New housing market report outlines affordable housing strategies to benefit everyone

Allocation of social housing subsidy dollars aren’t benefiting everyone when it comes to addressing housing affordability, suggests an  (PDF file) updated report from the Centre for Urban Research and Land Development (CUR) at Toronto Metropolitan University.

The recent report which explores Core Housing Need (CHN) in the GTA compares the latest data on CHN in 2021 to findings from 2016, highlighting the flaws with current policies aimed at tackling the housing crisis that point away from current approaches.

The mandate of the Centre for Urban Research and Land Development (CUR) is to advance the contribution of economic analysis and real estate market understanding to create more effective and cost-efficient urban policies. 

CUR senior research fellow and urban and real estate economist Frank Clayton, author of the report, shares insights from this timely and urgent initiative.

What is core housing need (CHN) and what is significant about it today? 

CHN identifies the number of households living in unaffordable or housing falling below acceptable standards. These households are concentrated at the lower end of the income spectrum.  

CHN provides policymakers at all three levels of government with quantitative data on the numbers and characteristics of households needing governmental housing assistance down to the municipal level. These data can be used to design and implement housing programs targeted at assisting CHN households and to evaluate the effectiveness of these programs.

A focus on the housing needs of CHN households is consistent with the federal government's 2019 National Housing Strategy Act that declared "the right to adequate housing is a fundamental human right affirmed in international law."

What are the markers of core housing need? How is it measured?

The markers are household size and composition, household income, shelter costs, size of dwelling occupied (bedrooms) and whether the dwelling is in reasonably good physical condition (not needing major repairs).

Housing that is affordable (shelter costs are less than 30% of household income), suitable (has the number of bedrooms needed to accommodate the number and mix of residents) and adequate (no major repairs needed) is labelled "acceptable housing". A household is in CHN if it is spending 30% or more of its income on suitable and adequate accommodation.

The updates to the latest report on CHN show some surprising results, can you explain this?

The number of GTA households in CHN declined from 401,400 in 2016 to 348,500 in 2021. The finding was unexpected since this was a period when rents and housing prices were rising faster than incomes. Both renters and homeowners recorded declines in CHN in the city of Toronto and the surrounding 905 regions.

The primary reason for the decline was pandemic-related assistance from the federal and Ontario governments temporarily raising the incomes of many households above the housing affordability threshold.

Had it not been for pandemic income supports, what would you have expected to see in this report?

I would have expected an increase in both the number and percentage of GTA households in CHN, especially renters, who, as a group, have much more severe housing challenges than homeowners. As previously mentioned, 2016-2021 was when rents and housing prices rose faster than incomes.

How are our government officials tackling the problem? 

All three levels of government have recognized the growing unaffordability of housing in the GTA and elsewhere. Affordability has moved beyond households with lower and moderate incomes (CHN) to middle-income households. 

The National Housing Strategy and Toronto's Housing Now initiatives are focusing much of their assistance on building new rental housing affordable to middle-income households. The main criterion is that the rents in the new buildings must be below the existing average rents in the community. These rents typically exceed rents most CHN renters can afford to pay. The  province, in contrast, is working to increase the supply of all types of new housing by accelerating municipal approvals through planning process changes. 

The report outlines issues with these initiatives, can you share what these are?

The housing affordability crisis, which is exceedingly impacting lower-income households, is being misaddressed by concerns and housing subsidies targeted at providing affordable housing for middle-income households rather than for those in greatest need of housing assistance.

There is a need to separate the affordability challenges faced by lower-income households from those of middle-income households, as the solutions are different.

How are we failing Core Housing Need households?

Much of the government assistance to support affordable housing is being channeled to provide support for middle-income housing, rather than those in CHN. CHN households are being short-changed.

I am continually disappointed by governments not using the CHN estimates as a benchmark to assess the effectiveness of their housing policies.

What is the solution?

Government housing subsidy dollars should be targeted at providing affordable housing for lower-income households, unlike the current situation where most subsidy dollars for new housing benefit middle-income groups.

For middle-income households, the thrust should be increasing the overall supply of housing to tip market conditions in favour of buyers and renters, which also helps lower-income households by reducing the competition for existing affordable housing. 

Reform of the land use planning process is key to increasing the supply of housing of all types. The Ontario Government is moving in this direction, but more drastic changes are needed if the new housing supply is to be expanded significantly. The province is also moving to increase the number of units within existing lower-density neighbourhoods which is also a step in the right direction.