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A solution to the housing crisis would be market-provided rental housing, at a range of prices accessible to those on low income. (Fred Lum/The Globe and Mail)
A solution to the housing crisis would be market-provided rental housing, at a range of prices accessible to those on low income. (Fred Lum/The Globe and Mail)

FINN POSCHMANN

Is it a housing problem or an income problem? Add to ...

Finn Poschmann is president and chief executive of the Atlantic Provinces Economic Council.

The spring 2016 federal budget allocated $2.3-billion to doing something about housing affordability, mostly through expanding existing federal-provincial and on-reserve programs.

That sounds a little dull. The budget went on, therefore, threatening to develop a National Housing Strategy. Strategy is good, we all know, and the word appeared 55 times in the budget. It also entails meetings and consultations, which were in full swing in Ottawa this past week, with the requisite “visioning,” statements of principles and themes and so on.

Trouble is that over the course of this year, the problem with housing affordability, in public discourse, has become the difficulty that middle-class families have buying single-detached houses near the Greater Vancouver or Toronto cores. That this is not a national problem is self-evident to those of us not in these regions and who are not shopping in those neighbourhoods.

And for those of us, say, in the East, who reside where housing prices have mostly spent the past decade doing absolutely nothing, a strategy to lower housing prices would seem rather mad. Calgarians, who just two years ago were included in the trouble-bubble list, would likewise now wonder what the fuss was about.

Others would say that the issue is not house prices per se, but the hurdle facing first-time buyers, or others aspiring to the ownership dream. This concern, too, seems misplaced. Canada has a very high rate of ownership tenure, there is no optimal level in theory or practice and, unusually in economics, more is not always better.

So these are issues that can safely be unaddressed by the nascent strategy.

In fact, the government in its budget allocation has already laid out the main elements of the program – more money to be spent on housing accessibility for those on low incomes, through social housing, subsidies for co-op rental housing, funding to First Nations and so on.

Now, the well-known disaster that is housing quality on many First Nations is a symptom, not a cause, of much larger issues. Those problems include land and property tenure, yes, but go more fundamentally to education quality, governance, and generating market incomes. Rather much for federal housing policy to address.

Social housing is another pair of sleeves. The feds had once happily abandoned the field, mostly, but there it is. Some regional governments say they want more of it, or at least more funding for it, even if the neighbours don’t. People who live on the very edges of shelter, or who have none at all, might like to live in social housing, and people who live in social housing would mostly like to live somewhere else.

A better solution would be market-provided rental housing, at a range of prices accessible to those among us on low income.

There seems to not be as much market rental available as we might like. It is not for want of developers willing and able to provide rental buildings – global capital markets are truly awash with money looking for real sector investments likely to produce any positive return with decent risk.

There are at least two classes of holdups.

The first and maybe biggest is government imposed. Zoning requirements, massive permitting delays, development charges that go far beyond the cost of funding development, property-tax systems that religiously discriminate against multiunit residential construction – the list is long.

And every item on that list is utterly beyond the federal government’s jurisdiction. For a good federal reason, it is going to stay that way, so we can scratch the items above from the national strategy.

The other class of holdup is what governments, including the federal one, are doing – which includes funding for social housing, which serves the same market as the one we are asking the market rental builders to serve.

For those who work in our communities struggling to maintain co-op or other non-profit housing, fix what’s broken, and get more needy families into shelter, it will seem nonsensical, even perhaps insulting, to suggest that they might be part of the problem. But perhaps they are, because we are collectively spending a lot of money to produce an insufficient quantity of not very good housing. We could be spending the same amount of money or less to produce more and better shelter for those who need it.

A system that provided direct funding – income support – to people and families struggling to afford rent would be well within federal capacity to negotiate with the provinces and to administer, say, within existing tax and benefit systems. It would not discriminate among ownership tenures, location or region. Even better, beneficiaries could seek housing that serves their individual needs, not just wherever assisted housing happens to be built.

Put another way, the housing market will generate the supply we want, if we let it. And if what we have labelled a housing problem is really an income problem, perhaps the latter is what we should focus on. That could be part of a regionally fair and sensible national strategy.

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