Tag: affordable-housing

Understanding Ottawa’s Affordable Housing Crisis

May 15, 2025

Affordable housing is constantly in the news today. My local city councilor emphasizes its importance in his newsletter. However, I am not convinced that our community of aging patriarchs would welcome such housing in our neighborhood; it evokes images of public and low-income housing, often associated with crime.

During the recent federal election in Canada, all political parties proposed ideas for building affordable housing, including financial incentives, reducing and simplifying the administrative approval process for house construction, prefabrication, and even rent control.

I do not know anyone actively seeking such housing. However, some friends have mentioned their children have trouble finding affordable options.

To understand why housing is unaffordable for many people today, I searched the internet for statistics that illustrate the challenges individuals face when renting or buying a home.

In simple terms, your income determines what you can afford. If you earn a minimum wage of $15-18 (provincial rates differ) per hour and work 2,000 hours a year, your annual income would be $30,000-36,000. The Canada Mortgage and Housing Corporation (CMHC) recommends that housing expenses should not exceed 30% of your yearly income.

According to this guideline, someone earning the minimum wage can afford $9,000 to $ 10,800 annually for housing, or approximately $750 to $ 900 per month. However, in Ottawa, rent for a one-bedroom unit starts at around $2,000 per month, which means minimum wage does not support renting. That is why many young people earning minimum wage stay home or bunk up with friends when renting.

Buying a condo or a house is a much more challenging scenario. In 2025, the average condo price in Ottawa is projected to be $445,000, while the average house price is expected to exceed $800,000.

Without a down payment and mortgage rates of 4.5%, the annual cost of owning a condo would amount to $20,000, which is significantly higher than what minimum-wage earners could afford. Purchasing a house would be even more expensive.

An affordability crisis affects individuals earning less than $65,000; according to guidelines, 30% of that amount would be needed to rent or buy a condo. Twenty-six percent of Ottawa jobs pay less than $50,000. This situation highlights the urgency for solutions to the affordability crisis.

One major issue is the gradual loss of low-rent housing due to demolitions to make way for higher-density and more economically profitable commercial and residential developments. Older neighborhoods in Ottawa are particularly susceptible to this redevelopment. Additionally, many low-rent units face renoviction, where tenants are evicted to make way for renovations that will increase rental rates.

According to the Executive Director of the Ottawa Community Land Trust (OCLT), between 2011 and 2021, Ottawa lost 26,000 low-rent units due to demolitions and renovictions; in contrast, only 6,000 new low-rental units were built during that time.

The OCLT’s purpose is to preserve and maintain low-rental units. Their strategy involves purchasing these units when they become available. Acquiring multi-unit buildings requires funding, and the OCLT has issued “community bonds” to raise capital. A bank in Toronto specializes in issuing such bonds backed by funds raised by the OCLT from the local community.

Interestingly, many residents are willing to invest in these bonds, even with a low interest rate or, in some cases, no interest at all, because they believe in the cause. Professional property managers are contracted to manage the rental units on behalf of the OCLT, and the rental income is used to pay off the community bonds.

This approach offers a distinctive and effective means of maintaining and expanding affordable housing. The OCLT’s key strategy involves community bonds, a system gaining traction across Canada.

Another innovative approach for maintaining affordable housing is leasing the land on which the rental units are built. Land costs are a significant factor in the overall expense of constructing housing units. Depending on the location, land costs form 30% or more of total housing construction costs.

Recognizing the importance of land costs in housing, the Centretown Citizens Ottawa Corporation (CCOC) leases land to build affordable housing. This corporation was established in response to the growing number of high-rise developments in the community. The community association leased land to develop affordable housing, thereby preserving the area’s character. Currently, they manage 1,700 housing units.

One example of their work is the land leased from the local school board following a demographic shift that led to the closure of Percy Street School. Public agencies are aware of community needs, and through a nominal lease, the CCOC created a low-rise development that is affordable for individuals with limited income.

A coordinated multi-level strategy is necessary to effectively tackle the ongoing affordable housing crisis. From my limited experience listening to various non-profit organizations attempt to tackle this issue, I have identified two main approaches: subsidizing the cost of housing units or providing financial assistance to help individuals secure accommodation in the private market. The Ottawa Community Land Trust (OCLT) follows the first approach. The CCOC employs subsidized housing and market-based options, catering to those who receive housing subsidies.

