We need to address housing affordability, not just affordable housing

ANALYSIS: Real estate pressures won't be solved simply by building more affordable housing — we need to make housing more affordable across the board
By John Michael McGrath - Published on November 29, 2016
No single bureaucrat in Ontario is focused on the issue of keeping housing affordable for the general public. (Richard Buchan/CP)

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Paul Smetanin, an economist and CEO of the Canadian Centre for Economic Analysis, calls it his latest “pilgrimage”: find someone in Ontario’s provincial bureaucracy who can make housing affordability a priority.

The province has a whole ministry devoted to housing (until this year, it was shared with the Ministry of Municipal Affairs) but has traditionally focused on the narrow issues of building publicly owned or subsidized housing and tinkering with the province’s rent-control laws. The province doesn’t, he says, have someone focused on the broader issue of keeping prices affordable for the general public.

“We have yet to find that division, or that person" at the provincial government, Smetanin told a panel convened by Ryerson University’s City Building Institute in Toronto on Monday. "They’re interested, however when it comes down to it we find that housing affordability doesn’t land on any one person’s bureaucratic agenda.”

The housing ministry flatly rejects Smetanin’s characterization. When asked, a spokesperson for Minister Chris Ballard pointed TVO.org to the minister's mandate letter, issued by Premier Kathleen Wynne and made public in September.

The text of the letter instructs Ballard to work both with Minister of Finance Charles Sousa and his federal counterparts to improve housing affordability (without further detail) and move forward on the province’s plan to make it easier for homeowners to become small-time landlords with basement or laneway apartments. Ballard’s office also pointed to the government’s recently-announced rebate for first-time home buyers.

But those are all either abstract or narrow. The mandate letter largely supports Smetanin’s description: the vast majority of specific measures the government has implemented or proposed are targeted at households with low incomes or other marginalized groups, such as plans for a portable housing benefit that wouldn’t tie the recipient to a particular location, services for Indigenous housing, and alternative housing for people fleeing domestic abuse. The language around broader affordability measures is vague and comes with neither deadlines nor dollar figures.

The province’s stake in the housing market isn’t just on social equity grounds, either: the financial accountability officer has cited the hot housing market as something that could both send the province into recession and send the provincial treasury into deficit if the market cools. If nothing else, the macroeconomic risks mean the province should be taking a more systemic view of the housing market than it has to date.


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One factor affecting affordability, identified by both Smetanin and Murtaza Haider, a professor at Ryerson’s Ted Rogers School of Management, is that baby-boomer homeowners aren’t cashing out their homes — “right-sizing” their property to fit the needs of empty-nesters — despite high and rising prices. There are a number of possible causes, including adult millennials living with their parents, and a lack of appealing, affordable options for boomers to move to. (Selling in a hot market means buying in one as well.) But whatever the cause, the “pipeline” that put larger homes back on the market for resale seems to have broken down.

It’s a difficult question for policymakers: If seniors are hanging on to big houses longer than they used to, thus constricting supply for younger generations, is the answer to induce them to sell somehow? No government wants to be seen as forcing people out of their homes, and in recent years the province has done the opposite, adopting policies to help seniors age in their homes (thereby keeping them out of long-term homes, and lowering provincial health care costs.)

And despite some voices in the development industry arguing for an expansion of homebuilding into the Greenbelt around the GTA, not everyone thinks restrictions on new construction in the Greenbelt are directly responsible for the region’s high housing prices, either. Mike Collins-Williams of the Ontario Home Builders Association acknowledges a point that defenders of the Greenbelt have maintained for years: that there’s sufficient land available for development to last at least until 2031, if not longer.

Instead of shortage of land, Collins-Williams says there’s a shortage of infrastructure: areas of the GTA that have been designated for new home building need water and sewer service, but municipalities around the region are pushing back deadlines on projects that developers have been waiting for. Collins-Williams pointed to delays in the Upper York Sewage Solutions project as an example: it was planned to accommodate growth in places like East Gwillimbury, north of Newmarket, but is now being delayed as the region sees less revenue from the development charges that were supposed to pay for the project.

Delays in the Upper York project and others in York Region alone mean that the region is going to be short tens of thousands of units it would otherwise have been able to build in the 2020s, while the greater Toronto region continues to add 100,000 people per year.

Marcy Burchfield, executive director of the Neptis Foundation, which publishes research on land-use planning around the GTA and elsewhere, notes that in addition to the infrastructure lags, one-third of the City of Toronto is zoned exclusively for detached or semi-detached homes, effectively raising the costs of anything more compact, like townhouses or even short apartment buildings.

“Another part is, is the land in the right place? Is there land for developers in the places where people actually want to live?” asks Burchfield. If the trend of millennial workers wanting to live closer to denser, amenity-rich places across the region continues, the perceived shortage of land at the periphery may lose whatever importance it has.

Whatever the combination of factors keeping housing prices high, there could be, at least in theory, a provincial solution: the government could force municipalities to allow more density in their zoning by-laws (current legislation leaves it up to the Ontario Municipal Board to override recalcitrant cities) or finance needed infrastructure out of the existing tax base to ensure capital improvements aren’t  held hostage to the vagaries of an unpredictable housing market.

For now, Paul Smetanin is still looking for that division in the provincial bureaucracy to make housing affordability its mission.

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