Opinion: Tax-incentives and Building More Homes Won’t Solve the Housing Crisis in Canada. Non-Profit Solutions Will.

With the housing crisis in Canada, affordable housing is a hot topic for the upcoming federal election. One writer argues that politicians should be looking at alternative, non-profit solutions to tackle the housing crisis.

I remember the exact moment I gave up on my dream of owning a house.

I was sitting on my dad’s couch holding my baby. I had been recovering with family after a difficult birth under the pandemic lockdown. For months, while house prices in Canada skyrocketed, my all-consuming focus had been my baby and our health. Like Rip Van Winkle, I opened a news article on my phone and read that the average price for a house in Canada was now over $700k. I stared at it for a moment, then closed my eyes.

“That’s it. It’s done,” I thought.

I had always hoped to buy something small in my hometown of Kingston, Ontario, but with the pandemic exodus from Toronto and the surrounding area into Kingston, I would now face bidding wars and prices beyond my reach.

The truth is, homeownership has been a stretch for a while, even though I had saved a healthy down payment. As a single mom, my main hurdle is the hit to my income until I go back to work full time. Seeing that figure forced me to admit to myself that my dream was no longer realistic, at least in the short term.

I turned to the rental market to look for something appropriate for myself and my child within my budget. It was pretty grim. I can only imagine what it would be like for someone without savings or family support.

Homeowners may be mystified by all this talk of a housing crisis in Canada during this federal election. For the rest of us, it’s no mystery.

When it comes to affordable housing, Canada is failing badly: our country currently ranks as the second least affordable housing market on the planet. According to Oxford’s North America Housing Affordability Index, Los Angeles and New York City are now both more affordable, in terms of housing, than Toronto, Vancouver or even Hamilton. Canadian financial expert Rob Carrick recently wrote that the housing boom is “tearing apart the financial fabric of Canadian life.”

House prices in Canada have risen faster over the last 30 years than any other OECD country, cut loose from any connection to wages. On the rental front, real estate investment trusts (REITs), which are not even taxed like corporations, have swooped in with predatory extractive investment practices, gobbling up swaths of affordable rental stock.

Surveys suggest that 46% of people under 40 believe they will never own a home (47.9% percent of millennials own homes, which is the lowest rate of any generation, and of those who bought during the pandemic, 33% received money from their parents). 1.7 million people are in core housing need, and 235, 000 experience homelessness in any given year.

So dire is our need for affordable housing, it has been labelled a “national emergency” by the United Nations, even though access to adequate housing was recognized as a human right in Canada and signed into law Bill C-97 in 2019.

Government Intervention

So how will party platforms and campaign promises take steps to address this national emergency?

There’s a lot of talk from candidates. The Liberals dangle a carrot to home-ownership dreams, offering tax incentives for first-time homebuyers, but really, that will just drive up house prices even more by stoking demand.

The Conservatives propose building more houses, implying that flooding the market with supply will lead to “trickle-down housing” — meaning that prices will stabilize once the demand decreases. But does anyone think that’s really going to happen?

The NDP promises a halt to foreign speculation, but what about all the local wealthy investors that drive up prices or the international institutional investors acting through local companies?

The Green Party says they will appoint a federal Minister of Housing. This sounds like a good idea, but will this translate into real change? We have a Ministry of Indigenous and Northern Affairs, yet we still have boil water advisories across the country in First Nation communities.

Housing experts have weighed in on all the platforms and spoken: None go deep enough, acknowledge the systemic causes, or offer solutions that are bold and aggressive enough. As a renter and affordable housing advocate on the front lines of the housing crisis, I’ve got a few ideas.

The most promising government interventions will need to start from the premise that unfettered market forces treating property ownership solely as a vehicle to build wealth have caused this crisis, and it will not solve it. Anyone who thinks it comes down to one simple tweak to the existing system (More supply! Less taxes for the construction of new homes! Burn Airbnb to the ground!) has not done enough research.

Alternative Solutions

Instead, we should be looking at alternative, non-profit solutions that could make a big dent in tackling the problem — and improve the quality of life for many Canadians.

Berlin, facing similar housing conditions as Toronto, is holding a referendum vote on a strategy that would have the government take back rental housing from investment companies and nationalize it — meaning the government would rent it out to citizens as rent-controlled housing. The Canadian federal government could consider using its expropriative powers, in the same way, to claw back some of our rental supply. They could then help cooperatives to purchase the buildings and manage them as mid-range to deeply affordable housing.

There are also land trusts. A famous example is the Champlain Community Land Trust (CLT) in Vermont, spearheaded by Bernie Sanders in the 1980s. Houses were unbundled from the land they sat on, which is owned by a community-based non-profit. In the CLT model, one can buy a house but not the land, leasing the land for around 90 years, drastically reducing the cost of mortgages. There are over 200 such CLTs operating in the US today. This is similar to the Toronto Islands Residential Community Land Trust in which residents hold title to their homes, but lease the lots until 2092.

Housing co-operatives with decades of experience managing non-profit housing are organizing around the concept of CLTs across the country, with a wealth of expertise to bring to the table should the federal government fund these initiatives and help non-profits acquire land for this purpose.

Other important government interventions include revoking tax laws that incentivize REITs to buy up residential housing and providing transparency about just how much of our rental market is controlled by these companies. The public also deserves more transparency around AirBnB — just how many apartments and single-family homes have been taken off of the market? — and, dare I say it, more regulation.

Lastly, zoning laws that prevent the development of large residential buildings near transit lines need to be amended. These types of developments have routinely been resisted by homeowners who fear that new developments will affect their property values. The stakes are too high to let the “not in my backyard” (NIMBY) individual interests stand in the way, considering both the social and environmental benefits.

It’s hard for me to see how any of these approaches would be controversial, but then again, I’m not standing on the side of the fence with the house.

Future Impact

If we don’t offer alternatives and offer them soon, our communities will be transformed by desperation.

For homeowners, aside from the uncomfortable feeling of being at a table with a meal when the person next to you has none and watches you eat, there will be increasing violence, property crimes, tent encampments springing up in parks, and neighbourhoods drained of the lifeblood of small local businesses.

People you know will be leaving to live in other countries. If you’re an employer, it will be hard to find and keep staff. We will have more elitism in politics and policy-making as the gap widens between the haves and have-nots. If you have kids, they may never be able to move out. It will be harder to build relationships across class divides.

Research has shown that it is cheaper to house people. It’s cheaper to house people in apartments than to warehouse them in hotels, for example. It is cheaper to house people than to keep them in prison. It’s cheaper to house people living with mental illness than let them move in and out through the hospital emergency room like it’s a turnstile.

Maybe these reasonable solutions to the housing crisis don’t budge well-off homeowners because they believe they earned their wealth by doing something that others couldn’t or wouldn’t. Maybe they think that poor people are lazy non-contributors that are deserving of the punishment of homelessness.

But I don’t believe the majority of homeowners out there truly feel that way. I think that most homeowners want to live in a society that is ethical and want to leave a just society for their children

For this to happen we need a truly transformed housing system that treats housing as a social asset instead of a hyper-financialized asset. We need housing options that restore humanity to our housing system, and an emphasis on other ways to build wealth than using a house as a piggy bank.

Maybe with some of these options as commonplace, wages will have a chance to catch up with the cost of living, and in another 30 years, homeownership will be within reach for my daughter. And if not, that will be okay. Because there will be safe, secure, affordable rental housing that allows her to live with dignity and thrive. Imagine that.