Housing sector

LISA ROBERTS: The undersized affordable housing sector is further squeezed by the construction boom

LISA ROBERTS • Guest review

Lisa Roberts is a former MP, former journalist, and present-day consultant who works to help build off-market housing. She served as NDP housing critic, following four different responsible ministers.

About 20 years ago, Northwood opened Almon Place, a 66-unit building in Halifax with bachelor, one- and two-bedroom apartments for seniors. This is one of the newest off-market housing developments in Nova Scotia.

Rents at Almon Place — which include underfloor heating, a community hall and access to Northwood’s recreation programs when COVID permits — are posted online. A two-bedroom apartment rents for $975 per month, or 73% of the average price ($1,335) in Halifax.

Almon Place tenants will not receive a raise next year to make up that difference, unlike some 373 tenants in Dartmouth’s new Southdale-Mount Hope neighborhood 20 years from now when the agreement between the Province of Nova Scotia Scotland and Clayton Developments — $22 million to secure rents between 60 and 80 percent of the market — expires. Maybe tenants will get rent supplements in 2042, which means even more public dollars will go to the private sector.

In Ottawa, members of the finance committee are examining inflation in the Canadian economy, which has reached 5%, more than double the Bank of Canada’s target. Although there is discussion of fuel and food costs – subject to dynamics well beyond government control – most witnesses talk about housing costs. It’s no wonder, given condo prices are up 29% from 2020 to 2021, to choose one statistic from many available.

There is a debate about the causes of real estate inflation in Canada.

The Progressive Conservative government of Tim Houston, with its announcement of special development zones and the Clayton Development deal, seems determined to tackle the supply. Lack of supply is the single most important explanation for our housing crisis and the one that conveniently aligns with the interests of developers and landlords.

A little-noticed amendment to the Condominium Act currently being debated at Province House will fix a leak in housing supply. Once Bill 106 takes effect, developers will no longer be able to buy multiple units in their own new construction and then rent them out as short-term rentals; at least they will have to wait until a new condominium has an elected board that can decide whether or not to allow such activities. The biggest supply drain in short-term rentals is not being effectively addressed, provincially or in Halifax.

But there are other causes of housing inflation, some of which affect housing demand. Imagine being a renter who has saved up to buy a home, only to find themselves competing with investors who scour the same market for any asset they can make a profit on, 50% of which is tax sheltered.

But there are other causes of housing inflation, some of which affect housing demand. Imagine being a renter who has saved up to buy a home, only to find themselves competing with investors who scour the same market for any asset they can make a profit on, 50% of which is tax sheltered.

For those with extra cash and good credit, why not buy a second or third home? As one friend put it, “it’s a good investment,” explaining why she and her partner recently purchased a “cottage” that, given its amenities and location near a town in New -Scotland where families will soon move to seasonal campsites to make way for tourists – could be a home.

Or if an entire house with a roof is a better investment than you can manage, how about shares in a real estate investment trust where you can protect your income from taxes until you sell the shares?

An interest rate hike expected soon could begin to cool some of this speculative activity. Low interest rates lead to higher bids. New provincial measures in Tuesday’s budget — treating non-resident homeowners with higher property taxes and deed transfer fees — are also moves forward in Nova Scotia.

The federal NDP’s agreement with the Liberal Trudeau government, which commits the government to tackling financialization – where housing is bought and held as a commodity and an investment, rather than a home – and to implement a transparent landlord registry program to combat money laundering.

But for the 800,000 households across Canada who spend more than 50% of their income on housing, mostly private sector renters, their best hope is to have more off-market housing like Northwood’s Almon Place where they can build lives and community ties with no impending expiry date.

That’s why some of the most disturbing testimony to this federal finance committee was from organizations trying to build off-market housing. Although they protect tenants from inflation, nonprofits and co-ops have no protection against inflation in labor and material costs, which is compounded by speculative investments in real estate. When a house that could be a house – with a fresh coat of paint and a little investment in energy efficiency – is instead razed and rebuilt into a bigger one, it increases the demand for drywall workers and carpenters than everyone is looking for. And it does not add any new offers.

Both federally and provincially, most funds allocated to housing go to the private sector. Less than five percent of housing in Canada is owned by nonprofits, co-ops and public housing corporations. Experts suggest that for every additional affordable housing unit being built, we lose 14 more.

The end of the renovation ban in Nova Scotia paves the way for investors to empty buildings and “reposition” units, which means new paint and countertops and, most likely, tenants who can afford much more than current rents.

It’s time to focus our taxes – state and federal – on building and acquiring off-market housing, rather than paying very expensive 20-year band-aids to our housing crisis.