The causes and solutions to Canada’s housing crisis have been endlessly debated in recent years. But at the core of the challenge is a supply issue – there simply isn’t enough housing to meet demand. According to the Canadian Housing and Mortgage Corporation, on top of the 19 million homes projected to be built by 2030, another 3.5 million are needed to return affordability to 2003 levels.
Canada struggles with housing supply, placing last among G7 peers in terms of total number of housing units per capita. But even more concerning is Canada’s shortage of social housing, which ranks near the bottom amongst OECD peer nations behind the U.K., Australia and even the U.S.
Decades of declining investments in both social housing (government subsidized) and affordable housing (a broad term that includes private, public, and non-profit housing) have eroded the supply of truly affordable homes. This has contributed to a situation in which one in 10 Canadian households live in ‘core housing need’, spending more than 30 per cent of their income on housing.
It is likely that no realistic amount of new builds will be enough to bring housing costs down to meet the needs of these households, many of whom are low-income and can afford at most $750 a month for rent, while facing a national rent average of $1,681 for a one-bedroom unit as of January 2023. Only targeted government initiatives can fill the supply gap at this end of the housing spectrum.
The challenge, as the CSA Public Policy Centre’s new report points out, is that governments’ collective efforts are too often misaligned or even conflicting, contributing to fragmented solutions and missed opportunities that ultimately limit the availability of desperately needed housing for those with fewest means. In the absence of foreseeable and significant social housing investments, this “pervasive policy coordination failure” on housing is one we can ill-afford. 
While securing a healthy stock of affordable housing for the long term will not be easy, there are three strategies to get started:
- Begin with a consistent definition of ‘affordable’ housing
On the most fundamental level, a consistent definition of what constitutes ‘affordable’ housing is needed. For example, the three biggest supply initiatives under the National Housing Strategy (NHS) employ three different definitions, alternatively based on average market rent, median market rent, and average income. Variation exists among provinces and municipalities too. In Ontario, the new More Homes Built Faster Act updates the province’s definition to “80 per cent of average market rent,” while the City of Toronto employs “30 per cent of the before-tax monthly income.”
Furthermore, the absence of a consistent income-based definition mistargets the very households that are in need. Income-based measures are more closely linked to a household’s ability to pay, whereas measures based on portions of average market-rent (typically around 80 per cent) often produce higher affordability thresholds. For example, when Toronto updated its definition to employ an income-based measure, the affordability threshold for a 1-bedroom unit in the city declined from $1431 to $1090.
It’s difficult to imagine how we can succeed in delivering the housing that is most lacking without clear agreement on what it is and who it should serve. A first step, therefore, is to employ a single, income-based definition of affordable housing across jurisdictions. This would better target resources and help measure policy effectiveness, as well as achieve the central objective of the NHS to lift Canadians out of core housing need.
2) Don’t overlook the supply we already have
The most affordable house is one that is already built. And while much of governments’ focus is trained on announcing and building new units, insufficient attention is given to preserving the housing that already exists, with about five affordable units being lost for every new one built.
Preserving deeply affordable housing – such as single-room accommodations in rooming houses and other building forms – is also critical as it is often home to very low income individuals with experience of homelessness for whom displacement could have dire consequences.
Saving these homes from demolition and redevelopment, as well as acquiring other properties that could serve as affordable housing is an underdeveloped priority at all levels of government. With the pandemic emptying out many office buildings across the country, there is also an underleveraged opportunity to acquire such properties for conversion into housing, as Calgary has successfully done.
To be effective, a holistic and coordinated approach to acquiring these buildings is needed, with each level of government playing an important enabling role: federal and provincial governments can create dedicated acquisition funds, provinces can grant municipalities the right to bid first on select properties, and municipalities can work with local communities and land trusts to purchase and renovate housing where it is needed.
3) Make it easier for nonprofit developers to build faster
Nonprofit real estate developers are crucial players in the affordable housing ecosystem, building housing that targets underserved communities and retains long term affordability.
However, navigating complex regulatory requirements imposed by different levels of government often creates delays, costs, and uncertainty that risks the viability of these projects. Conflicting and duplicative requirements from government programs also makes it challenging to combine funds from multiple sources, a practice known as ‘stacking’, which is often necessary and in some cases may even be required to access certain funding. Billions of dollars set aside for affordable housing developers have gone unspent because of the difficulty in accessing funds.
There is a clear opportunity to do better. One solution would be the creation of digital development permitting systems to serve as central repositories for all development requirements and restrictions administered by any level of government. This would allow developers to clearly see and track all requirements applicable in the jurisdiction they’re building in. Additionally, case management tools could be developed as part of these systems to provide more support to nonprofit developers as they move through the permitting process.
And to encourage stacking, governments could take a more flexible approach, for example by deferring to one level of government’s underwriting criteria and by encouraging the adoption of consistent affordability criteria as outlined above.
Both of these approaches would have the benefit of helping to accelerate all development, while being particularly valuable for nonprofit projects.
The affordable housing Canadians need is unlikely to materialize without greater coordination of efforts and resources among levels of government working towards clearer goals. Beginning with these three strategies would be a step in the right direction.
Nevena Dragicevic is Manager, Public Policy at CSA Group
