Bill Black: Government Contributions To Housing Costs Should Benefit The Neediest People
The federal and provincial governments have announced initiatives for affordable housing. Some of their initiatives focus on the wrong target.
Anything that increases the supply of housing is good for all parts of the market. The federal commitment to expand the capacity for insured loans by Canada Mortgage and Housing Corporation (CMHC) is useful. So are initiatives both federal and provincial to import skilled tradespeople.
So is the Housing Accelerator Fund, which bribes municipalities to speed up processing and waive zoning provisions, such as those that restrict housing types or density.
On the other hand, the “Canadian Mortgage Charter” is toothless hot air. It asks banks and other financial institutions to do what they are already doing to help borrowers. Many of them are struggling with payments because their interest rates have gone up. There is no legislation and no enforcement of the government’s “expectations.”
There is considerable confusion around the meaning of affordability. Back in 1986 CMHC and the provinces agreed to measure housing affordability based on whether the household spent 30% or more of its average monthly total income on shelter costs.
This is far too simplistic. A single person making $80,000 per year can afford much higher rents than a family of four. That family can afford higher rents in low-tax Alberta than in high-tax Nova Scotia. …[Continue Reading]