January/February 2022 // Canadian Government Executive / 7 AFFORDABLE HOUSING KEY ISSUES AND CHALLENGES Home Ownership One of the main issues in the area of housing policy is that the federal government housing policies are largely aimed at market mechanisms that incentivize home ownership above other forms of housing (rental or social need) (Hulchanski, 2006). Some examples include, the 2009 first-time home buyers tax credit which allows for a non-refundable federal income tax credit for the principal residence for first time buyers, and the Home Buyers’ Plan that allows first time buyers to withdraw money from RRSP’s, tax-free, to assist with home ownership. Of course, the largest and most expensive federal housing subsidy is the non-taxation of capital gains on Canadians’ principal homes (Chisholm and Hulchanski, 2019). While it was mainly federal policies that encouraged home ownership, provincial and municipal policies in the 1990’s, like weak rent control and exclusionary zoning, discouraged renters (Rozworski, 2019). Additionally, the provincial legislation in the 1970’s that allowed condominiums as a form of home ownership contributed to a lack of rental housing. Previously, high and medium density zoned residential areas were exclusively rental properties. As condominiums are more profitable than rental properties, condo developers easily purchased and developed more of these zoned areas (Hulchanski, 2006). While there is nothing inherently wrong with incentivizing home ownership, current financial and housing market circumstances are increasingly making this goal infeasible and it fails to ensure fair and adequate distribution of housing. For the last decade, as housing prices have increased, there has been a corresponding increase in housing inequality. Globalization has led to a more national and international housing market as opposed to former local markets. Increasing speculation and investment in real estate (without actual residence) have escalated the problem (Chisholm & Holchanski, 2019). This disparity can be seen in the numbers. In Canada, 40% of households own 2% of the available real estate, and the top income of 20% of these households own 63% of real estate. Even with incentives, home ownership is not keeping pace. Home ownership had grown 9% in the years from 1971-2011. Since the 2018 financial crisis, ownership has remained stagnant at around 68%. This can be described as the ‘paradox of the housing crisis’, a situation where current home owners have the wealth and the value of their homes increase while many others struggle to keep themselves housed (Rozworski, 2019). This emphasis has affected how Canadians view housing. Home ownership is prized in a way that is not familiar to people in places like New York or European cities. An illustration is the emotions expressed over a property developer’s plan to purchase thousands of single family homes, renovate and rent them out as two units. Planning experts agreed that the developer’s plan was what the crowded cities needed but the general population was outraged and accused the company of profit mongering. As one op-ed piece pointed out: “Whether you call it ‘mongering’ or something that sounds nicer, earning a profit is at the indispensable heart of creating housing in Canada” (Pittis, 2021). This highlights two troubling aspects of the government’s support for home ownership: it has been mainly left to the market, and the policies have left many Canadians focusing on home ownership to the exclusion of other forms of housing. This emphasis on ownership support has created a system where federal government support of low income households who have a ‘social need’ for housing is a secondary concern (Hulchanski, 2007). The federal government did have some programs addressing this need with subsidies for public housing between 1949 and the early 1990’s, but only 12,000 units had been created by the early 1960’s (Hulchanski, 2007 ). The 1993 federal budget ended the funding for the construction of social housing, a move that “only accelerated the transformation of housing from human necessity into investment good, to be supplied almost exclusively by the private sector” (Rozworski, 2019). With the 2017 release of the National Housing Strategy (NHS) discussed below, the federal government is trying to address this secondary, non-market housing population. Importance of housing Another issue that affects all levels of government but weighs most heavily on the federal government is the recognition of the importance of housing. At the World Conference on Human Rights in Vienna in 1993, adequate housing was affirmed by the international community as a human right. While the federal government had been involved in ensuring adequate and affordable housing off and on since the post-war years, the release of the 2017 National Housing One of the main issues in the area of housing policy is that the federal government housing policies are largely aimed at market mechanisms that incentivize home ownership above other forms of housing (rental or social need) (Hulchanski, 2006).
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