Can New Housing Strategies Solve Canada’s Affordable Housing Shortage?

April 26, 2025

With the Canadian federal election only days away, all federal parties have offered plans to tackle the housing shortage and its impact on affordability.

High housing prices, expensive rents, and a shortage of homes are key issues, especially for first-time homebuyers. Unfortunately, there are no simple solutions. The proposals presented by party leaders comprise well-worn ideas that have been around for decades.

While one party wants to double the annual housing construction to 500,000 units, another proposes 3 million units over 5 years—an annual rate of 600,000. According to one study, Canada must construct three million housing units by 2030 to satisfy demand and lower prices. The housing industry has averaged only 250,000 units built annually in recent years.

Canadians’ income levels are tied to affordability. The average salary in Canada is $67,000, while the average home price is $670,000. Salaries can vary based on age, occupation, and other factors, and home prices vary across the country depending on location factors. Historically, housing was affordable when an individual’s income was one-third of the home’s price. Home ownership becomes unattainable for many people today when the home price reaches ten times their annual income.

Despite these challenges, the housing market continues to bubble because of two-income households and help from family members.

We can attribute the current housing crisis to the imbalance between supply and demand. Demand has surged because of a rise in immigration; the government has acknowledged this situation and has implemented measures to reduce the number of immigrants. However, the government has not addressed supply.

The major political parties propose a plethora of ideas to increase supply:

A proposal to establish a new government agency, “Build Canada Homes,” immediately caught my attention. Whoa! I remembered the Ministry of State for Urban Affairs, a government agency established years ago that ran into provincial jurisdiction and was abolished. I worked there and learned the hard way not to interfere with provincial matters. And how long would it take to create a new agency?

One party proposes rent control due to steeply escalating rents, averaging over $2,000. Policymakers in Europe and North America have long discussed and implemented this system. However, it has always resulted in a lack of maintenance and deteriorating buildings. Rent control does not increase the housing supply; it does the opposite, although it benefits long-term rentals. It also leads to “renovictions,” or forcible eviction of people for renovations and the subsequent legal rent increase.

Another proposal is to build “affordable” housing units for homeless individuals, students, low-income families, and indigenous people. When I asked my local councillor to define affordable housing, he could not provide one. Subsidies are necessary to encourage developers to construct units that are not based on market rates.

There are also suggestions for building prefabricated housing, which is less expensive than traditional methods but of lower quality.

Yet another idea is to train more people in the building trades. The shortage of skilled labor is one reason Canada builds only about 250,000 housing units yearly.

People blame the cost and duration of the regulatory process, zoning, and associated standards, such as the building code, for increased costs. There’s a convincing argument for reducing standards to lower expenses, but would Canadians go back to smaller bedrooms and less insulation?

While the proposed solutions have merit, a significant issue remains: Most of these pertain to provincial matters, including planning, zoning, rent control, and building codes, all of which fall under local jurisdictions. Local governments are also responsible for education and training, should a program for skilled trades be established.

Housing inventory can only increase through new land development and the densification of existing urban areas. Since local jurisdictions control these functions, the federal government has limited opportunities to expand the housing stock beyond providing financial resources and taxation strategies, such as reducing the GST for first-time homebuyers (proposals also exist to use vacant federal lands and buildings for “affordable” housing).

Besides the limited availability of land and skilled labor for house construction, the rising cost of materials presents a significant barrier to building affordable housing. This begs the question: Can the federal government regulate the price of construction materials?

Considering the housing problem more broadly revealed added complexities. For example, homelessness is often associated with mental health issues and substance abuse, leading to more complex problems that need specific solutions.

Another complicating factor is that, with low unemployment rates in Canada today, many young people may not see the need to train for skilled trades when they already have jobs. Governments should promote training in skilled trades such as carpentry and plumbing, which offer good pay. Employed people, however, might be reluctant to switch careers.

I’m wary of recycled housing solutions presented as novel ideas. The proposed ideas are not fresh: similar proposals have been made before, and I wonder why these proposals have not been implemented. I believe the emphasis should be on cooperative action at all levels of government and execution rather than just rhetoric.

Policy Born Out of Panic

April 26, 2024

It is astonishing how the federal and Ontario governments announced a fifteen billion dollar incentive to Honda to set up a car battery plant in Ontario yesterday while they encouraged the municipalities last week to eliminate the requirement for parking for multiple unit developments. So, the message is to make more cars but provide no parking! Let me describe what happened.

