On November 22, Prime Minister Justin Trudeau unveiled a new initiative. The National Housing Plan aims at building tens of thousands of affordable housing units over the next decade and repurposing other cash to maintain housing supplements.
This “once-in-a-generation” housing plan is a 10 year, $40-billion strategy that is not only federally funded, but includes a plan for the provincial governments to also contribute billions. The key elements of the strategy won’t begin until after the next federal election in 2020.
The Federation of Canadian Municipalities praised the announcement as a “breakthrough” for Canadian cities pushing for help in dealing with a shortage of affordable housing. The main new initiative is a $4-billion Canada Housing Benefit which would provide rent support for about 300,000 low-income households. There are 1.7 million Canadians who spend more of their disposable income than they should on housing. Particularly in Toronto, where 1 in 5 households are financially stretched. This is the highest rate of any city in the country.
Documents released by the Federal government show that their goal is to promote diverse communities with a mix of incomes and uses that are near transit, work, grocery stores and public services. These are all great initiatives, but some observers questioned why the program was limited to low-income Canadians and does not address that other Canadians are also struggling to find affordable housing.
Karen Vecchio, Conservative MP stated, “we hear this government talk a lot about the middle class. What is this doing to help the middle class? All it’s doing is providing government subsidies, but it’s not providing a plan for the future.”
The same sentiment was felt by Jeremy Kronick, a senior policy analyst with the C.D. Howe Institute, “these measures do not deal with middle-class affordability issues in our major cities.”
Although the plan is admirable in tackling low-income Canadians, the government failed to address the ongoing issues surrounding the middle-class. Prices have increased rapidly in communities such as Markham, Unionville and Stouffville. The average detached home in Markham was selling for $988,0341 in October 2014 and currently, the average detached home is selling for $1,468,2211. Properties in Stouffville were selling on average for $790,1921 back in October 2014 and currently the average detached home is selling for $928,5511. If middle-class families look to the suburbs to purchase a home they are going to find it increasingly difficult to afford one.
As of September 2016, the average Ontarian earns $50,5892. For those looking to purchase their first home, the task of saving enough for a down payment has become harder. Add the new stress test rules that will come into place on January 1, 2018, and it will become even more challenging to afford a home. The government showed that it understands the challenges of low-income families in major cities, but it still does not address the overall concern surrounding housing affordability for everyone. The federal government should look to reevaluate the way it is spending its funds so that every middle-class and low-income family has the ability to afford a home that suits their needs.
1Toronto Real Estate Board Market Watch Reports.
2 Workopolis Careers – https://careers.workopolis.com/advice/how-much-money-are-we-earning-the-average-canadian-wages-right-now/