Housing Affordability

What Does It Mean?

Affordable housing generally refers to the average cost of housing that can be maintained financially by a middle income earner. However, depending on the housing market you find yourself in, your income bracket, your desire to rent or own, the size of the dwelling required, and the age and condition of the structure, the meaning of the term ‘affordable’ varies.

The term ‘affordable housing’ carries a broad meaning that not only considers the actual affordability of the housing stock, but also serves as an umbrella term that encompasses the various privately, publicly and non-profit funded housing sectors.

In the Canadian context, the Canada Mortgage and Housing Corporation (CMHC) defines affordable housing as shelter costs that account for less than thirty percent of before tax household income. In 2016, forty percent of Canadians who were renting spent more than that, with twenty percent of people spending more than fifty percent of their monthly income on housing.

In the City of Toronto, one of the most inflated real estate markets in Canada, where demand for property rental and ownership is high, what is affordable has changed significantly over the last several years. Affordable rent in the city is that where the total monthly costs of shelter are below the city average market rent (AMR), by unit type and affordability. In 2019, for instance, the AMR for a one-bedroom apartment was $1,270; $1,492 for a two-bedroom unit; and $1,664 for three bedrooms, which are fewer in availability.

If one were to look online for housing in Toronto, and even on the outskirts of the Greater Toronto Area (GTA) to some degree, they would be hard pressed to find anything that reflected these prices, unless the rental was for a room in a house shared by many, or for an illegal basement apartment that has not been approved or does not meet standards or codes.

A one-bedroom in the city’s core typically goes for more than $2,000 a month, not including housing utilities. When it comes to townhome rentals and home ownership, the figures are even more daunting. This is a contributing factor to the 9,200 people who find themselves homeless in the city each night.

An employed single person without property to their name, according to LowestRates.ca, requires a minimum salary of $49,545 before taxes to survive with a modest lifestyle in Toronto, a number that continues to increase year after year, though wages often stay the same.

In 2017 and 2018, 50,000 people moved out of Toronto, where the median household income is just over $78,000, according to a report by Zoocasa. That same report notes that the average home price is $823,300, meaning the average family can only support a mortgage of around $300,000, which simply doesn’t add up.

For many, renting is the only possibility, as home ownership is often out of reach, especially in a hot real estate market like Toronto where prices continue to climb. An increasing number of people are turning to condo ownership, which has shown marked growth both in the city’s downtown as well as its suburbs.

For some, the dream of home ownership will take them as far as Kitchener-Waterloo, from which they will commute to downtown Toronto or into the GTA for work each day. This can translate into upwards of three or more hours of commuting each day and anyone who has driven Highway 401 West at rush hour knows that you aren’t getting anywhere quickly.

As a result of the high costs of home ownership, the condo market is on fire in the GTA, making that market increasingly unaffordable as well, both in the city’s core and in the suburbs. The average price of condos in Mississauga in 2019 was up fifteen percent, one of many markets in the GTA driving record condo sales. Prices per square foot have even reached $1,000.

There has long been concern regarding the emergence of an affordable housing crisis in the City of Toronto, a population that is approaching three million people, not including the suburbs that contribute to its workforce and the countless visitors to the city each day. The number of applications for affordable rental units continues to increase but the number of vacancies dwindles. There is a crisis of supply and demand as a result of sky-high prices that individuals are unable to afford.

The Toronto housing market has been paralleled against that of Silicon Valley, where wages are high and there are great jobs, as well as persistent homelessness. While those who are making the highest wages can afford the cost of housing, the low to moderate income earners who work service jobs and the support workers who help keep the city operating are priced out of the market. In the last five years, only two percent of new housing in Toronto was deemed affordable, but further to affordability, the issue is complicated because of supply. Between the years 2016 and 2019, Toronto added 325,000 new jobs, but during that same period, only 102,000 new homes were built or approved.

There are many ways to address the affordability issue and they are taking place at all levels of government and in the private sector. Indeed, the public and private sectors often come together to address housing market gaps – but it’s not quite enough.

The City of Toronto has announced an investment totalling nearly $24 billion in a housing plan that will address the affordability crisis that continues to worsen in the city. The city will contribute $8.5 billion, $5.5 billion of which was already promised, and the remaining $14.9 billion will come from federal and provincial government support.

The 2020-2030 Action Plan is a ten-year effort to prevent evictions and improve supply of affordable rental accommodations. The plan’s comprehensive blueprint was approved by a vote of 24 to 1 at a meeting that took place in December 2019 and is another attempt to address the homelessness and affordability crisis resulting from increasing housing costs year after year.

The Action Plan identifies numerous actions for the city, including the approval of 40,000 new rental homes, including 18,000 supportive homes for vulnerable residents. A minimum of 10,000 of these must be dedicated to women and girls.

The action items also include the prevention of evictions and renovictions in low income rental units, which are on the rise. The goal is to improve housing affordability and access for marginalized demographics, including those who are homeless or at risk of homelessness, women and children, and seniors. The city will also create a land bank to support the approval of the new rental and supportive homes. These efforts will be supported by attempts to preserve existing affordable rental spaces.

Further to government efforts, the private sector is doing its part to address the gap in Toronto’s housing market. To mark World Habitat Day, The Daniels Corporation stepped up its commitment to affordable housing.

The Daniels Corporation is one of Canada’s premier builders and developers, but it is its work with Habitat for Humanity, a non-profit housing organization, that truly sets it apart. It has committed to building ten new homes to improve housing affordability in neighbourhoods across the GTA: Toronto’s Regent Park, Mississauga’s City Center and Erin Mills, Pickering and Brampton.

The homes, which will be occupied by 2022, are just a small part of the Daniels Corporation’s $6 million contribution to Habitat for Humanity over the span of 23 years. Thanks to this partnership, 83 Habitat families have suitable and affordable housing.

What is perhaps most interesting about partnerships with Habitat for Humanity in the GTA is the organization is not limited to providing Habitat families with detached homes; it also looks vertically to the condo market, as well as apartments and townhomes, to provide immediate and affordable homeownership opportunities.

The implications of a housing crisis are immense and the severity of the problem in Toronto is real. Where there are job opportunities and housing seems out of reach, some employers have even taken to providing staff accommodations, making it easier for them to be a reliable employee without being burdened by the cost of living in the city.

Unlike the U.S. market where rising prices can signal a crash and there is some reasonable expectation that prices will correct, safeguards in the Canadian market are likely to insulate it from any wild corrections and as such, relying on prices to come down as a solution isn’t viable. There are countless ways the public, private and public-private sectors are coming together to address the affordability crisis that is depleting the quality of life of many who are trying to maintain a career and a roof over their heads at the same time. Any solution to the crisis of affordability will require a multifaceted approach that includes buy-in from all stakeholder groups in the private and public sectors to ensure there is housing infrastructure to support the economic activities taking place in the city.

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May 29, 2020, 5:37 AM EDT