THE AFFORDABLE CITY

There has long been a consensus on what constitutes affordable housing in Canada. Spending more than 30 per cent of your monthly income on housing and heat, water and electricity means you’re creeping into housing unaffordability, according to the Canada Mortgage and Housing Corp. and Statistics Canada.

And that leaves people to make tough choices about what’s left of their income. Buy food, pay the utility bill or get needed medicine for a child? It also means they lack any cushion to make it through a rough patch, such as injury or job loss. Current food bank use, homelessness and eviction trends reflect this reality. In Canada, about 3.3 million households — almost one in four — have housing costs above this affordability threshold. In Vancouver and Toronto it’s even worse. One-third of households are coping with unaffordable housing. In a 2011 report, StatsCan found that on average people living in unaffordable housing spent more than half their incomes on shelter. The extra cost — beyond the affordable level threshold of 30 per cent — was $510 a month, itself 20 per cent of their income. Home ownership seems out of reach. A recent StatsCan report found that the median price of homes in Greater Vancouver was more than nine times the median income. And a calculation by Point2Homes, a real estate market website, estimates that millennials who set aside 20 per cent of their incomes would take two decades to save enough for a downpayment in Vancouver. A few reasons come to mind as causes for this unaffordability. One that has received some political attention is speculation. Houses and condos have become investments, not places to live. And in Vancouver or Toronto, the profits on those investments have been enormous. Many owners count on them as retirement savings; few are willing to accept policies that would return the value of their properties to local income level norms. Taxes that target speculation, empty homes and foreign owners seem to have had at least some of the intended impact in British Columbia. Purchases by foreign buyers dropped sharply after a tax was introduced in 2016. And, price increases slowed and then dropped in Vancouver after B.C’s speculation and vacancy tax and the city’s empty home tax were introduced. But that is far from the complete picture. Of the seven in 10 (68 per cent) of Canadians who do not currently own a home and do not feel they will be able to afford one in their desired neighbourhood, 26% said that their salary was not enough to save for a down payment. An average detached house in Vancouver cost $400,000 in 1995; by 2015 it was $1.8 million, a 450-per-cent increase. Meanwhile, average incomes in Vancouver increased only 14 per cent in the same period.

“Salaries aren’t keeping up, but costs are rising.” - NDP leader, Jagmeet Singh

In his paper titled “The global urban housing affordability crisis”, Steffen Wetzstein discusses how this critical commentary confronts and explores the – so far under-recognised and under-researched – emergent global crisis of urban housing affordability and affordable housing provision. This crisis results from the fact that housing-related household expenses are rising faster than salary and wage increases in many urban centres around the world; a situation triggered by at least three global post-Global Financial Crisis megatrends of accelerated (re)urbanisation of capital and people, the provision of cheap credit and the rise of intra-society inequality.

Indeed, it is the world’s 100 largest cities that capture two-thirds of McKinsey’s Global Institute’s ‘Affordability Gap’. The evidence is thus becoming overwhelming that this urban housing crisis is global in scope. Yet in contrast to the GFC that originated in subprime financed housing stock in the USA and spread via global financial centres to countries and populations worldwide, this new global crisis emerges simultaneously across many metropolitan regions around the planet.

The re-urbanisation of capital and people has pushed-up demand for housing, the provision of cheap money has facilitated extensive mortgage lending and the rise of intra-society inequality has reduced the ability of lower socio-economic households to pay growing housing and energy bills. While affordability concerns relate to both, housing-related household expenses as well as net household incomes, policy making communities, social advocates, business and the media have framed the problem overwhelmingly as an affordable housing challenge. Accordingly, the spotlight has been put almost everywhere on questions of how to release more land, build more houses and apartments and reregulate mortgage and rental markets rather than to deal with the more contentious issue of how to help households to earn salaries and wages in line with rising housing expenses.

As global inequality declines with between-country inequality and the convergence of median incomes, within-country income inequality is on the rise in many countries.

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DR. PAUL MAKDISSI

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