Making Homes Affordable Again
10/04/22 14:40
The pleas for help rise as people face unaffordable rents and ultra-high home prices.
Prices for homes are considerably higher, outpacing income and putting ownership out of reach for many people.
The Organization for Economic Co-operation and Development's Canadian house-prices-to-income index reached 164.79 in the second quarter of 2021, with home prices rising nearly 65 percent faster than incomes since 2015.
Higher rents are also increasingly difficult for many people to afford.
The effects of financialization are everywhere as luxury developments continue to rise, corporations buy up rental units, and people leave communities that become too expensive for them to remain.
In Canada, real estate investment trusts have bought nearly 200,000 suites in apartments over the last 25 years.
Almost 20 per cent of Canadian privately owned, purpose-built rental apartments are in the hands of REITs and other corporations.
There are few jurisdictions with vacancy controls in Canada, so non-corporate landlords are just as free as the corporations and REITs to charge much higher rents to incoming tenants.
According to Marc Lee, an economist with the Canadian Centre for Policy Alternatives, “housing primarily as an investment, as opposed to a place to live,” is a problem.
He says 95 per cent, or more, of new home construction, is market-driven and is a private sector activity with developers building housing for-profit and occasionally investing in rental units.
Lee says we need to get away from the market as the primary means by which we allocate housing in British Columbia and Canada.
He says in many countries, such as Singapore and European countries, there is much more active intervention in managing and regulating rental housing in the interests of ordinary working people.
Article 25 of the United Nations Universal Declaration of Human Rights recognizes the right to housing as part of the right to an adequate standard of living. In Canada, it remains more of an investment than a human right.
Lee says the provincial and federal governments, along with local governments, should be more active in building non-market housing. It should be about making it more of a human right and a place to live instead of the frenzy of investment seen in the last few years.
He suggests purpose-built rental housing managed by a nonprofit society and adds that cooperatives are another way of doing that.
Lee says the federal and provincial governments deserve credit for putting money into housing for people who are homeless or in a very vulnerable population.
However, very few supports exist to create broad-based housing for ordinary working people.
Lee finds that puzzling because creating non-market housing involves the upfront capital cost of buying the property and building the structure.
The completed project then provides “rental income that goes many many decades into the future, so typically those kind projects pay for themselves within a 20 to 30 year period” while removing developer and landlord profit from the equation.
Lee says this model allows the housing to be provided “at its fundamental cost,” so there is no reason why governments should not be involved.
He says local governments can also play a role in building dedicated affordable housing, either through creating a housing development corporation or using land they own by putting it in the hands of nonprofit developers to construct the type of housing needed.
The demands for change are growing, and they are not just from individuals and advocacy groups.
In British Columbia, the Union of B.C. Municipalities released a position paper on housing that says high prices are not from a lack of supply – for which municipalities are blamed due to lengthy approval times for permits – but from a lack of the right kind of housing.
The report says among the many factors, a big problem is the financialization of real estate for investment and wealth rather than a social good.
The UBCM says new housing construction is too often investor-driven, which drives up prices for anyone trying to get into the housing market.
It says creating affordability "will require incentivizing the right supply, including affordable rental housing and co-ops, and addressing the market-skewing influence of speculative demand.”
The UBCM is calling on all levels of government and industry to work closely to identify and implement policies to bring out the necessary changes.
Intervention to help provide affordable housing goes back nearly nine decades.
In 1935, the Dominion Housing Act, the first national housing legislation in Canada, provided loans and helped finance nearly five-thousand units over three years.
In 1973, changes to the National Housing Act provided financial assistance for new home buying, loans for cooperative housing, and low-interest loans for municipal and private nonprofit housing.
A goal of the amendments was to integrate different income levels into social housing projects.
In the 1970s, there was support for affordable housing from the federal government.
However, budget tightening in the 1990s resulted in little cooperative housing built in Canada.
All levels of government must work collaboratively against the continued financialization of housing by making affordable housing part of an economic strategy.
