Rental housing has become prohibitively expensive for millions of Canadians in most of the country’s urban centres. That is the stark and frightening conclusion of a report just released by the Canadian Centre for Policy Alternatives (CCPA).
The author of the report, the CCPA’s senior economist, David Macdonald, examines the situation of rental housing in Canada generally. He points out that when the federal government stopped investing in rental housing, in the 1990s, it became increasingly more expensive and less available.
But Macdonald focuses primarily on the ability of full-time workers on minimum wage to afford reasonable rental accommodation. In 2015 there were more than one and a quarter million Canadians earning the minimum wage or less.
In Vancouver, the minimum wage is $12.65 per hour; in Toronto it is $14.00. Based on the generally accepted principle that you should spend about 30 per cent of your income on rent and no more, you would need to work 84 hours a week in Vancouver and 79 in Toronto to afford a basic one-bedroom apartment. That amounts to about 15 hours per day for a five-day week. Not much time for sleep, let alone anything else.
In Victoria, a working person would need to work 67 hours at minimum wage to pay rent on a one-bedroom home. In Ottawa it would be 61 hours, while in Calgary it would be 56. Those workers would get a bit more sleep than their counterparts in Vancouver and Toronto, but would still be working 12 hours a day or more.
The only glimmer of good news comes from Montreal, where, at a minimum wage of $12 per hour, a working person would only have to work 47 hours per week to afford a basic one-bedroom apartment. David Macdonald points out that not only does Montreal have the largest stock of affordable rental units in the country, it also has the best public transit. Quebec’s largest city is not exactly a renter’s paradise, but it is way ahead of nearly all other major metropolises in Canada.
Majority of neighbourhoods in Canada are unaffordable for low income renters
The CCPA economist analyzes rental affordability and availability by neighbourhood and finds that in most Canadian cities there are zero neighbourhoods — none whatsoever — where it is possible for a minimum wage earner to afford either a one- or two-bedroom apartment.
This is as true of the Greater Toronto Area’s 117 neighbourhoods as it is of Barrie or Guelph’s four neighbourhoods.
And it is true right across the country from east to west.
There are 23 neighbourhoods in Halifax, but there are none with affordable rental units for full-time minimum wage workers. The same is the case for Lethbridge, Alberta, with its 11 neighbourhoods, or Abbotsford-Mission, B.C., with its five.
Saskatoon has 16 neighbourhoods, but not a single one with affordable rental housing for full-time workers at minimum wage. Working-class Hamilton has 22 neighbourhoods — not a single one with rental housing within reach of the minimum wage group. Same for St. John’s, Newfoundland, with three neighbourhoods, Vancouver with 65 and Ottawa with 27.
It is a grim picture, relieved only by a few (somewhat) bright spots, such as Windsor, where a full third of the 13 neighbourhoods offer rents within reach of full-time minimum wage earners, and London, Ontario, where 14 per cent of its 22 neighbourhoods are affordable.
The majority of affordable neighbourhoods for rental housing are in Quebec.
In Montreal, 18 per cent of the city’s 97 neighbourhoods offer rental accommodations minimum wage workers can reasonably pay, while in Quebec City it is 27 per cent. The rental affordability champions are Trois Rivières, Quebec, where 92 per cent of the neighbourhoods offer affordable rental housing, and the municipalities of Saguenay and Sherbrooke, where 100 per cent of the neighbourhoods are affordable for renters.
Quebec might be friendlier to renters because, traditionally, home ownership has not had the same sacred status there as in the rest of Canada. For many decades, it was considered quite normal and respectable in Quebec to raise a family in a rented flat or apartment. At one time, the majority of Montrealers lived in rental accommodation. The city’s urban landscape was filled with small-scale, multi-family units — duplexes, triplexes and quadruplexes — not found anywhere outside Quebec. That is now changing. Each day, rental units in Quebec are converted to condominiums, while newer housing in the burgeoning suburbs is mostly of the single-family-owned kind. Quebec is becoming more like the rest of Canada, but it is not there yet.
The public sector must do more to deal with crisis for renters
The big takeaway from Macdonald’s study is that a society cannot count on the private sector alone to provide rental housing. The government must play a major role.
As he puts it: “The construction of purpose-built rental units is heavily dependent on public policy as opposed to market forces. As public funding collapsed in the 1990s, both through the end of tax incentives and funding for affordable housing, so did the construction of new purpose-built rentals.”
Macdonald adds that “public funding from provincial and new Canada Mortgage and Housing Corporation (CMHC) programs recovered somewhat in the 2000s.” As a result, there was an uptick in rental starts. Still, even if the provinces and federal government keep up the current momentum, new rental housing will fall far short of the growing need.
“If the remaining targets for CMHC programs roll out as planned over the next eight years, and if on-reserve new unit construction continues apace and unilateral provincial programs are maintained, this would result in 15,400 new affordable units a year,” Macdonald explains.
But here is the down side: “While this is more than any year since the early 1990s, it is also still less than the 20,000 high-water mark of the 1970s and ’80s.”
In 1975, Canada’s population was a bit over 23 million. Today it is closing in on 38 million.
The housing picture is complicated by the fact that much new multi-unit construction is aimed at the affluent or relatively affluent. It consists of condominiums and high-rent luxury units.
Aside from reviving support for low- and middle-income rental construction, the Trudeau government also seeks to mitigate the crisis for renters through its new Canada Housing Benefit (CHB). It is now in the process of negotiating implementation of that program with the provinces.
Macdonald explains the CHB this way: “The cash transfer to families who rent is aimed at providing an average benefit of $2,500 to 300,000 families … [But] capping the program at that number leaves far more than 300,000 spending above 30% of their income on rent. In 2020, of the estimated 4.8 million families who will rent their homes, 2.4 million will be considered in core housing need” — that is, paying more than 30 per cent of income for rent.
The report concludes that not only is the CHB an inadequate response to the challenges facing renters but that rent subsidies are not the best way to go.
“Ultimately,” Macdonald says, “there is no substitute for building new dedicated affordable housing, which would cool down rental prices and increase the stock of housing available to the millions of families who choose or who are forced to rent.”
Karl Nerenberg has been a journalist and filmmaker for more than 25 years. He is rabble’s politics reporter.
Photo: Magnus Larsson/Flickr
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