Camada’s three levels of government hastily introduced a cobbled together housing policy this month, a move that could have significant repercussions. Upon learning that our City Council, under pressure from senior government levels, is considering approving quadruplexes or four units on a residential lot and eliminating parking requirements for highrise or multiple-unit buildings, I couldn’t help but worry. These are just a couple of the many proposals aimed at addressing the severe housing shortage that has led to the emergence of tent cities in all metropolitan areas.

With all the recent announcements, the federal government promises to double housing starts for the next seven years from the current pace of 250,000 units per year, by pouring billions of dollars into municipal budgets, providing local city councils agree to change zoning codes, including the above two proposals.

While this could alleviate the housing shortage and provide more affordable housing options, it raises concerns about the quality of these new units and the impact on existing neighborhoods.

Yes, the recent surge in international migration created the housing shortage; statistics show that the Canadian fertility rate is way below the replacement rate, and the increase in population and the consequent surge in housing demand can be attributed directly and totally to immigration.

But wouldn’t it be more prudent for the federal government to address the demand for housing as well instead of focusing solely on the supply side? Would it not be faster and easier to restrict immigration in the short term than build housing that takes years to complete? A more balanced approach would be advisable in considering both supply and demand for housing.

A panic reaction is not a good incubator for developing thoughtful housing policy. For example, consider the proposal for building four housing units on a residential lot. A quarter-acre lot measures seventy by one hundred feet (excluding space for roads). Yes, one can build four units on such a lot; it could be two side by side units on the main level and the same upstairs, or one unit per floor in a four-storey building. It would be a dense development, especially considering the parking space for each unit.   But, oops! Are parking spots still required?

However, more recent developments have much smaller lot sizes; some are thirty-five by one hundred feet. To put four units in such a small lot would be a design challenge. And where would the parking be? On the neithborhood streets? As much as good public transit, which we do not have, may negate the need for cars, most individuals and families like to have a car to get around on weekends and at nights when public transit is sporadic at best.

In the suburbs, there are one-acre and larger lots where four units per residential lot are reasonably achievable, but would people desire it? They moved to the suburbs because they wanted bigger lots so why would they now build three additional units on their land? Not likely.

Although four units per residential lot is an attractive slogan, it behooves the government to specify what a “residential lot” means. For example, it would be helpful to identify a minimum lot size to utilize this concept fully.

While the first proposal for densification relates to the efficient use of an urban lot (four units on a lot), the second proposal to eliminate parking refers to cost; by not building garages, the government claims the cost savings would benefit renters/buyers. However, consider the potential impact of this idea on different demographic groups. For instance, families with children, the disabled or elderly individuals may still require parking spaces, and the lack of these amenities could disproportionately affect them.

Before believing government claims that eliminating parking spaces will reduce the cost to the buyer/renter, consider vacancy rates. With vacancy rates so low today that people immediately take up any vacant rental unit, why would developers not charge market rates even though their costs would be lower by not providing parking? And when people buy condominiums, they buy garage spaces in addition to the unit’s price. As a consequence, I do not see why multiple unit residential buildings with no parking would save money for renters/buyers.

To implement the no parking proposal, the City Council proposes to do away with the current policy of requiring parking as a ratio of the number of units in the building and let developers decide on the number of stalls provided based on market forces. While in some areas of the city, developers may choose to skimp on parking spaces, assuming that people could park on neighboring streets, it may not be the case downtown, where office towers dominate, and street parking is not available. I am concerned that not providing parking would exacerbate congestion on the streets and create a huge problem during the winter months when parking is prohibited on the streets for snow clearing.

What further concerns me and find astonishing is when I see that the two higher levels of government are actively pursuing car manufacturers to set up shop in Ontario.  They announced yesterday a multi-billion-dollar incentives package for Honda, after providing incentives for Volkswagen and Stellantis, last year. Is this not a huge contradiction: do not provide parking but encourage the manufacture of cars?

Quadruplexes on quarter-acre lots and highrise buildings without parking do not reflect what people want today; to me, it appears that governments are attempting to modify behavior to solve a housing shortage, without dealing with any of the basic issues that contributed to the problem – that is, an unprecedented increase in immigration levels, and the capacity of the country in both labor and supplies to accelerate any construction. Despite all good intentions and even beyond the questionable objectives of these ideas, the pace of housing construction cannot and will not double for the next few years due to the lack of skilled labor.