Election 2019: Housing affordability — Backgrounder

The Federation of Canadian Municipalities calls on all federal parties to commit to eight targeted measures that address Canada’s housing affordability crisis.

Our recommendations build on important progress made in recent years to ensure that low- and moderate-income Canadians have access to housing they can afford. If adopted, they will address gaps in delivering social and affordable housing and tackle the disconnect between market rents, home prices and income levels.

Housing for low- and moderate-income Canadians	Leadership to tackle the housing affordability crisis
Maintain federal leadership in affordable and social housing and in ending homelessness	Launch a new intergovernmental forum on housing affordability
Establish a supportive housing construction fund	Initiate a market rental housing preservation program
Create a new Indigenous social and affordable housing initiative	Design a new housing adaptations program for seniors
Optimize the Federal Lands Initiative	Expand federal data on housing and establish a new affordability indicator

Below are more specific actions related to each ask and key facts that explain each recommendation’s context. All funding commitments are requested for an eight-year period, in order to align with and leverage existing National Housing Strategy investments.

Housing for low- and moderate-income Canadians

Maintain federal leadership in affordable and social housing and in ending homelessness

• Maintain the investments and priorities named in the National Housing Strategy (NHS) that focus on housing for low- and moderate-income Canadians through social and affordable housing.
• Ensure that investments flow efficiently to all regions, and prioritize communities with deep housing needs and high land costs.

Key facts:

• The NHS responds to key priorities for local governments:
  • Construct and repair social/affordable housing.
  • Replace rent subsidies for low-income households in social housing that were slated to expire.
  • Increase investments to address homelessness at the local level.

Establish a supportive housing construction fund

• Introduce a new, dedicated fund to construct supportive housing for people experiencing homelessness and struggling with mental illness, substance use or other challenges.
• Address a critical gap in the NHS by creating an additional 2,300 supportive housing units per year, over and above the units achieved through the existing NHS funding. This would, at a minimum, achieve the NHS target of reducing chronic homelessness by half.
• The estimated cost of this fund is $365 million per year, based on the federal government contributing up to 100% of total construction costs at $150,000/unit (there are higher per-unit costs for supportive housing in the North).
• The federal government should provide a commensurate amount to provinces/territories that already have a robust and dedicated supportive housing construction program (currently Quebec and British Columbia).

Key facts:

• Canada’s emergency shelter system is at over 90% capacity. It experienced a 10% increase in demand between 2005 and 2014 (National Shelter Study 2005-2014).
• The relationship between mental health, substance use and homelessness is clear: between 25% and 50% of Canada’s homeless population live with a mental illness (Mental Health Commission of Canada, 2011).
• The opioids crisis persists, affecting communities in every part of Canada. There were more than 11,577 opioid-related deaths in Canada between January 2016 and December 2018. Of these, 94% were accidental (Statistics Canada, 2018).

Create a new Indigenous social and affordable housing initiative

• Introduce a new initiative to support the construction or acquisition/rehabilitation of culturally appropriate social and affordable housing for Indigenous households in cities and communities.
• This would address a gap in the NHS by producing 1,000 units per year over and above the Indigenous households in cities and communities that result from existing NHS funding.
• Develop and deliver this initiative in deep collaboration with the Indigenous housing sector. Put governance structures in place to ensure that Indigenous housing providers and representatives participate in the funding allocation process.
• The estimated cost of this fund is $162.5 million per year, based on the federal government contributing 70% of the total construction or acquisition/rehabilitation costs at $225,000/unit. (There are higher per-unit costs for housing in the North)

Key facts:

• The majority of Indigenous people live in cities and communities.
• Indigenous renter households living off reserve experience a core housing need at a rate of 34%, compared with 26% for non-Indigenous renters (Statistics Canada, 2017).
• The average total income of Indigenous people was 75% that of non-Indigenous people in 2015. That’s a 25% income gap (Canadian Centre for Policy Alternatives, 2017).

Optimize the Federal Lands Initiative

• Expand the program by making federal surplus land available for social and affordable housing.
• Have municipalities identify these lands, instead of having the federal government undertake this process. This will accelerate the rollout of critical housing projects.
• Adjust the mandate of the Canada Lands Company to prioritize the provision of land for social and affordable housing. The Company has previously included social and affordable housing in its redevelopments, but only on a case-by-case basis.
• These recommendations require an additional $20 million per year in funding. That doubles the Federal Government’s level of investment in the NHS to $40 million annually.

Key facts:

• As of April 2019, only five properties had been made available through the existing, federally led approach to identifying surplus lands.
• Since 2013, the Western Manitoba Seniors Non-Profit Housing Co-operative has opened two seniors affordable housing projects in Brandon, MB. Both were made possible by land donations and other grants from the City of Brandon. Together these projects contain 97 seniors’ rental units, 82 of which are affordable units.
• In 2018, the City of Vancouver approved a proposal for affordable housing across seven city-owned sites. There will be 989 new units ready for occupancy by 2021.
• The City of Toronto’s Housing Now initiative provides 11 city-owned land parcels for the development of about 10,000 homes and approximately 3,700 affordable rental units.

Leadership to tackle the housing affordability crisis

Launch a new intergovernmental forum on housing affordability

• Create a new forum where orders of government can join forces and tackle the housing affordability crisis. Each order of government is responsible for different housing levers—from federal responsibility for demand-side levers and the legislative role of provinces to the municipal role in community planning and approvals—so only intergovernmental collaboration can solve the housing crisis.
• The forum should tackle issues such as speculation, how to deploy demand-side measures that improve affordability, understanding and addressing the role of short-term rentals and expanding the municipal housing toolbox for increased innovation.

