Fall Economic Statement’s Housing “Action” Plan misses the point – and fixates on the wrong solution – supply supply supply!
Steve Pomeroy
Executive Advisor and Industry professor at Canadian Housing Evidence Collaborative (CHEC) McMaster University
Not only does a supply response not address the crisis – getting people out of tents now, before winter – because it takes 3-4 year to build. More critically it defers this investment until 2025!"
There is no action on mitigating the crisis that is worsening as we speak. There are only longer-term measures with a misguided belief that relies on increased supply to improve affordability. To address the crisis it would be more immediate and effective to give people money to help with excessive rents and to lend money to non-profits to acquire and preserve existing moderate rent housing.?
The housing chapter proposes to add an additional $15 billion in loan authority to the existing Rental Construction Financing Initiative (RCFI) rebranded as the Apartment Construction Loan Program (ACLP) ?and identifies $1 billion for capital grants in affordable housing, in the Co-investment fund, rebranded as the Affordable Housing Fund (AHF) but these loans and funds won't flow until 2025.
There have been many recent reports of shovel ready projects put on ice due to higher construction costs and interest rates. This includes both market rentals and non-profit affordable. Providing low-rate finance and, for non-profits, additional grant now, would pull these pending projects off the shelf and immediately create what this government believes is much needed supply. Perhaps then they might as least be ready to occupy by late 2025, rather than not even started.
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Changing tax treatment on short-term rental (Airbnb) with a hope of encouraging (by penalizing) STR landlords to shift these back to the long-term market could potentially impact sooner. But seems like a lot of wishful thinking – can the CRA devise different tax rules for STR vs LTR income?
And the one proposal that aligns better with a crisis is a proposal to create a code of conduct for federally chartered lenders to offer great flexibility and forebearancxe to homeowners facing large increases when their mortgage comes up for renewal. This costs government nothing but might enable people to retain their homes. That’s a good thing.
And my greatest disappointment: no mention of a funding initiative to support non-profit purchase of existing moderate rent properties, to remove these from market pressures and excessive rent increases. An issue I have advocated for for over 5 years. This is despite proposals that offered up to $500 million in equity investment from social impact investors with a request to match equity from government, that would have resulted in costs to government of only $10,000 per unit preserved. Its bewildering that the government turned down such a low cost option to lever social impact capital – seemingly blinded by their fixation on supply. My recent research has calculated that over the past decade we have lost 11 existing lower rent units (below $750 and affordable to incomes of $30,000) for every new affordable home built.
Without fixing the hole in this ?bucket all the new spending on supply will be negated. Sadly the Emperor (Minister) is fiddling as Rome burns!
Mental Health Advocate & Consultant | Leading Mental Health Initiatives
3 个月Steve, Appreciate you sharing this!
Secretary-General - Cooperative Housing International / Julie of all trades in communications, program development and delivery.
1 年Why is gov't waiting until 2025? Is it because it's an election year?
Professor of Housing Research and Policy, UNSW
1 年Excellent analysis as ever, Steve. Yes, by all means, GOC, look to free up supply where possible. Prices and rents will be slightly lower in the long term than would otherwise have been the case. But don’t fall for the delusion that this is the silver bullet for housing unaffordability that means not much else needs to be done. Direct intervention at scale is also essential to aid renters under pressure and others at risk of homelessness. As you say, Steve, enabling not-for-profits to buy up moderate rent homes from private landlords would make a lot of sense when this dwindling resource is at risk of gentrification.
Facilitator of Action
1 年Thanks Steve for your unending advocacy even tho it has not fallen on accepting ears yet. As we continue to wait for senior levels of government we need to keep pushing, advocate collectively, and act locally.
Founder & Principal at Trillium Housing
1 年Always excellent analysis! I think a very important nugget is the creation of a new Department of Housing, Infrastructure and Communities. Hopefully this will put Housing policy development (and hopefully enforcement) in the department where it belongs and out of CMHC. CMHC can focus on its monopoly insurance business. This is good governance. I would add three items that the federal government directly controls and that could have immediate impacts on housing affordability for families: 1. The number one cause of inflation right now is Bank of Canada interest rate - ostensibly the hikes in the rate were designed to cut inflation. Without interest rate hikes, inflation is close (or below) the 2% target - so the government should signal they expect a reduction in the interest rates. 2. Update the HST New Home Rebate threshold - it was set in 1991 at $350,000 and hasn't been updated since. 3. Update the Mortgage Stress Test. Interest rates have gone up and most forecasts are that they should fall. The Stress Test design is poor and CMHC is punishing modest income families the most - The government needs to give direction that giving average Canadians a break is more important than CMHC's zero-risk attitude.