Tag: finance

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.

The Coffee Klatch: Why Canadians Compare Themselves to Americans

November 16, 2024

When I sat down for coffee, my friend asked, “Will your children return to Canada?” I understood he was talking about Trump’s presidential victory in the US and its impact on people. Trump’s win caused widespread consternation among my friends.

I said no. Why would my children return when they have good jobs, own their houses, and are growing families in the USA? I said that I do not talk with them much about politics; we talk about their families. Besides, a new government would not make any difference to them, at least in the short term.

His question upset me because it steered our conversation immediately toward US politics. Why are we Canadians so preoccupied with US matters? Yes, the US is our largest trading partner; most of us visit and travel to the US. But don’t we have our own political issues to talk about?

I find scant news about Canada despite watching Canadian TV channels. Two recent provincial elections were hardly covered on the national TV channels. Ontario’s big news recently was that the Premier ordered municipalities to remove bicycle lanes on major roads to ease traffic jams. I agree with him; on some major roads in Ottawa, the bike lanes take up space, making for dangerous driving while watching for cyclists right next to you. And, of course, one cannot park along the curb to visit stores because of the bike lanes. Beyond the bike lanes issue, what comes to my mind is the Premier’s promise to give every Ontarian $200, anticipating an election next spring. These news items produce no excitement in me.

Although local news has had sparse coverage, US news of the election was shown in detail on Canadian national TV channels every night. Canadians have a love-hate relationship with Americans. They like to winter and shop in Florida and Arizona. However, they often express critical views of life there, mentioning rampant crime and an expensive healthcare system compared to Canada.

You’ll be surprised how often you read a thread on Quora (a social network) about universal Canadian healthcare and its superiority to American healthcare. It is also cheaper, according to the threads. Perhaps. However, the subject is more complex; only eight percent of Americans are without health insurance today, and we should also compare the quality of healthcare in the two countries before drawing simplistic conclusions. Two-thirds of Americans with private insurance have better healthcare quality than in Canada; for example, access to a family doctor is much faster than in Canada, and waiting times for hip replacements are shorter.

Also, in Quora threads, many Canadians think Americans are ignorant; I remember the popularity of Rick Mercer’s TV show (This Hour Has 22 Minutes) when he presented fake situations and asked people to respond, for example, when he said the Canadian parliament building is made of ice. Is that Canadian humor? It was a silly statement and demeaning to the people he interviewed. In one episode, he interviewed Mike Huckabee when he was governor of Arkansas, embarrassing him: Huckabee congratulated Canada on having a “National Igloo” in response to Mercer’s prompt. I think American comedians could come to Canada and emulate Mercer’s performance in the US, showing how ignorant Canadians are.

I went to graduate school, worked in the US in the 1960s, and have fond memories of my life there. That was after I lived in Vancouver, Canada, where people, particularly the British people, wanted to learn about your pedigree before befriending you. I found them class-conscious, and the Brits still considered themselves living in the colonies. In contrast, the Americans asked what I could do and what my skills were, not dwelling on my background.

In my experience, Americans work harder and longer hours than Canadians, which may also lead to higher stress levels. I remember when my brother, who traveled a lot, told me that it was always calming to fly into Canada; the atmosphere was just more relaxed at Canadian airports compared to US ones.

The conversation with my friend over coffee made me think of why Canadians spend so much time comparing themselves to the US, and always in a favorable light. I do not have an answer, but I cannot help wondering whether this results from an inferiority complex, justified or not.