A fun phrase that gets thrown around - “Affordable Housing”. No matter which side of the political spectrum you are, it’s a term we’ve all heard from various Governments. It’s usually followed by a line surmising how it will fix all of our housing problems. Well what actually IS this mythical ‘Affordable Housing’?
The CMHC summarises Affordable Housing as housing that costs less than 30% of a household's pre-tax income. So in Vancouver our average household income is $82,000, which means housing would need to cost no more than $24,599 a year. This equates to a mortgage/rent payment of $2,050 / month. In Toronto (“Tronno” for some of you Canadians with accents) this is the equivalent of $2,100 / month. Now this is where things get interesting….
Calgary has a Median household income of $105,060 / year. So that 30% now becomes $2,626.50 / month. All of a sudden it’s a lot easier to fit inside that affordable housing 30%. On top of that, Calgary currently sits at a Home Price Index of $245,000 for apartments, and $349,000 for townhouses. These figures vs Vancouver’s $755,000 and $1,096,500 respectively.
In summary, it’s a lot cheaper to buy and build in areas such as Calgary, Edmonton and Sudbury, than it is in Vancouver, Toronto and Montreal. Don’t forget, the Liberal government's latest plea on affordable housing is not to help YOU get into a home in which you can afford, it’s to build 100,000 homes by spending $4 Billion dollars. Just look at the math, with a goal of 100,000 homes, you can’t actually make that happen paying the higher prices in the bigger cities. You can get way more bang for your buck in the other areas noted above. So these homes (if 100,000 is even achieved) end up being disproportionately spread out and not helping those who need it most. Leaving the runaway markets to continue running away.
I hate to be pessimistic, but affordable housing is not something new, it’s been preached since the 80’s. For something that’s been preached for so long, you would think if it’s the answer, then we would have the solution figured out by now. Just like taxing the rich is not new, it’s been a political platform forever, and is dubbed as “THE” answer to all our problems.
Now for some, kind of, optimism. Well what IS the answer then?
Well as city’s get bigger and bigger, the desire for those living in single family homes increases greatly to ‘preserve their neighbourhoods’. In simple English this means “We don’t want you developing in our neighbourhood, especially ugly high rises housing ugly people we don’t want here.” That leaves us with a meet in the middle type scenario, and therein lies our answer. Mid sized developments. Whether this be Duplexes, all the way up to mid rise buildings.
Vancouver and Toronto are very Single Family focused homes and neighbourhoods (around 39% to be precise). This cannot continue if we want to be a growing city. So instead of having those ugy high rises, housing ugly people, we have to increase the density allowances to accommodate for the smaller types of multi dwelling homes. Duplexes allow double the numbers of families to live on the same plot of land, triplexes triple. Mid rise condos/row homes allow multiple housing units without disturbing the aesthetic of a neighbourhood in the way a high rise does. Let’s not kid ourselves here either. The major cities are likely going to be expensive for a long time to come, so even if your $4,000,000 home is situated in an area with Duplexes starting at $1,800,000, you’re still not going to be attracting the riff raff of society at these price points. The same applies in East Van, your $2,000,000 detached house area will not be ruined by the types of people paying $1,400,000 for a townhouse.
The drag is just when this happens. Canada is notoriously slow at updating housing rules and regulations. In fact Canada was the only country in the G8 prior to November 2017 that didn’t have a National Housing Strategy (sorry Conservatives, but that’s not on the Liberal government, cough). Unfortunately we are one of the countries expected to struggle most with housing affordability in the world according to data gathered by the Organisation of Economic Cooperation and Development (OECD).
Alas, we only need to look to our southern neighbours and see the success of the above mentioned. Minnesota, a very single family focused area, made these changes in 2020 with great success. Our latest Vancouver City Wide Plan seems to crack down on the Single Family only zones in the same way. The draft is still exactly that, a draft, but it shows the direction of thinking. After all, Vancouver has not updated its citywide plan since the 1920’s. We’ve changed just a little since then I would say… This of course will take time to go through, be fought by locals, adjusted, fought again, repeated, finalised, and then eventually implemented if so. We are a way aways, but a step in the right direction I believe.
