Why Growing Housing Unaffordability and Homelessness?

All three levels of government have contributed to these growing problems.

1. Federal:
  • Cancellation of tax breaks for rental construction in the 1970’s.
  • Cancellation of building affordable housing
  • Allowing housing to become an investment (see more on this, below)
 2. Provincial:
  • Cancellation of building affordable housing
  • Social assistance (including for disabled persons) has not kept up to the cost of housing. Not even close
  • Until recently: a lack of building standards that reduce the cost of heating a home (poor insulation, single clear pane windows, drafty homes cost a lot more to heat)
  • Lack of adequate assistance for relationships in distress leads to separations, spousal abuse, broken families, alcohol and drug abuse and homelessness
  • The high cost of transportation dependent on owning cars
  • Lack of illness-prevention strategies, leading to loss of income and a taxed health-care system
3. Municipal:
  • The desire to accommodate the single occupancy motor vehicle driving up the cost of housing. Examples:
    • one underground parking stall costs about the same as an entire one-bedroom apartment, taking the cost of renting an apartment far beyond the means of increasing numbers of people
    • building a city requires several times the amount of space to accommodate motor vehicles (far more & wider roads, driveways, parking lots). This space requires higher taxes as well as higher ownership and rental prices
  •  Lower population density further exasperated by neighbourhoods resisting densification (that would otherwise help to bring down the cost of renting by providing more units)

  • Lack of rules to insist that a developer set aside a minimum percentage of housing for lower income people

Most likely the number one reason for rapidly increasing house and condo prices is due to the financialisation of housing. Which means? Treating the house as a capital investment rather than a place of residence. Housing investments encourage speculative buying and selling (getting most of your return from capital growth), rather than long-term investing (get most of your return from rental income). Increasing numbers of homes sit empty. They are worth more that way. Thus housing markets fail in their primary social function of supplying secure housing.

According to the Globe and Mail, global residential real estate is now valued at $163-trillion (U.S.), more than twice the world's total GDP. In Canada in 2016, real estate represented the third-largest segment of our economy but accounted for half the country's GDP growth.

As a direct consequence of shifting homes from being valued as a place to live and raise a family to now being viewed also as a place to park and grow capital puts the interests of investors ahead of human needs. Hence the rising housing crisis, and the primary reason why more people cannot afford to own or rent a home.

Ian Gartshore July 25, 2018

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