Key facts:

• The increase in home prices and rent in many communities has vastly outpaced income growth in the last decade. That means more Canadians face housing affordability pressures.
• Unprecedented housing market pressures, particularly in big cities, pose an unparalleled threat to our future economic prosperity.
• In Canada, 40% percent of renters spend 30% or more of their income on rent. That includes the 80% of households with incomes under $20,000 who pay more than 50% of their income on rent (Rental Housing Index, 2018).
• An average-priced home requires almost 52% of the median household income to cover the cost of homeownership (mortgage, property taxes, utilities) (RBC, 2018).
• In 2018, the Canada-wide rental housing vacancy rate was 2.4%. From November 2017 to November 2018, Canada-wide, rents increased by 3.4%, a higher rate than inflation (CMHC 2018). A vacancy rate of 3% is generally considered balanced.

Initiate a market rental housing preservation program

• Introduce a new federal program to preserve and improve aging, low-cost market rental housing (privately owned) using a combination of federal tax incentives and grants. Older market rental housing generally provides lower-priced housing, compared with rented condos or newer rental properties. Because this part of the housing stock is aging, it needs considerable repair and retrofit.
• This program would preserve the existing affordability of older market rental housing stock and avoid the deterioration, “renovictions” or conversions of 40,000 existing units that would further reduce the rental supply.
• It would also incentivize owners to undertake energy retrofits that improve the energy efficiency of this part of the housing system. That would reduce GHG emissions – driving climate action - and help address poverty by lowering utility costs for tenants.
• In addition to reducing GHG emissions, renovating aging rental buildings can also improve community resilience to climate change. Improvements to the building envelope and cooling systems in particular, as well as the potential addition of natural infrastructure to the property, will mitigate against the “heat island effect” and reduce health risks for vulnerable populations during heat waves.
• Such a program would complement existing energy efficiency programs targeted at non-profit housing providers.
• The program would primarily constitute a tax credit worth 75 percent of the total qualifying repair/retrofit cost for building owners, which could be claimed over a period of five years. To ensure continued affordability, owners would be required to agree to not increase rents beyond allowed guidelines (or CPI where guidelines do not apply) for at least 20 years. 
• An additional grant would be available for building owners who undertake particularly ambitious repair and retrofit work and/or have a small number of units within their building(s) such that they have a greater financial gap to overcome.
• The estimated cost of this program is $250 million per year and has the potential to achieve the repair and retrofits of 40,000 units.

Key facts:

• Approximately one in three Canadian households rent their home.
• The number of renters in core housing need increased by 13% between 2011 and 2016 (CMHC, 2017).
• Currently, 76% of Canada’s rental units are more than 36 years old (Tower Renewal Partnership, 2019). This ranges from towers to walk-ups with just a few units. Aside from a small amount of social/affordable housing, the vast majority of this purpose-built rental housing is owned and managed by the private sector (multi-property corporate landlords, individual owner/operators of single properties, etc.).
• Between 2011-2016, the number of rental units with rent levels below $750/month declined by almost 400,000 (Pomeroy and Lampert, 2017). 
• Homes and buildings account for 12% of national GHG emissions (Pan Canadian Framework on Clean Growth and Climate Change, 2017).
• Existing buildings lag behind new buildings on energy efficiency. By 2050, they will constitute at least half of Canada’s building stock (Pembina Institute, 2017).

Design a new housing adaptations program for seniors

• Introduce a program that offsets the cost of home adaptations (grab bars, ramps and lifts) that help seniors safely and affordably age in place.
• FCM recommends three funding streams: owners/renters/private landlords; non-profit landlords and rural communities.
• Funding should be progressively income-tested so low-income seniors have access to the deepest grants.
• The estimated cost for this program is $30 million per year to support 12,000 adaptations per year. It assumes a 50% federal contribution and an average cost of $5,000 per adaptation.

Key facts:

• While some provincial/territorial and municipal programs support home adaptations, many are oversubscribed. There is no universal program to address this need.
• Sometimes the only alternative to aging in place is long-term care, which comes at a significant cost to the healthcare system.
• Ensuring that seniors can age in place in rural Canadian communities is critical given that there are often few or no housing options for them there.
• The incidence of senior households in core housing need in Canada was 14% in 2016, compared with 12.2% for non-senior households (CMHC, 2019).
• From 2011 to 2016, the number of senior households in core housing need increased by 21%, which is well above the 5.1% increase in non-senior households (CMHC, 2019).
• In Ontario, the per-resident, per-day cost to the provincial government of housing a senior in long-term care is $149.95, or $54,730 per year (Ontario Long Term Care Association, 2019).

Expand federal data on housing and establish a new affordability indicator

• Introduce data enhancements that provide households and policy makers with better data on affordability, rental vacancies, core housing need and rural housing markets.
• A new affordability indicator should report on combined household housing and transportation costs. This will help clarify the trade-offs households make when they move far from job centres to access housing they can afford.
• We also recommend creating a new CMHC market analysis product that regularly and comprehensively assesses the state of local and regional housing markets. It should include twice-yearly reporting on rental housing data.
• There should be more frequent updates on core housing needs and improved and expedited data on housing supply, demand and affordability in rural Canada.

Key facts:

• Outside Canada, jurisdictions are beginning to take an expanded view of affordability, one that combines housing and transportation costs. Generally, they use a benchmark of no more than 45% of household income. In Canada, we do not have a regular, rigorous survey that captures this combined metric.
• Prolonged commutes have a negative impact on government systems (e.g., transportation infrastructure) and limit the progress made against government goals (e.g., increased transit ridership, reduced emissions).
• A recent Metro Vancouver study measured the combined cost of housing and transportation for the region at a single point in time. The study found that renter households earning less than $50,000 can spend up to 67% of their pre-tax income on housing and transportation costs (Metro Vancouver, 2015).