Can Housing Become More Affordable?
by Melanie Swailes on behalf of the Development and Transportation Committee
Imagine that you own and live in a house but no longer use all the space, so you decide to rent out the basement. You complete any necessary secondary suite upgrades and are ready to list it for rent. How would you decide how much rent to charge? You’d likely look up some comparable rates on rental websites, and then charge the going rate: would it make any sense to charge a substantially lower rent? It would depend on your reason for creating the suite in the first place. If the goal is to make money, then a higher rate is most desirable. If your goal is to provide housing for a friend, you might charge them less. If you are creating a room for a grandchild to stay while attending university, you might charge a very minimal rate, or even nothing.
For most investors and developers who build units as a business, profit is the motive. There is no reason for them to build low-cost units instead of more expensive, more profitable ones. They charge what the market will bear for current demand in the area.
The alternative to this model is non-market housing, an umbrella term that covers shelters, supportive, social, and co-operative housing intended for low- and moderate-income households1. Low rents are often subsidized through government programs such as grants, low-cost loans, and subsidies.
In June, I attended an open house for the Varsity Multi-Service Centre, including a new fire station, 48-unit affordable housing building, and some retail/workspaces2. The residences are managed by Calgary Housing, which administers rental and rent supplement programs on behalf of the City of Calgary. The 48 units include 11 fully accessible units, and all are intended to serve tenants with a range of incomes who might otherwise struggle to afford a unit: rental rates range from near-market rates to deep subsidy programs.
Tenants pay different rates depending on their income. By combining market and subsidized units in a project, the higher rents help with the overall project viability. Over time, as the mortgage for the project is paid down, rents may become more affordable, providing affordable housing options for the life of the building. The City of Calgary has similar affordable housing projects planned or underway, but the numbers are small compared to the need (196 units in Southview, 52 units in Whitehorn, and 16 units in Mount Pleasant3). Subsidized units have to be paid for by someone, and non-profit organizations have limited resources: meanwhile, Calgary is growing rapidly, and the need is increasing.
Most housing starts in Calgary are for the profitable market-rate housing sector. Housing has become an investment, not just a place to live. Population growth in Calgary has outpaced housing starts, and builders cannot keep up; the city cannot “outbuild” the demand, nor does this result in affordable housing. Cities around the world are facing the challenge of offering housing to those who actually live and work in the community.
Calgary has placed City-owned surplus sites for sale at non-market rates, since land cost is a significant barrier for non-profit organizations. Governments at other levels contribute through policy, for example, providing tax exemptions for non-market housing. Co-ops may be another option to remove the profit motive: residents buy into a member-owned and managed system and collectively determine how the co-op is run. Other measures include streamlining planning processes to make them more development-friendly: however, blanket rezoning has created a lot of building, but the new units have not brought “affordability”.
In practical terms, perhaps home sizes and built forms should be reviewed. In Brentwood, our original bungalows were about 1,100 to 1,200 square feet – would there be a demand for smaller homes again? Does every home need to have 9’ ceilings or granite countertops or three bathrooms? Could there be a market for smaller, less expensive homes? In many communities in B.C., mobile home parks are common but here most have been torn down. Could more of these help with affordability? Other housing forms, such as tiny homes and modular homes might provide options; ATCO Structures currently has a modular building open for touring.
Despite all the good intentions in the world, simply building more units is not likely to bring down the price unless there is a requirement or a reason to do so. Erick Villagomez of The Tyee recently argued, “The belief that more market supply alone will deliver affordability has long been challenged by housing scholars. Without requirements for non-market housing and without integrated plans for schools, transit and infrastructure, we risk building faster but not more fairly. Cities risk becoming pipelines for capital, rather than homes for people.”
What do you think? What types of housing do you think we need? The civic election is in October so ask your candidates what their vision for growth and change looks like. Join the Brentwood Community Association or the Development and Transportation Committee to learn more and take part! Contact the office at [email protected] or at 403-284-3477.
Sources:
2. https://engage.calgary.ca/varsity
3. https://www.calgary.ca/communities/housing-in-calgary/current-affordable-housing-projects.html
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