A staggering one-in-four Canadian households are in the housing affordability danger zone – paying 30% or more of their income on housing. Even more troubling, the poorest Canadian households – renters – face the worst affordability problems.
New data released today by Statistics Canada confirms that the cost of housing – rental and ownership – has been rising faster than the rate of inflation, and has been rising faster than household incomes
That translates into a nation-wide affordable housing crisis for renters and owners, which the StatsCan numbers confirm has grown worse in the five years leading up to the 2006 Census.
Behind the figures is the terrible reality that millions of Canadians don’t have enough money to pay their rent, or mortgage payments, and also cover other necessities such as growing energy costs, medicine, food, transportation, clothing and other basics.
Renters feel sharpest pain
In most parts of Canada, renters have households incomes that are about half (or less) of the income of owners. The affordability crisis is biting deepest among tenants, with more than 40% of all renters trapped in the affordability squeeze.
This means that the lowest-income Canadians are facing the worst affordability problems.
Growing pain for owners
More Canadian households have moved into ownership in recent years. But the latest StatsCan numbers report that affordability problems are growing faster among owners than renters.
The most recent ownership affordability report from RBC Economics (March 2008) reports: “Nation-wide housing affordability deteriorated in every consecutive quarter throughout 2007 to end up at its most unaffordable level since the housing bubble peaked in 1990.”
So, the ownership market is offering no relief for tenants ensnared in their own affordability woes, and has trapped a number of new owners between rapidly rising costs and stagnant incomes.
Toronto, Ontario, race for bottom
The StatsCan research shows that Ontario has the highest shelter costs in Canada for owners and renters, and the Toronto Census Metropolitan Area has the highest number of households caught in the affordability squeeze.
One-of-every-three Torontonians have been forced into the danger zone.
Decoding the numbers
There has been a near-record amount of new housing (mostly ownership) in most parts of Canada in recent years, but the Statistics Canada report confirms that a growing number of Canadians are literally being priced out of both the ownership and rental markets.
With the U.S. economy already in a massive downward slide triggered by an affordable housing crisis in that country, the latest numbers from Canada show that there increasingly desperate conditions facing households throughout the country.
Before the massive housing cuts and downloading in the 1990s, governments (federal and provincial) realized that the private markets for ownership and rental housing couldn’t meet the housing needs of all Canadians, and they stepped in with strategic affordable housing investments.
The patchwork of funding and programs at the federal level, and in Ontario and Toronto, that has emerged in recent years is badly fraying. The three major national housing and homelessness programs (the federal homelessness strategy, the federal housing rehabilitation program and the federal affordable housing initiative) are all due to expire this year, and the federal government has made no announcements about new housing investments.
The latest Ontario budget calls for a 6% cut in spending at the Ministry of Municipal Affairs and Housing at a time when a growing number of Ontarians are facing a crippling affordability crisis in their housing costs (both ownership and rental).
Housing: Smart, strategic investment
In recent years, a growing number of business organizations have noted that affordable housing is one of the most important foundations to a strong and competitive economy. TD Economics reported in 2003:
Housing is a necessity of life. Yet, after ten years of economic expansion, one in five households in Canada is still unable to afford acceptable shelter – a strikingly high number, especially in view of the country’s ranking well atop the United Nations human-development survey. What’s more, the lack of affordable housing is a problem confronting communities right across the nation – from large urban centres to smaller, less-populated areas. As such, it is steadily gaining recognition as one of Canada’s most pressing public-policy issues…”
“We are used to thinking of affordable housing as both a social and a health issue. This is not altogether surprising, given the fact that many social housing tenants receive their main source of income from government transfer payments. As well, in study after study, researchers have shown that a strong correlation exists between neighbourhoods with poor quality housing and lower health outcomes. However, working to find solutions to the problem of affordable housing is also smart economic policy. An inadequate supply of housing can be a major impediment to business investment and growth, and can influence immigrants’ choices of where to locate.”
In the five years since TD Economics wrote those words, the number of Canadian households trapped in the affordability squeeze has jumped from one-in-five to one-in-four.