Our Goal: All Canadians Can Afford a Good Home by 2030
Establishing a home will always take hard work and sacrifice. But for too many young Canadians it’s starting to feel impossible. In many places, housing costs have grown out of reach and out of control.
In response, the Canada Mortgage and Housing Corporation ("CMHC") has adopted a goal that "By 2030, everyone in Canada has a home that they can afford and that meets their needs."
This is the right goal. It balances ambition with specificity, and has the credibility of being associated with Canada's national housing agency. So, we're adopting it as our goal, too.
This will be very difficult. But, it’s doable.
Guiding principle: Homes First
For all Canadians to afford a good home by 2030 and to protect that affordability — forever — we need to fundamentally shift how we treat housing and residential land. We need to share it more equally, making room for a diversity of people and housing. We need to protect it for locals, and against egregious uses by money launderers, cheats, speculators, and those parking money in empty homes. Going forward, government policy shouldn’t encourage owners to expect more wealth from the sale of their home than they put in through principal payments and home renovations, plus inflation. And we shouldn’t encourage landlords to expect more income than is warranted by the total cost — including financing costs — and ongoing labour of providing a rental home.
In a nutshell Homes First is about treating housing as a place to call home, not a way to get rich, or something only the rich can afford.
Our basic plan
Affordability can be restored through some combination of higher incomes and lower costs. In many Canadian communities, housing costs have risen so sharply that it’s unrealistic to expect young peoples’ incomes to catch up.
So, while we also need to wrestle with the future of work and incomes, this basic plan focuses on reining in costs.*
In the regular market, we need to dial down harmful demand, dial up the right kind of supply and rebalance the way we tax housing wealth (dial-up) vs. income (dial-down). Adjusting these dials won’t guarantee affordability, but we can use them to push the market’s creative energies in the right direction.
At the same time, we need to scale up all manner of non-profit housing to serve a range of incomes and needs and to guarantee affordability on a more permanent basis. This includes shelters, transitional and social housing to serve the most vulnerable and a diversity of community housing models that use co-operatives, land trusts, covenants, shared equity and other mechanisms to provide an array of rental and ownership housing across the spectrum.
As we rein in costs, we have to be mindful that declining home values carry risks for highly-leveraged households, including many young Canadians who clawed their way into sky-high markets. We can soften this landing e.g. by scaling up the recently-announced program to offer shared-equity arrangements between individual homeowners and the federal goverrnment.
And through it all, we need to continually improve our collection and synthesis of housing market data to make the best evidence-based decisions possible.
* While this gameplan focuses on reining in housing costs, we also need to rein in child care, parental leave and transportation costs, which themselves can add up to mortgage or rent-sized payments.
Sketching some details
Building on that basic two-path plan, we can start sketching out some details.
Path one - adjust the dials of the regular housing market
We’re currently encouraging governments to:
Decrease harmful demand — by tracking and restricting global capital flows into local real estate, eliminating hidden ownership, penalizing excessive speculation and "flipping," cracking down on money laundering and fraud, taxing empty homes, restricting and regulating short-term rentals, and holding the line on mortgage stress tests and amortizations.
Increase the right supply — by protecting/stabilizing existing affordable supply, opening up low-density zoning to make room for a diversity of people and homes with an emphasis on more family-sized units and purpose-built rental, an aggressive focus on energy efficiency and green building, and provincial and federal infrastructure incentives to encourage municipalities to facilitate new supply.
Rebalance housing and income taxes — dialing up taxes on housing wealth windfalls and dialing down taxes on local income — to help decrease harmful demand and encourage the right supply, and to address inequalities created by the out of control housing markets.
Path two - scale up the non-profit market
We’re currently encouraging governments to:
Shore up the existing stock — with federal and provincial resources and supports to address a backlog of maintenance and required upgrades.
Expand the stock — with government loans, capital, land and other supports to the community housing sector, and with incentives for both institutional and individual owners to add their own land and/or homes to a permanently affordable stock. Due to the scarcity of available land in our urban centres, there is an imperative to leverage — and not simply liquidate —public land for this purpose.
- Create strategies to serve the most vulnerable — including groups identified in Canada's current National Housing Strategy: women and children fleeing domestic violence, seniors, young adults, Indigenous peoples, homeless people, people with disabilities, those dealing with mental health and addiction issues, veterans, racialized groups, and newcomers.
Non-profit housing is a vital — and currently minor — component of Canada's housing system. Even as we seek to aggressively expand it, the majority of Canadians will continue to rely on the regular housing market for the foreseeable future.
To support action in both the regular and non-profit housing markets, we also need to:
De-risk the market against a decline in prices
It's possible that an expanded, federal Home Equity Share program could go a long way to reducing some of the household risks associated with what is arguably a necessary decline in home prices. We're currently exploring this concept with others.
Continually improve data collection and synthesis
Including with a federal beneficial ownership registry, additional information on global capital flows into Canadian residential real estate, and the current extent of non-resident ownership of local housing.
Within that basic plan, our current priorities are:
Pushing all federal parties to make four key commitments in their 2019 election platforms
The federal government has a critical role to play in restoring housing affordability. The current National Housing Strategy is a good start, but it's largely a social housing strategy that leaves out many Canadians, including an additional ~1.2 million Canadians in core housing need, many of whom earn decent incomes but find themselves priced out of their own community.
In conjunction with the Housing Research Collaborative — comprised of researchers, housing providers and policymakers from B.C., Ontario and Quebec and hosted at the University of British Columbia — Gen Squeeze is asking federal parties to make four key commitments, guided by a comprehensive framework and implemented through a range of specific policies, to ensure ALL Canadians can afford a good home.
Educating voters about where the federal parties stand
As the federal parties release — or hint at — components of their housing affordability plans, the Gen Squeeze lab will analyze and compare these commitments to help voters understand their strengths and weaknesses.
- Researching solutions, addressing barriers
The Gen Squeeze lab continually works with a range of thinkers and actors to help develop solutions, put them together into workable plans, and identify and address barriers to dialogue and action.
Two of our current priority projects in this area include our participation in the Housing Research Collaborative and our A Home for Good project.
"Explanations exist; they have existed for all time; there is always a well-known solution to every human problem — neat, plausible, and wrong." — H. L. Mencken
The housing system is dynamic and complex. That shouldn't stop us from acting boldly, but it should keep us wary of potential oversimplifications and unintended consequences.
At the end of the day, we're all in this together and we need to work together. That doesn't mean agreeing on everything, or presuming we'll ever get it perfectly right...
... it means treating each other with respect and building common ground.