Affordable Housing in Canada

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The federal government defines unaffordable housing as that which exceeds 30% of a person's income. That puts a two-bedroom apartment rental out of reach of many full-time workers. In Dartmouth, N.S., across the harbour from Halifax, John and Stacey Smith lost their rental home in November. Now, they are looking for another rental home. This article discusses some of the factors that contribute to an affordable housing market in Canada.

Rent control

The federal government's income tax reforms in 1972 began with a series of reforms aimed at raising equitable taxation, closing loopholes, and reorienting the economy. Many argued that rent controls would harm affordability, as they removed new primary rental supply from the market, making the shortage worse. However, in 1992, the exemption period was extended to five years, and then made permanent. Today, critics of rent control disagree, arguing that it only hurts rental affordability.

Many governments in Canada are trying to address this issue by lowering the rental cost, and most of these suggestions involve direct subsidies or the reinstitution of tax shelters. However, without these interventions, rental housing in Canada wouldn't exist. One government agency that aims to combat this issue is the Canadian Mortgage and Housing Corporation. In this report, it explains how the government's policies have affected rental affordability in Canada. While these changes are positive, they will be short-lived.

Ridiculous eviction laws

Canadian tenants have long argued that outrageous eviction laws are part of the problem. Compared to the US, Canada has fewer rental units, but the government discourages landlords from evicting tenants who are in need of affordable housing. Whether it's landlords trying to get rid of tenants or zoning changes, there are ways to protect tenants. Listed below are some examples of ridiculous eviction laws in Canada.

These eviction laws are based on the assumption that a tenant can afford to pay the rent. In reality, however, minimum income criteria do not accurately predict a tenant's ability to pay rent. Moreover, protected groups have repeatedly voiced concerns about how the minimum income criteria would impact them. These tenants include those with mental illnesses, who might choose to pay seventy or eighty percent of their income to rent.

Low supply

Canadian policy makers must adopt a comprehensive housing supply strategy to solve the problem of low supply of affordable housing. The federal government must provide financial incentives to developers to build more rental housing, especially purpose-built rentals, to increase the diversity of housing stock. The IMF's June 2019 report calls for a comprehensive housing supply strategy, including a mix of high-rise and single-family units, to meet the needs of all income groups.

The Bank of Canada has estimated that the median housing supply elasticity will be 2.2% by 2021, with a one per cent increase in price being associated with a two-per-cent increase in housing supply. While this figure is relatively consistent across cities across Canada, it varies significantly among them. In Vancouver, it was only 0.63%, while in Toronto it was 1.9%. In Winnipeg, the figure was 4.3%.

High demand

Canadians face a dire housing shortage. As a result, more than a third of the population has given up on owning a home. While the government has stepped up efforts to build more affordable housing, the debate on the matter still rages. The debate is rooted in myths about affordable housing that are harmful to communities and devalue the surrounding property prices. To overcome this myth, it is important to understand what makes housing affordable.

A lopsided economic performance is one of the major factors behind the current high demand for affordable housing in Canada. While wages remain stagnant, housing costs continue to increase. More Canadians will be forced to rent at unaffordable rates. This problem has reached crisis proportions and will only continue to worsen. Fortunately, Justin Trudeau's government has taken action. This government has proposed 29 housing-related measures that will cost $10 billion over the next five years. The measures aim to boost housing supply, combat speculative buying, and help first-time homebuyers afford their first homes.

June 15, 2022
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