Affordable Housing and Homelesness

Yesterday I gave a presentation to a church group in Ottawa on affordable housing and homelessness. My slides can be downloaded here.

Points I raised in the presentation include the following:

• Though government provides subsidies to some low-income households for housing, it is important to be mindful of the considerable funding available for Canadian homeowners as well (including for high-income homeowners). For example, there is no taxation on the capital gains raised from the sale of a person’s primary residence.  On an annual basis in Canada, this tax exemption costs the public treasury almost $2 billion.

• Though private developers can (and sometimes do) build rental housing without government subsidy, it is only profitable for developers to do this when tenants are able to afford rather high monthly rent levels.  In Toronto, newly-built, private apartments might require a monthly rent of $1,500 (in the case of a large one-bedroom unit, or a small two-bedroom unit).  For a household to afford such rent levels (without spending more than 30% of their gross monthly income on rent) that household would have to earn at least $60,000 a year.  For some households, this is feasible.  But for many households, this is not.

• Average rent levels are lower than rent levels required for newly-built units (in other words, typically, as apartments age, they become cheaper for tenants).  For example, in Toronto, average rent for a large one-bedroom  or small two-bedroom unit is about $1,200.  But even this rent level is considerably beyond the reach of many households.

• In most Canadian jurisdictions, social assistance (i.e. welfare) benefit levels include money to help the household pay rent.  However, these levels are (typically) considerably below average market rent levels.  Though there are some apartments available at lower-than-average rent levels, there are typically very few available that are, say, more than 15% lower than average rental levels.  In other words, while’s possible to rent at below-average rent levels, it is generally not possible to go much lower than average rent (in Canada).

• Some low-income households are fortunate enough to live in social housing, where rent levels are subsidized (and where tenants typically do not have to pay more than 30% of their gross monthly income on rent).  Every Canadian jurisdiction that I’m aware of, however, has considerably more people in need of of social housing than it does social housing units.  In Ottawa, the median wait time for social housing for families with children is more than three years; for single adults (without dependents) it is more than five years.  And across Ontario, fewer than half of households earning less than $20,000/yr. are fortunate enough to live in social housing.

• These wait times for social housing can have important repercussions for children.  Research has been done in Toronto on the role of housing when it comes to children in care.  This research suggests that the state of a family’s housing is often a factor leading to a child being temporarily admitted into care.  Moreover, the same research argues that a family’s housing status often delays the return home of a child who is in care.

• Canada’s ‘rate of social renting’ (i.e. % age of households in social housing) is about 5%.  This is considerably below the OECD average.  In England, the rate is 18%.  In Sweden, it’s 32%.  In the Netherlands, it’s 34%.

• In some cases, a lack of affordable housing can lead to homelessness (that is, it can lead to people sleeping in emergency shelters or sleeping outside).  And as Dr. Stephen Hwang has argued, homeless persons “often develop health disabilities that are more commonly seen in people who are decades older.” Homeless persons also die much more quickly than housed people.

• In a Toronto study, more than one-third of homeless persons reported having been physically assaulted in the previous 12 months.  In the same study, one in five homeless women reported having been sexually assaulted in the previous 12 months.

• In the past several years, it has been common to hear senior levels of government in Canada profess their belief in the Housing First approach to homelessness.  This means they are publicly stating that an effective way to fix homelessness is to provide immediate access to permanent housing for homeless people (as opposed to insisting that such individuals ‘rehabilitate’ before being offered permanent housing).  However, as I’ve blogged about before, this is not the same thing as agreeing to provide sufficient funding for such housing.

Reprinted with permission from The Progressive Economics Forum.