The Housing Crisis, an Introduction

Once again this morning, the news was dominated by discussions of the housing crisis. If you haven’t been following it closely, it can seem like an enormous mess that’s difficult to untangle; my goal in this post is to give you some context for untangling it. Over the next few weeks we will pull on some threads, outlining specific problems or causes for a few posts, and then some solutions for a few more. But for now, an outline of the issue. (If you prefer to listen, rather than read, this podcast covers it really well.)

When Did the Housing Crisis Start?

Human beings love a crisis. They activate parts of our minds and bodies that were really useful for escaping danger in the past, dangers that no longer exist. We’re wired to look for threats, so we tend to always keep at least one crisis front of mind. There’s lots to unpack about the psychology of that, but for now I want to zero in on one key point: having a crisis is sometimes the only thing that can motivate us to act.

Does it ever seem like all of the overlapping crises that we face today, that effectively shape our entire lives, should have been dealt with a long time ago? We’ve been having climate talks for forty years, why wasn’t climate change dealt with in the 90’s (at the latest!)? It seems like every time a new crisis comes up, it surprises a lot of people, but has actually been brewing for a long time. The same is true for housing.

I was first clued into it about five years ago. At that time I simultaneously started a new career as a REALTOR® and became a candidate in the 2018 provincial election. Housing affordability was already a major election issue then, and all parties agreed that a lack of housing supply was a key problem. The PCs reduced the entire issue to that: we need more houses, so we need to build more, so we need to “cut the red tape” to get more houses built. It’s the same thing the federal Conservatives are talking about right now, and I’ll unpack that approach in the next post. The other parties all had some variation on the theme: we need more housing, but we need to talk about housing subsidies, non-market housing, and environmental sustainability on new builds. We’ll talk about those as well.

But through that campaign I learned that the problem that I was seeing at work was actually rooted in policy decisions going back thirty years or more. Starting in the late 40’s and early 50’s, governments got into building housing in a big way–most notably by building housing for returning veterans of World War II. By the 70’s, a large portion of all housing builds were government funded, or even government built. Through the 80’s and the Reagan/Thatcher era, the idea that government should be doing anything for itself fell out of fashion, but government funding for housing continued until the mid-90’s. If you’re looking for who to blame, both of the big federal parties took part in the demise of federally-funded housing, and both parties maintained the policy ever since. And folks who work in the sector have been sounding the alarm for decades, pointing out that the remaining non-market housing is either going to expire (i.e., will revert to being market housing at the end of a contract period), or collapse (i.e., much of the infrastructure is crumbling).

All of that to say that this “crisis” shouldn’t have surprised anyone. But again, we tend not to act until a problem becomes a crisis.

Who’s Responsible for Housing?

IS the federal government responsible for building housing? Since the 90’s the federal government has maintained that it is the responsibility of the provinces and municipalities. The province devolved responsibility for social services to the municipal level about twenty years ago (see my last post about how subsidized housing works), but tends to maintain that funding for actually building housing should come through the Canadian Mortgage and Housing Corporation (CMHC), a federally funded organization. While CMHC does give out millions of dollars in grants for building housing each year, it’s a small fraction of what the feds used to fund.

Municipalities, for their part, can’t afford to do much. Truly affordable housing is high-density housing that tends to come in large apartment buildings. The initial investment required to build those is enormous: a community like Brighton is unlikely to invest tens of millions of dollars into a single building, even if it could majorly address the housing crisis in our community. Large cities sometimes do invest at that scale, but the scale of their housing crisis is much larger, so they still have little effect on the problem as a whole. Municipalities collect about 8% of all taxes collected, and the taxes they do collect come from property taxes, which are not very progressive; if we want to invest public funds into building affordable or non-market housing, it doesn’t make sense to leave it to municipalities.

Of course, the decision to stop investing public funds at a large scale into housing was based on the idea that the market can better provide for us than the government can. I’ll have a whole post about market forces–maybe more than one–but I hope we can all agree at this point that the market is doing more harm than good at this point.

So that leaves the Federal and Provincial governments, and they’re both starting to come to the table with proposed solutions. In the next few weeks I’ll pick some of them apart, and zero in on the real causes and some solutions to the crisis.

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