The answer to the housing crisis will come not from federal Government planning, nor should we expect them to handle something like this. Love them or hate them, this is not in their power to fix, it’s down to municipalities making the changes needed on a local level.
The CMHC summarises Affordable Housing as housing that costs less than 30% of a household's pre-tax income. So in Vancouver our average household income is $82,000, which means housing would need to cost no more than $24,599 a year. This equates to a mortgage/rent payment of $2,050 / month. In Toronto (“Tronno” for some of you Canadians with accents) this is the equivalent of $2,100 / month. Now this is where things get interesting….
Calgary has a Median household income of $105,060 / year. So that 30% now becomes $2,626.50 / month. All of a sudden it’s a lot easier to fit inside that affordable housing 30%. On top of that, Calgary currently sits at a Home Price Index of $245,000 for apartments, and $349,000 for townhouses. These figures vs Vancouver’s $755,000 and $1,096,500 respectively.
In summary, it’s a lot cheaper to buy and build in areas such as Calgary, Edmonton and Sudbury, than it is in Vancouver, Toronto and Montreal. Don’t forget, the Liberal government's latest plea on affordable housing is not to help YOU get into a home in which you can afford, it’s to build 100,000 homes by spending $4 Billion dollars. Just look at the math, with a goal of 100,000 homes, you can’t actually make that happen paying the higher prices in the bigger cities. You can get way more bang for your buck in the other areas noted above. So these homes (if 100,000 is even achieved) end up being disproportionately spread out and not helping those who need it most. Leaving the runaway markets to continue running away.
I hate to be pessimistic, but affordable housing is not something new, it’s been preached since the 80’s. For something that’s been preached for so long, you would think if it’s the answer, then we would have the solution figured out by now. Just like taxing the rich is not new, it’s been a political platform forever, and is dubbed as “THE” answer to all our problems.
Now for some, kind of, optimism. Well what IS the answer then?
Well as city’s get bigger and bigger, the desire for those living in single family homes increases greatly to ‘preserve their neighbourhoods’. In simple English this means “We don’t want you developing in our neighbourhood, especially ugly high rises housing ugly people we don’t want here.” That leaves us with a meet in the middle type scenario, and therein lies our answer. Mid sized developments. Whether this be Duplexes, all the way up to mid rise buildings.
Vancouver and Toronto are very Single Family focused homes and neighbourhoods (around 39% to be precise). This cannot continue if we want to be a growing city. So instead of having those ugy high rises, housing ugly people, we have to increase the density allowances to accommodate for the smaller types of multi dwelling homes. Duplexes allow double the numbers of families to live on the same plot of land, triplexes triple. Mid rise condos/row homes allow multiple housing units without disturbing the aesthetic of a neighbourhood in the way a high rise does. Let’s not kid ourselves here either. The major cities are likely going to be expensive for a long time to come, so even if your $4,000,000 home is situated in an area with Duplexes starting at $1,800,000, you’re still not going to be attracting the riff raff of society at these price points. The same applies in East Van, your $2,000,000 detached house area will not be ruined by the types of people paying $1,400,000 for a townhouse.
The drag is just when this happens. Canada is notoriously slow at updating housing rules and regulations. In fact Canada was the only country in the G8 prior to November 2017 that didn’t have a National Housing Strategy (sorry Conservatives, but that’s not on the Liberal government, cough). Unfortunately we are one of the countries expected to struggle most with housing affordability in the world according to data gathered by the Organisation of Economic Cooperation and Development (OECD).
Alas, we only need to look to our southern neighbours and see the success of the above mentioned. Minnesota, a very single family focused area, made these changes in 2020 with great success. Our latest Vancouver City Wide Plan seems to crack down on the Single Family only zones in the same way. The draft is still exactly that, a draft, but it shows the direction of thinking. After all, Vancouver has not updated its citywide plan since the 1920’s. We’ve changed just a little since then I would say… This of course will take time to go through, be fought by locals, adjusted, fought again, repeated, finalised, and then eventually implemented if so. We are a way aways, but a step in the right direction I believe.
The answer to the housing crisis will come not from federal Government planning, nor should we expect them to handle something like this. Love them or hate them, this is not in their power to fix, it’s down to municipalities making the changes needed on a local level.