October a time to address housing affordability

I was listening to a debate on the radio the other day about the issue of housing affordability and what can be done to address the high cost of homes in the GTA. It seemed like the experts were discussing completely different issues and talking right past each other, and I realized it was because their definitions of housing affordability were different. I believe, though, that some of the solutions can be the same.

At the risk of oversimplifying a complex subject, there are really three different definitions of housing affordability: Housing that the average family can afford to buy, housing that the average person can afford to rent, and not-for-profit rental housing where collective ownership (co-op) or a degree of social assistance (subsidized housing) helps ensure that the resident can afford the cost within his or her income.

Definitions of affordability

All three definitions of housing affordability are valid and all come with specific challenges we need to address if we are to tackle affordability as an issue. Regrettably, as is often the case with highly political topics, we tend to debate the differences, picking winners and losers, and missing opportunities. What all three definitions have in common is lack of supply: Not enough new housing is being built for sale or rent, and there is not enough not-for-profit rental housing to meet the need. This translates into higher prices, higher rents and long wait lists.

The supply of all three forms of housing is affected by a number of factors, including a lengthy building approvals process, layers of regulation, reliance on community acceptance and the political will that exerts influence on building projects in the GTA. All three forms of housing require land that is adequately serviced with infrastructure such as water and wastewater services. Each of these factors can add cost, impact the number of new units that come to market, delay new housing from being built or stop construction entirely.

Layers of tax

Homes that fall under the first two definitions are also subject to government fees and charges that increase purchase price or impact rental costs. BILD’s recent study on the government fees, taxes and charges applied to new homes in the GTA demonstrated that the layers of tax added almost 25 per cent or $186,500 to the price of an average single-family home in the GTA.

As this year’s October municipal elections approach, we need our governments not to pick winners and losers, but to focus on housing policies and reforms that can have broad benefits and increase housing supply.

RELATED READING

Housing supply a top priority in the GTA