Ottawa is experiencing a housing and homelessness crisis. We’ve known that for a while. Years, even. It’s not just the people who can’t afford a home at all. It’s also the people who struggle to make ends meet even though they do have stable jobs with decent enough salaries. People whose household income is in the $70K-$100K range (before taxes) do not have an easy path to finding a home they can afford inside the greenbelt.
Housing is considered affordable if it costs you no more than 30 percent of your pre-tax income. So if your household pre-tax income is $100,000 a year, your home shouldn’t cost you more than $33,000 a year.
That’s $2,750 a month. Congratulations if you’re making it. I’m really happy for you. Can I ask where you got that mortgage?
And that’s for those who can qualify for a mortgage and come up with a good down payment.
The average rent for a two-bedroom apartment in Ottawa is around or slightly above $2,000, depending on who you ask. A house — which you kind of need if you have more than one kid since there are virtually no apartments bigger than two-beds-plus-den anywhere in this town — will sport a much higher rent than that, starting around $3,000 in the city’s less interesting neighbourhoods.
Now imagine you’re a single parent earning $75,000 a year. Housing for you is considered affordable if it doesn’t cost you more than $22,500 a year, or $1,875 a month. Good luck finding anything even modestly nice for that price.
Now ask yourself this: If the people who make $75K or more a year have trouble affording a home, what do you think happens to people who earn slightly above minimum wage? Someone who works 40 hours at, say, $25 an hour makes $50K or so a year before taxes. There are lots of people in that situation. Housing is considered affordable if it doesn’t cost more than $15,000 a year. That’s $1,250 a month.
See where I’m going with this? Can I stop with the math now?
The problem is complex and has many causes. The report by Carolyn Whitzman, about which I wrote a cracker of a column, shines a bright light on what needs to be done, right now, for the City to scale up deeply affordable housing. That’s housing for people at the lower economic end of the examples I provided, and for those who need more support than that.
One of the causes of the crisis that we don’t like to talk about is that we’ve been treating housing as an investment vehicle, not a right or even an essential need. People buy a house expecting it to increase significantly in value. It’s their way to ensure they have money for their retirement or to finance their kids’ post-secondary education or whatever.
Let me ask you this: Why do we exempt people from paying capital gains tax on the sale of their primary residence? It’s a fine gift to people who invest in their primary residence and sell it at a profit. It’s certainly a fiscal advantage renters who invest successfully in the stock market don’t get.
I’m no economist but if the rules are clearly meant to favour people who sell their primary residence at a profit, you’re going to see a whole bunch of people organize their affairs accordingly and therefore contribute to residential real estate values going up like crazy, making an already difficult situation much worse for new entrants in the home ownership market. If you’re going to give home owners a great tax incentive for selling their home at a profit, don’t be surprised to see the residential real estate market grow faster than many other investment options.
There’s more, and much worse. Because governments — especially here in Ottawa — are notoriously shy about investing public dollars in not-for-profit housing, and are much keener to rely on private for-profit builders to get a tiny percentage of new units that are theoretically affordable except they’re not, every year we keep falling behind in the number of deeply affordable housing units we need.
The people who need those deeply affordable units that never materialize become house insecure, they couch-surf, wind up in (overflowing) shelters or on the street.
Question: How much do you think it costs society (in policing, health care costs and other social costs) to have people chronically homeless wandering the streets especially if they have ill-treated or untreated mental health conditions?
I’ve been looking for recent numbers and wasn’t able to find any that were local to Canada but according to six-year-old research it’s over $55,000 a year per chronically homeless person. I’m going to go out on a limb and say it’s not likely to be less than that now.
And for what? To avoid investing upfront in solutions that work, like housing-first? Medicine Hat in Alberta (in *Alberta,* damn it) has essentially eliminated chronic homelessness with that strategy. Other cities are experimenting with it and finding that not only is it cost-effective in terms of money but it’s a HUGELY positive return on investment at the human level. The unhoused person on the sidewalk is just as able to contribute to society as you or I, provided they get a stable place to live and the support they need. We’re way too quick to give up on those people, and it’s costing us a fortune in money, social capital, and just plain karma.
The report I mention in my column comes out publicly May 1. There’s a public launch— it’s sold out for in-person attendance but you can be there virtually if you RSVP in time. I encourage you to read the report and urge your councillor to support it.
We can end homelessness and make a real dent in the housing emergency. There is no excuse not to.