Social Policy in Ontario

It’s time for some unconventional thinking on the affordable housing crisis.

We could start by admitting that housing and profit don’t mix.

We’ve long believed that to be the case in medicine, which is why most major economies have universal health-care systems dominated by non-profit providers.

In the near absence of Canadian non-profit housing providers, reasonably priced starter homes and middle-class and low-income family dwellings have become ever harder to find.

Instead, with its plethora of monster houses and luxury condo towers, our city increasingly has the feel of a gated community. Like Nairobi. Or Manila.

Fixing that requires that we remove the profit motive from housing as much as possible.

“The crux of the housing problem is that it is both a basic human right and a commodity from which to extract a profit,” Brian Doucet, a Canada Research Chair in urban studies at the University of Waterloo, recently wrote.

Mostly, the for-profit developers build premium-priced housing. They do so because that is where the big profit margins are.

That is why the instrument for making abundant affordable housing a reality is government and its non-profit partners in housing. The free market cannot do it, will not do it, and it must be done.

Two false hopes cloud the vision of today’s housing reformers.

They believe Canada suffers a housing shortage, and that simply building more houses will solve the affordability problem.

Ottawa and the Tories and the NDP in their Ontario election campaigns have promised to build more housing, presumably by the same free-market principles that have yielded very little affordable housing. (The Ontario Liberals’ housing platform is forthcoming.)

They propose open-ended grants and subsidies to both builders and buyers, who will build and try to buy the housing the for-profit market dictates.

As it happens, there is no housing shortage in Canada. House builders are keeping pace with population increases.

Talk of that phantom shortage distracts from the real problem, the shortage of affordable housing. Our starting point should be what kind of houses are needed and by whom, not a simple count of housing starts.

The other false hope is “upzoning,” which scraps the zoning rules that have long required that a demolished house be replaced by a single-family dwelling, to preserve the character of the neighbourhood.

The upzoning process is underway in Toronto and many other jurisdictions.

It encourages the building of once-excluded housing types including duplexes, triplexes, townhouses, laneway houses and low-level apartment blocks in established neighbourhoods.

Upzoning is an intended quick fix in boosting density and doing justice to racialized and low-income people most harmed by the previous exclusionary zoning.

But in practice, upzoning looks like our old enemy gentrification.

With the free market still deciding what gets built, often a demolished house is replaced by a low-level apartment building whose units rent for $2,800 to $3,600 each.

Or the “knock-down” purchased by a developer for $800,000 is replaced by a duplex, each half of which is priced between $1.2 million and $1.4 million.

That drives up valuations and rents of all housing in the vicinity, making the neighbourhood even less affordable than it was before the upzoning.

As we continue to fixate on the false hopes, house prices and rents keep soaring.

For April, the benchmark price of a detached house in Toronto and Vancouver was $1.7 million and $2.1 million, respectively.

In its latest forecast, the Canadian Mortgage and Housing Corp. (CMHC) expects current high price levels to continue into 2024.

Affordable housing will become abundant only when governments make it so, a mission they embraced until the early 1990s.

They built affordable housing for returning vets after the Second World War, and later to accommodate the waves of immigrants to the GTA in the second half of the 20th century.

Canada has a long tradition of governments at all levels providing affordable housing. Absent a profit motive, they can, as they once did, provide decent homes at reasonable prices and rents.

In the 1970s, the feds also invested heavily in non-profit co-operative housing. Co-ops are permanent affordable housing that can’t fall into the hands of speculators. Today, about 125,000 Ontarians live in co-op housing.

The landmark David Crombie co-operative mixed-use complex on the Toronto waterfront can be replicated at smaller scale, adding to the existing co-ops discretely tucked into neighbourhoods throughout the city.

Ottawa has committed $1.5 billion to co-op housing. But its separate $4-billion plan to increase affordable housing supply should be guided by the Crombie project.

Two-thirds of that complex was built by non-profit housing developers. Left to their own devices, for-profit developers revert to the mean, which is profit maximization.

The profit motive has its place in our mixed economy. But it has failed us in the provision of affordable housing. Housing will not be a human right until we accompany that noble sentiment with an abundance of affordable shelter.

https://www.thestar.com/business/opinion/2022/05/21/to-fix-our-housing-affordability-crisis-we-must-acknowledge-that-profit-and-housing-dont-mix.html?source=newsletter&utm_content=a08&utm_source=ts_nl&utm_medium=email&utm_email=0C810E7AE4E7C3CEB3816076F6F9881B&utm_campaign=top_125238