What housing crisis? New StatsCan insight on how to improve affordability

For years now we have repeatedly heard that we are amidst a housing affordability crisis – prices are out of reach for young families aspiring to buy a home. Meanwhile more people remain in the rental market, adding demand pressure and driving rents to increasingly unaffordable levels, especially for low-income vulnerable households. Then today Statistics Canada released a series of data sets on housing identifying improvements in affordability.

The accompanying notice highlighted that fewer households in Canada's 10 provinces lived in unaffordable housing in 2021 compared to 2018; and that core housing need has declined from 1.6 million (11.3%) to 1.4 million (9.8%). This will be music to the ears of the CMHC leadership and Minister and suggests that the National Housing Strategy is making a difference. But is it? To what extent does 2021 provide a key datapoint revealing a sustainable downward trendline?

The key feature in the 2021 landscape, captured in the Canada Housing Survey, was the impact of massive wage and income support during the Covid pandemic. Affordability is determined based on both the cost of housing and the income of households, so these wage subsidies play an important role. We have seen weekly reports of rising prices and rents (prices are now stalling but rents are not). In short, temporary improvement in income but worsening housing costs.

So these reported affordability improvements are much more a consequence of the very temporary and now terminated income support and assistance than they are of providing an increased supply of low-moderate rent affordable housing. In fact very few low-rent homes funded under the NHS were yet complete and available at the time of the survey in spring 2021, so the data do not reflect much of the supply impact.?

It is good news that affordability for lower income core need households has improved.

But what this data really shows is the very substantial and quick impact that addressing insufficient income can have in substantially reducing housing affordability need. This is important in reconsidering the focus and funding mix in the National Housing Strategy. The NHS includes a small somewhat experimental initiative to provide rental assistance under the cost-shared and provincial-territorial delivered Canada Housing Benefit. But the CHB is funded with only $4 billion (joint FPT) over 10 years. This is roughly one tenth of the quantum necessary to more fully address core need and to provide a realistic level of monthly assistance to those in need, and to those seeking to exit homelessness.

This new data from the 2021 CHS provides valuable insight on the impact of such income-based assistance and should stimulate expansion of the CHB to build on the temporary improvements recorded in the 2021 survey.