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Sabrina Maddeaux: Living in tool sheds won't solve housing crisis

National Post logo National Post 2022-10-05 Sabrina Maddeaux
Average rent prices in the London region have now eclipsed areas of Toronto. REUTERS/Sarah Silbiger/File Photo © Provided by National Post Average rent prices in the London region have now eclipsed areas of Toronto. REUTERS/Sarah Silbiger/File Photo

Outside Cambridge city hall sits a small, 110-square-foot wooden shack meant to demonstrate how the city can house its rapidly increasing population. It contains no toilet and, while it is insulated, no heating system. The city doesn’t intend to use these shanties to charitably house the homeless, but promote them as solutions for paying tenants.

Cambridge’s deputy city manager of community development says local homeowners could build one in their backyard, and even use them as “mortgage helpers.”

It’s the natural de-evolution of forcing renters into smaller and smaller spaces while extracting ever-higher rents. First came micro condos and laneway homes, then garden and garage suites and now what are essentially tool sheds with beds on pulleys.

What’s next? Renting out sleeping beds and bedpans under the shade of a shrub on one’s front lawn?

According to a new Parliamentary Budget Officer (PBO) housing report , affordability is only getting worse. It found Canada’s national average house price increased by a staggering 52 per cent between February 2020 and February 2022.

That average has declined slightly –– by a mere 7 per cent –– since the Bank of Canada (BoC) began interest rate hikes, but the resulting sharp mortgage rate increases paired with still-stubbornly high prices means prospective and first-time homebuyers face the worst of both worlds.

In August, the PBO estimated the national gap between average house prices and what Canadians could actually afford was 67 per cent. In its last report, published in December 2021, the gap was only 45 per cent. That’s a 22 per cent increase in just eight months. In December 2019 it was 20 per cent; in January 2015, just two per cent.

In Hamilton, the city young Torontonians once flocked to because it was relatively cheap and within commuting distance, the average house price to affordable house price gap hit 109 per cent in August. The gap was also above 50 per cent in Toronto, Halifax, Ottawa, Montreal, Victoria and Vancouver.

The PBO’s new report games out various ongoing Bank of Canada rate increase scenarios to come up with what they call not forecasts, but “illustrative scenarios” of what may happen to Canada’s housing market by the end of 2022. Their scenarios see national average price declines, relative to peak, in the range of 12 per cent to 23 per cent.

Even their most extreme scenario of a 23 per cent decline wouldn’t come close to restoring affordability, particularly when decreased borrowing capacity and higher monthly mortgage payments are taken into account. The message: politicians can’t rely on monetary policy alone to solve the housing crisis. They must act to address supply shortages and demand surplus with policies of their own.

The PBO isn’t the only one painting a bleak affordability picture even in the face of modest price declines. A study by think tank Youthful Cities finds that, on average, young people face a deficit of $750 per month living in cities across Canada. The monthly deficit is $1121.14 in Toronto, $1290.74 in Halifax and $372.86 in relatively affordable Edmonton.

Soaring shelter costs are largely responsible, as average rents in big cities now top $2,500 per month and even many mid-sized cities require a mid-six figure household income to purchase a starter home. The Greater Toronto Area (GTA) saw average monthly rents increase by 21 per cent this August when compared to a year ago.

Unsurprisingly given all this, recent Statistics Canada numbers show an overall decline in housing ownership driven by younger Canadians still renting at ages when older generations already owned homes.

Meanwhile, the best municipal politicians can come up with are toilet-less wooden shacks. The idea is representative of the lack of seriousness and empathy demonstrated by decision makers who typically own their own homes, often earn side income as landlords and almost universally fail to grasp the weight of the issue.

There’s of course the issue of generational wealth disparity, but what should concern people of all ages are social, health, demographic and democratic consequences. The housing crisis is linked to rising mental health issues, declines in institutional trust, anger directed at government officials and record low birth rates.

Cutting off generations of young people from affordable housing is already having ripple effects throughout society; suggesting they layer up in winter and share a communal toilet isn’t likely to help matters. By delaying action on housing, politicians are only setting Canadians up to pay a bigger bill down the road — one we might not be able to afford.

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