Balancing the Housing Construction Equation: A Call for Affordable Homeownership

Victoria, BC - January 12, 2024

In the face of our housing crisis, all levels of government have seemingly fixated on the construction of rental housing. It's a commendable effort and more rental housing supply is needed, but one can question the exclusive focus on this aspect of housing and explore its broader implications. Ravi Kahlon, BC's Government House Leader and Minister of Housing, rightly acknowledges that, “Housing is one of the biggest challenges facing people in B.C. The housing crisis is hurting people and holding back our province’s economic potential.” While recent changes in BC are welcomed, there is a compelling need for a more comprehensive and balanced approach.

The imbalance between rental housing construction and affordable homeownership funding by governments is clear. Federal government funding through CMHC is focused on rental housing construction only. Similarly, the province of B.C. focuses specifically on supporting rental housing construction. Recently announced GST waivers on new construction are exclusively for affordable rental units. Existing programs to help people become homeowners, such as the First-Time Homebuyer’s Incentive have been critiqued as being ineffective, especially in high-priced markets such as Victoria with just 5 applicants in 2019 and 45 in Toronto during the same period.

This narrow rental housing focus is an overcompensation trying to correct for the decline in rental housing construction since the 1970’s and it ignores affordable homeownership.

An unbalanced approach worsens the housing crisis by overlooking the importance of a diversified housing market. Canada’s diversified housing continuum, encompassing subsidized housing, affordable rentals, market rentals, cooperatives, affordable homeownership, and market homeownership. Each component plays a crucial role in contributing to a healthy and balanced housing market that benefitted all Canadians.

Traditionally, families were able to traverse this continuum, freeing up spaces for others in the process—a phenomenon known as "filtering." Renters transitioned to homeowners as their stage of life changed. Filtering has effectively collapsed in Canada.  In Vancouver, CMHC's Housing Supply Report October 2022 report highlighted how strong migration and higher mortgage rates impede renters' transition to homeownership. The consequence is a bottleneck in the housing market, preventing the positive effects of filtering and perpetuating core housing need through renters remaining renters.

Indeed, one of the consequences of this rental construction only focus is the emergence of a permanent renter class in Canada. Statistics Canada's November 2023 research points out that children of homeowners are statistically more likely to become homeowners themselves, perpetuating multi-generational housing inequality.

Homeownership offers undeniable benefits, including financial equity growth, security from eviction, and improved outcomes for children's health and education. While homeownership may not be the goal for everyone, especially during certain life stages, it is attractive for families raising children and historically a cultural expectation in Canada. Unfortunately, government emphasis on funding rental construction exclusively neglects the specific needs of these families.

The construction of purpose-built rental homes funded through government programs also does not necessarily translate to affordability. Of the very few three-bedroom apartments available for rent in the Victoria area, rental rates in 2024 approach and sometimes exceed the total carrying costs for a home built by Habitat for Humanity, which families can purchase and realize all the benefits of homeownership.

This is not a call for governments to get involved in building housing outright or suggest that government can be all things to all people. Rather, it is a call for governments to balance their focus to include making homeownership achievable for Canadians which in turn fosters inclusivity, social cohesion, and better societal outcomes.  It's time for a more balanced and inclusive housing policy that addresses the diverse needs of Canadian families.

So let’s encourage our governments to contribute to affordable homeownership for working families. Let’s ensure that we don’t inadvertently create a society polarized into renter and homeowner classes.  Habitat for Humanity stands ready to collaborate with all levels of government to unite communities in the pursuit of strength, stability, and independence through affordable homeownership.

Scott Dutchak

CEO Habitat for Humanity Victoria

Habitat is the only charity in Canada focused on affordable homeownership, which leads to better social outcomes for our communities. It leverages ReStore profits, and community donations to build affordable family sized homes for working families.