Housing has been a hot topic in the campaign for Canada’s 44th parliament.
Every major party platform offers proposals for reining in what has become a nationwide affordability crisis. However, experts say the most effective potential solutions have either received scant attention from the federal platforms, or have failed to be included at all. Five of them are broken down in detail below.
1. Leverage the weight of federal coffers
Part of the challenge with trying to come up with a national fix for housing affordability is that it is fundamentally a local issue. Provincial and municipal governments generally have jurisdiction over the factors - such as zoning rules and building permits - that determine exactly what type of housing gets built, where that housing gets built and how fast.
Ottawa “needs to figure out how to use the financial clout of the federal government to get changes done at a local and municipal level,” said Mike Moffatt, senior director of policy and innovation at the Smart Prosperity Institute. He notes the Conservative Party has suggested tying federal transit funding to a requirement that more housing be built along transit lines and the Liberal Party has proposed a $4-billion housing “accelerator” that “is designed to help municipalities modernize their zoning rules and approval processes.”
“I think those are the right kind of approaches,” Moffatt said. “I think we need to go farther than that, but ultimately we need to get shovels in the ground, that is the only thing that is going to fix this.”
Jill Atkey, CEO of the British Columbia Non-Profit Housing Association (BCNPHA), agreed that “the federal government needs to tie its infrastructure investments to affordable housing commitments.”
“Too often we’ve seen the federal government come in - and this happens regularly in the lower mainland - making significant investments into transit with no requirement that affordable homes be built near that transit,” Atkey said. “In fact, we’ve seen affordable homes become displaced because of that transit investment. We need to reverse that trend and the federal government does have the tools to do that.”
2. Address the surge of international students
“One thing that I was a little bit disappointed not to see in the various platforms” was a policy aimed at building more student housing, Moffatt said. “A lot of what is happening in the housing market is being driven by students, mostly international students.”
Canada has experienced “huge enrollment spikes” from international students in recent years, he said, “and what happens is a lot of those students are ending up in homes, either buying them or in many cases renting them, so you’re getting these family homes that are being lived in by four-to-six college or university students that is reducing the overall supply of family homes.”
As one example, Moffatt notes international enrollment in Fanshawe College just east of London, Ont. has grown by 6,000 people over the past five years: “If you just drop 6,000 extra people in east London, that is going to get you a housing shortage,” he said.
“One of the things the federal government could do is work with colleges and universities to build more residences and apartments specifically for students,” Moffatt said. “You can do cost-sharing models with provinces and the colleges and universities themselves where they each basically pay one third. That would take a lot of the pressure off of the local housing markets.”
3. Let seniors sell their homes and live there too
One of the most common complaints among aspiring home buyers - particularly Millennials - is that Baby Boomers and other seniors continue to live in large single-family homes long after their children have moved away. Diana Petramala, a former real estate economist with TD Bank who is now the senior economist for Ryerson University’s Centre for Urban Research and Land Development, said Ottawa could make it more attractive for seniors to move or even to renovate their existing homes into multiple units.
“If you had more suitable seniors housing, maybe you would see more seniors being willing to leave their single-family homes and opening those up to more new generations of families,” Petramala said, noting senior women in particular prefer to move into apartment buildings that are no more than five stories. “The one thing that I didn’t see in any of the platforms and that I think is a constraint for seniors leaving their homes is helping them find the appropriate type of housing.”
“A lot of our seniors housing is being built on the outskirts in these sort-of ‘seniors communities’ that are away from downtown and the places they actually lived,” Petramala said. “The federal government could offer financing specifically for seniors housing; not just providing more senior-friendly housing, but also helping with transaction costs such as realtor fees that might change some of the incentives for moving.”
For seniors who simply do not wish to leave their lifelong homes, Petramala suggests a multigenerational housing tax credit as “a really good way to repurpose single-family homes and turning them into what has been called the ‘missing middle’.”
“I think of my mother, for example, who is a senior and is living in a house with seven bedrooms where she could easily put an apartment in the basement or on the third floor and that would open up more housing for other families while allowing her to stay in the neighbourhood that she has come to love,” Petramala said. “I think that is a program that could work federally where it could help repurpose low-rise housing stock into the missing middle such as multiple apartments in large single family homes.”
4. Protect existing affordable rental stock from “financialization”
While much of the focus for housing policies for the rental market has been on encouraging new supply, the BCNPHA’s Atkey says Ottawa “also needs to take a hard look at what is happening with our existing rental supply.”
“We are seeing increasing investments by institutional players purchasing older, purpose-built rental stock - much of which was built with government incentives back in the 1970s and 80s - that are being purchased and turned into higher-income rentals and that is displacing a lot of people,” Atkey said. “When we look at the numbers in B.C. alone, how many of those affordable homes have already been lost, between 2011 and 2016 there were 320,000 of those units lost due to that financialization.”
“The federal government needs to take a look at the tax structure, because right now it does prioritize institutional investors and rewards them,” Atkey said. “We are looking for the federal government to help the non-profit and co-op sectors purchase those buildings, because then they will stay affordable in perpetuity.”
5. Restrict access to credit
If there is one single policy lever the federal government could pull that would profoundly improve housing affordability, it would be to “restrict the availability of credit,” said Hilliard MacBeth, author of When the Bubble Bursts: Surviving the Canadian Real Estate Crash.
“Governments basically stopped intervening in the credit market in the 1970s and said they were going to let the private sector decide, but all we have gotten for that is a housing bubble so I suggested we go back to restricted credit,” MacBeth said. “The best would be three times household income, but obviously that would be extreme right at this moment because the average house costs about six times household income right now, so I think we could start at four times household income and then bring it down eventually to three times.”
That would mean, for example, that a couple with a combined annual income of $100,000 could only borrow up to $300,000 for a mortgage at a three-to-one restriction and up to $400,000 at a four-to-one restriction.
“Something more drastic needs to be done, but that would fix things,” MacBeth said. “Of course, the side effect of that would be quite severe in that there would be a dramatic drop in house prices since houses trade for the amount of debt that the banks are willing - or are able - to allocate.”