cost-shared conditional federal-provincial initiatives to construct affordable housing, worth $1 billion. However, during this period of tax cutting and debt reduction initiatives, the devolution of federal responsibilities to the provinces, without an accompanying transfer of funds, made it impossible for the provinces to contribute their share for affordable housing projects. Provinces were focused on reducing government size and increasing provincial tax cuts.

Armine Yalnizyan (2006) pointed out that 1.7 million Canadians of a total population of 31 million were underhoused or non-housed (Canadian Housing and Renewal Association). That’s 5.5% of the Canadian population without safe, decent and affordable housing.

The Government of Canada provides financial assistance for the supply of new affordable rental housing under the Affordable Housing Program. In September 2008 the Government of Canada announced $1.9 billion, over five years, for housing and homelessness programs for low-income Canadians. As part of this investment, the Affordable Housing Initiative (AHI) was extended until March 31, 2011. By the end of 2007-2008, the Federal Government's investment in this program will total CAD$1 billion, an amount that will be matched by provincial and territorial governments.

Following two consecutive quarters of deterioration, affordability improved modestly across Canada in the third quarter of 2011 due to lower mortgage rates which contributed to lessening the costs of owning a home in Canada.

Ontario

In 2002 the Social Housing Services Corporation (SHSC) was created by Province of Ontario to provide group services for social housing providers (public, non-profit and co-op housing) following the downloading of responsibility for over 270,000 social housing units to local municipalities. It is a non-profit corporation governed by a board of municipal, non-profit and co-op housing representatives. Its mandate is to provide Ontario housing providers and service managers with bulk purchasing, insurance, investment and information services that add significant value to their operations.

With an annual budget of $4.5 million, SHSC and its two subsidiaries, SOHO and SHSC Financial Inc. offers a dedicated insurance program for social housing providers, bulk gas purchasing and an innovative energy efficiency retrofit program which coordinates energy audits, expertise, funding, bulk purchasing of energy-efficient goods, training and education, and data evaluation. SHSC manages and provides investment advice to housing providers on capital reserves valued at more than $390 million. Working closely with other housing sector organizations and non-governmental organizations, SHSC also supports and develops independent housing-related research, including a new Housing Internship program for graduate-level researchers.

British Columbia

Recently, there has been a move toward the integration of affordable social housing with market housing and other uses, such as the 2006-10 redevelopment of the Woodward's building site in Vancouver.

Further reading

• Luffman, Jacqueline (2006). "Measuring housing affordability". Statistics Canada. {{cite web}}: Unknown parameter |month= ignored (help)