Solutions to affordable housing crisis are within reach

The summer of 2023 was the summer of the “housing crisis,” and it is increasingly clear the issue will dominate the next federal election, even if housing is constitutionally a provincial issue.

It may well dominate the next New Brunswick provincial election also.

In some parts of Canada, rent in a newly built apartment building is running above $3,000. Those units would be affordable for households with incomes above $120,000 per year—that is using the government’s official definition of housing affordability, whereby no more than 30 per cent of before-tax income is spent on housing. According to Statistics Canada, the median after-tax income for economic families and individuals was $68,400.

That median household could afford housing at $1,710. Half the population requires housing that costs less than that, and for them, the “housing crisis” is felt mostly as an affordability issue.

The federal government used to help build as much as 40 per cent of the rental housing stock in Canada through incentives and subsidies for developers of multi-family (apartment) housing. We also built about 20,000 units of public and non-profit housing every year after 1964 for two full decades into the 1980s.

Starting in 1978, the federal government’s housing commitment began to be seen as a liability on its balance sheet, and the cuts began. By 1993, the Chrétien-Martin Liberal government ended federal subsidies for affordable housing. They did so to balance budgets (and later, to cut taxes, especially on the wealthy).

In the process they created new deficits—perhaps none now more important than the affordable housing deficit. Resolving our affordable housing crisis is not as complicated as Conservative and Liberal politicians make it out to be. The solutions are, however, inconvenient to the landlords and wealthy investors who support both parties.

Solutions

Alternatives that might address our over-reliance on the private sector for satisfying our housing needs are not hard to come by, and not all that radical.

Provincial

Housing is regulated at the provincial level, where it is possible to enact rules quickly and cost-efficiently. This includes legislative changes that would make tenants less vulnerable to renoviction and other arbitrary actions on the part of landlords.

But first and foremost, New Brunswick needs to address the rising cost of rents by imposing real rent control that applies to vacant units and existing tenancies alike. That will ensure that we don’t continue to bleed market rental units that are affordable to people on low incomes—including many people working full-time in low-wage jobs.

In Fredericton, apartments that are affordable for people earning as much as $40,000 a year disappeared at the rate of about one per day between 2016 and 2021. There is no reason to think that rate may not have accelerated since. So, it is time to do something.

Rent control, however, will not bring new units into the housing market. But there is more than one way to bring new rental stock onto the market.

Municipal

The fastest and cheapest way to secure more affordable housing is to take them away from investors in short-term rentals. Short-term rental platforms are sucking up hundreds of affordable units in central city locations across the province. Replacing them with newbuild units is expensive. Regulating Airbnb costs as much as enforcement of by-laws.

So far, municipalities have been more willing to pay millions in emergency shelters or on policing the homeless population. This doesn’t inconvenience landlord-speculators.

But landlords of short-term rentals should be inconvenienced. It is a housing crisis, and their investment decisions do nothing more than increase rents. In cities like Fredericton or Saint John, this would immediately double vacancy rates for most unit types. For instance, in Saint John, 2.6 per cent of the primary rental market for one bedroom apartments are on Airbnb (69 of 2,637 apartments in the CMHC’s survey of the primary market in Saint John)—that is well above the vacancy rate of 1.8 per cent. A quick glance at the map of where these units are available shows most are in the South End “Uptown,” a neighbourhood with many low-income households.

In Moncton, more than 10 per cent of the city’s 3 or more-bedroom apartments for families have been moved to short-term rental platforms. There is a way to help a lot of people without spending a lot of money.

If the population continues to grow in New Brunswick, that shot in the arm of regulating short-term rentals will be short lived. We will still have to build more affordable housing. And that will require new funding streams from the federal government.

Federal

At present, the federal government, through the Canada Mortgage and Housing Corporation (CMHC), is providing developers with access to favourable interest rates in exchange for modest accessibility and energy efficiency targets that should already be part of local building codes. In exchange, the CMHC offers lower mortgage insurance rates and other cost incentives.

By comparison, the CMHC does a lot less for low-income households. Most of their affordable housing streams are for units that follow market rents, or that target income groups that are wealthy enough to find market housing.

For instance, the National Housing Strategy’s Rental Construction Financing Initiative (RCFI) provides financing for developers who add affordable units to their projects, but “affordable” is simply the before-tax median income for a given census metropolitan area (CMA). But that means the “affordable” units would be unaffordable for half the population of a CMA—the half most in need of affordable units, since provincial inaction is leading to a loss of thousands of affordable units a year in New Brunswick.

There is also the National Housing Co-Investment Fund, another tranche of funding for affordable housing construction in the National Housing Strategy. It defines affordability as units priced at 80 per cent of the median market rents by unit type—more affordable than the RCFI. However, the median market rent in New Brunswick has increased by more than 25% since 2019. There is no rent control, so median market rents are rising fast.

Crucially, and totally absent from the debate about the “housing crisis”: it is federal banking legislation from the 1980s that enabled the financialization of housing—allowing corporate landlords to package and sell housing incomes on to other investors.

Large corporations have piled into the housing sector with the aim of increasing housing-related revenue streams—which are housing expenses for households, already cash strapped by the cost-of-living crisis. By contrast to low- and moderate-income tenants, the owners and investors in housing-related assets were probably the benefactors of Paul Martin’s tax cuts in 1999.

Housing dispossession

The violence of this process of housing dispossession should be lost on no one. Our growing homelessness and housing affordability crisis are the direct result of federal government policies from three and even four decades ago, which were wildly popular amongst the same social classes who often want nothing to do with some of the social problems their tax cuts have created—especially the homelessness and addictions crises.

The right thing to do here is to increase taxation on high incomes and wealth, and redistribute it through more aggressive public and non-profit housing programmes.

The federal government has a responsibility to ensure that low-income households have access to adequate housing in well-planned neighbourhoods with access to services and infrastructure (like transit, sidewalks, parks, schools, and day cares). We cannot wait three or four decades for this to become a reality.

Matthew Hayes is a spokesperson for the New Brunswick Coalition for Tenants Rights and a Canada Research Chair in Global and International Studies in the Department of Sociology at St. Thomas University.