Doing so would mean people can focus on things that improve their lives in ways that would ultimately benefit all of us.
Prices for homes are considerably higher, outpacing income and putting ownership out of reach for many people.
The Organization for Economic Co-operation and Development's Canadian house-prices-to-income index reached 164.79 in the second quarter of 2021, with home prices rising nearly 65 percent faster than incomes since 2015.
Higher rents are also increasingly difficult for many people to afford.
The effects of financialization are everywhere as luxury developments continue to rise, corporations buy up rental units, and people leave communities that become too expensive for them to remain.
In Canada, real estate investment trusts have bought nearly 200,000 suites in apartments over the last 25 years.
Almost 20 per cent of Canadian privately owned, purpose-built rental apartments are in the hands of REITs and other corporations.
There are few jurisdictions with vacancy controls in Canada, so non-corporate landlords are just as free as the corporations and REITs to charge much higher rents to incoming tenants.
According to Marc Lee, an economist with the Canadian Centre for Policy Alternatives, “housing primarily as an investment, as opposed to a place to live,” is a problem.
He says 95 per cent, or more, of new home construction, is market-driven and is a private sector activity with developers building housing for-profit and occasionally investing in rental units.
Lee says we need to get away from the market as the primary means by which we allocate housing in British Columbia and Canada.
He says in many countries, such as Singapore and European countries, there is much more active intervention in managing and regulating rental housing in the interests of ordinary working people.
Article 25 of the United Nations Universal Declaration of Human Rights recognizes the right to housing as part of the right to an adequate standard of living. In Canada, it remains more of an investment than a human right.
Lee says the provincial and federal governments, along with local governments, should be more active in building non-market housing. It should be about making it more of a human right and a place to live instead of the frenzy of investment seen in the last few years.
He suggests purpose-built rental housing managed by a nonprofit society and adds that cooperatives are another way of doing that.
Lee says the federal and provincial governments deserve credit for putting money into housing for people who are homeless or in a very vulnerable population.
However, very few supports exist to create broad-based housing for ordinary working people.
Lee finds that puzzling because creating non-market housing involves the upfront capital cost of buying the property and building the structure.
The completed project then provides “rental income that goes many many decades into the future, so typically those kind projects pay for themselves within a 20 to 30 year period” while removing developer and landlord profit from the equation.
Lee says this model allows the housing to be provided “at its fundamental cost,” so there is no reason why governments should not be involved.
He says local governments can also play a role in building dedicated affordable housing, either through creating a housing development corporation or using land they own by putting it in the hands of nonprofit developers to construct the type of housing needed.
The demands for change are growing, and they are not just from individuals and advocacy groups.
In British Columbia, the Union of B.C. Municipalities released a position paper on housing that says high prices are not from a lack of supply – for which municipalities are blamed due to lengthy approval times for permits – but from a lack of the right kind of housing.
The report says among the many factors, a big problem is the financialization of real estate for investment and wealth rather than a social good.
The UBCM says new housing construction is too often investor-driven, which drives up prices for anyone trying to get into the housing market.
It says creating affordability "will require incentivizing the right supply, including affordable rental housing and co-ops, and addressing the market-skewing influence of speculative demand.”
The UBCM is calling on all levels of government and industry to work closely to identify and implement policies to bring out the necessary changes.
Intervention to help provide affordable housing goes back nearly nine decades.
In 1935, the Dominion Housing Act, the first national housing legislation in Canada, provided loans and helped finance nearly five-thousand units over three years.
In 1973, changes to the National Housing Act provided financial assistance for new home buying, loans for cooperative housing, and low-interest loans for municipal and private nonprofit housing.
A goal of the amendments was to integrate different income levels into social housing projects.
In the 1970s, there was support for affordable housing from the federal government.
However, budget tightening in the 1990s resulted in little cooperative housing built in Canada.
All levels of government must work collaboratively against the continued financialization of housing by making affordable housing part of an economic strategy.
Doing so would mean people can focus on things that improve their lives in ways that would ultimately benefit all of us.