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Prime Minister Justin Trudeau speaks during an announcement and groundbreaking ceremony at the Squamish Nation's Senakw housing development site, in Vancouver, on September 6, 2022. The federal government is providing a $1.4-billion loan to a Vancouver First Nation to build 3,000 homes on land that was once an ancient village that was burned and expropriated a century ago.DARRYL DYCK/The Canadian Press

In a space of five years, between 2011 and 2016, Canada lost 322,000 affordable homes. In the same period of time, the country built about 60,000 new homes for people most in need, according to housing expert and consultant Steve Pomeroy.

“Affordable” in this case is defined as rental units under $750 a month. The units lost were either demolished or renovated and turned into more expensive units, according to the last census data.

“Without looking at the erosion and the loss of existing stock, it’s a real serious problem,” says housing policy expert Steve Pomeroy. “And it’s associated with the financialization issue, it’s associated with redevelopment, and intensification pressures, the kind of stuff you are talking about there on Broadway,” he said, referring to Vancouver’s recently approved Broadway Plan, which will add an estimated 50,000 residents once much of the existing stock is redeveloped.

What is seldom acknowledged is the amount of housing lost in that process of redevelopment at a rate of about five units for every new one.

“That’s absolutely the existential threat to the affordability problem,” Prof. Pomeroy said.

The majority of households in need of affordable housing are renters, with 80 per cent in the bottom fifth of household incomes, according to a report commissioned by the National Housing Council. The report, released in February but largely ignored, reviewed the federal government’s Rental Construction Financing Initiative and showed that new housing generated by the RCFI was significantly more expensive than the housing it replaced.

Prof. Pomeroy says that in most cities, the new rents were more than double that of the existing median rents, as a result of its affordability criteria.

The federal government announced that Squamish Nation and Westbank development Senakw would be the recipient of a record $1.4-billion under the RCFI program. Among other perks, it offers private developers and nonprofits ultra-low interest rates for a 10-year term, amortized over 50 years. The program is part of the National Housing Strategy which aims to address housing need and homelessness.

Mr. Pomeroy, an adjunct professor at Carleton University’s Centre for Urban Research and Education and at McMaster University advises governments on housing policy. He is an urban planner and housing policy research consultant, based in Ottawa. In February, he analyzed new census data and found that 1.3 million homes in Canada are not lived in full time. In a previous interview, he said that if government wants to improve affordability and home ownership accessibility, they need to address “super-charged demand” rather than simply lack of supply.

Prof. Pomeroy and others are taking the NHS to task for contributing to the loss of truly affordable housing, particularly as rents continue to increase.

“There is nothing in the National Housing Strategy or any subsequent initiatives that have really tried to target that particular aspect of the problem,” Prof. Pomeroy said. “At this rate of loss, this issue completely undermines the objective of the NHS to add affordable supply.”

Prof. Pomeroy calls the RCFI the NHS “centrepiece” because it has grown to account for 40 per cent of the NHS funding, at $25.75-billion. However, it acts as a major bonus to developers who, responding to the market, were already planning to build rental housing anyway, he says.

Only 3 per cent of the housing funded by the RCFI was affordable to low income households, according to the NHS-commissioned report.

It stated that the RCFI affordability criteria failed to result in “meaningful downward pressure on rents, often permitting units with rents that are well above market rent in the areas in which they were located to be counted as affordable.”

Based on the criteria used for Senakw, the affordable rents will be 30 per cent of median family incomes in the census area. Prof. Pomeroy said while that sounds fine on paper, the true affordability is another matter.

For example, the median total income of Vancouver families is $98,640, based on 2020 statistics. That would mean an “affordable” median rent of $2,466 for 20 per cent of units supported by the program.

“The thing happening is that many of the new units being built through these rental construction programs are demolishing existing older three-storey buildings,” said Ann McAfee, a member of the National Housing Council and former co-director of planning for the City of Vancouver. “If you’ve followed what’s been happening in Burnaby and in Burquitlam Skytrain area in Coquitlam, you’ll see there is quite a number of modest priced rental units that have been demolished in order to build the new units. So not only are the new units coming on stream not affordable to modest or low income people, but in many cases, they are resulting in the demolition of the units that are affordable to that group.”

The question comes down to the net gain, said Prof. McAfee. The CMHC said the RCFI is supporting the creation of 37,700 units. But how many will be lost?

“There is no doubt that one issue we are facing is that the supply of existing affordable housing is eroding, and whether it’s the federal government rental supply program, or the financialization of housing through REITs [real estate investment trusts] and other private investors, is resulting in the demolition or the purchase and up-pricing of that older rental stock.

“So on one hand, you’ve got government trying to add to the stock that’s affordable to those in core housing need, but at same time, through other initiatives, such as the construction of these new units… resulting in a faster loss than it is a gain.”

The CMHC confirmed in an e-mail that, “The Rental Construction Financing Initiative was brought forward to expand the supply of rental housing available to Canada’s middle class through the construction of more than 71,000 new units across the country.”

The biggest cause of expensive housing is lack of supply, said the CMHC, adding that the program had also resulted in savings between $92 and $642 a month for renters, depending on the area.

The CMHC said the program is being adjusted to increase affordability of the homes, with a target based on a percentage of local market rents, for at least 40 per cent of the units that receive support.

If housing providers greatly exceed affordability and energy efficiency goals, they’d be eligible to have a portion of their loans converted to non-repayable loans, said the statement.

Prof. Pomeroy says more funding should be directed to the programs that build affordable homes or help non-profits acquire existing low-rent properties.

“We have to think of housing as a system. If you are only directing your policy and programming to one part of the system, and not doing much in the others, then there are unintended and inadvertent consequences,” he says. “So if young families can’t afford to buy a house, they stay in the rental market. We now have a number of pretty well-heeled renters creating demand in the rental market, which is why developers can build rental housing at $2,500 a month.

“And as those folks stay in the rental market instead of moving into home ownership, vacancy rates go down and rents go up and people at the bottom of the market get hurt. "

Prof. Pomeroy says he supports the funding of non-market housing in combination with housing allowances that help low-income households get into secure housing and back on their feet.

“Most of the affordability crisis that [the media] write about is the crisis that our kids can’t afford to buy a house. The true affordability crisis is for the folks at the very low end of the rental market, where we just don’t have enough rental housing at low rents.”

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