It was good to read in last week's Low Down that the MRC des Collines is hiring an affordable housing specialist to create an action plan to deal with this crisis, (MRC to hire affordable housing specialist, March 9 edition). Much needs to be done and this is a positive first step.
The average price of a house in Canada topped an eye-popping $800,000 in February. I just plugged some numbers into an online mortgage calculator (five per cent down, 25-year term, two per cent interest) and the monthly payments for that would be over $3,200 a month. Add in property taxes, utilities, and maintenance, and it could easily be $3,500 a month in housing costs. In order for that to be under the 30 per cent threshold considered to be an affordable amount of your total income spent on housing, you'd need a household income of $140,000 a year to pay for that — an amount that would put you in the top four per cent of earners in Canada. So in other words, according to these admittedly back-of-the-envelope calculations, only four per cent of Canadians can afford to buy a home in Canada right now. And where goes the cost of purchasing, so goes the cost of renting.
House prices have been increasing about 20 per cent a year for the past two years in Canada. Naturally, those sorts of gains attract investors; they now account for one in five property buyers. Is this a problem? Probably some houses are sitting empty, waiting to be flipped at great profit. Other rental units are bought up by real estate investment trusts – many traded publicly on the stock market – whose goal is to distribute maximum profits to their shareholders. That doesn't sound like a recipe for affordability.
What it does sound like is market failure. In a recent CBC article, Michael Brooks, the CEO of an association that represents large real estate companies, even admitted as much: "Affordable housing is a public good, and the private sector is not primarily in the business of providing a public good … you can't expect the private sector to solve all social ills."
Brooks went on to say that what's needed is a national housing strategy — that is government involvement. Canada actually has such a thing – we're halfway through a 10 year federal commitment to spend $72 billion on it over 10 years – but it's clearly not making enough of a difference.
Brooks also claimed that we need landlords with "access to capital and scale and good management … to meet the housing needs of this country." But who says those landlords need to be private owners? Municipalities have significant access to capital and are in the business of management. Why couldn't a municipality like La Pêche or Chelsea simply buy housing as it comes up for sale, for the purpose of renting it out long-term at affordable rates? The municipality could cover all its costs, and still peg rents well-below market levels. The city of Berlin owns 17 per cent of all rentals and has the right of first refusal on residential properties coming up for sale. Maybe the MRC des Collines should fly their new affordable housing specialist to Berlin to learn how to do it.
Sean Butler is a Wakefield resident, writer and farmer at his Ferme et Foret in Rupert. You can find a longer version of this piece at seanbutler.ca.