Part 1 – Solving the Housing Crisis, Issue 45

Canada, the United States, and Australia each have a growing affordable housing crisis. We have seen the headlines:

• Canada’s Housing Bubble Is Getting Way Worse, And Young People Are Screwed, Vice World News, March 18, 2021
• Affordable Housing Crisis Affects One In Five Renters In Canada: Study,  Rental Housing Magazine
• After the eviction cliff, a different U.S. housing crisis looms: Low-cost home production is lagging, thanks to construction slowdowns and budget cuts. Patrick Sisson, Bloomberg City Lab, July 30,2020
• The lack of affordable housing is getting worse in the US  Kalimah Redd Knight, PHYS.Org, June 3,2020
• Australian housing system ‘broken’ with more than half of low-income renters facing rental stress Christopher Knauss, The Guardian, January 20, 2021
• Australia: Study makes shocking findings about housing affordability crisis Cait Kelly, The New Daily, April 29,2019

Lack of Ambition

All three wealthy nations use gallons of ink announcing programs to address the problem. The US administration’s 2021 mega infrasrtructure plan includes the most recent grand scheme. The plan allocates US$ 213 billion to affordable housing initiatives. Over a ten year period the monies will be used to:

1. Rehab, retrofit, and build one million homes for renters
2. Build 500,000 new affordable houses
3. Reduce exclusionary single-family zoning laws
4. Clean up and repair existing public housing 
5. Increase the focus on clean energy investments

At first blush, this would appear to be an ambitious plan. Today, ten million American families spend more than 50% of household income on housing. Additionally, federal housing assistance reaches only one in four eligible families. There is a current 6.8 million unit shortage  of affordable rental homes for low income earners in the States. Ergo, a program to build and retrofit 2 million units over ten years doesn’t even start to meet existing needs.

The dollar amount of the US program sounds impressive. However, the program cost per person per year is  only $65. Contrast this to Vienna, Austria that already boasts 440,000 affordable housing units. In that country, the annual per person cost of affordable housing works out to about $360. This allows for the addition 4,300 affordable housing units each year.

Lack of Imagination

Success of the ten-year plan will rely on the usual smorgasbord of government programs. There will be some direct government funding, tax credits, grants, and project-based rental assistance.  Also, it will rely heavily on public-private partnerships with private developers, municipalities, and not-for-profit organizations. It seems that the program is “hoping to achieve significantly different results by repeating the same mistakes.” Is this not a frequently quoted definition of insanity?

There is no intent to pick on the United States.  It is just that its recently announced program exemplifies the lack of ambition and imagination behind many developed countries’ plans to deal with the affordable housing crisis. So what has to be done?

The first step: A change in attitude and ambition

Developed nations that have chronic housing problems appear focussed on providing opportunity to rent or purchase a home. Also, ambition constrained by a definition of affordable as 30% of median household income ignores the 50% of the population below the median. 

Countries with the greatest success in providing affordable housing for all see housing as a basic human right. Finland embodies this approach with its nation-wide Housing First program, which has radically reduced homelessness in that country. In Denmark, co-operatives own one-third  of the homes in Copenhagen and the non-profit sector houses one-fifth of Danes. The Austrian model targets housing costs of between 20% and 25% of individual household income. Is it any wonder these countries top multiple  “happiness” and “livability” indexes. 

Benefits of solving the housing crisis

The benefits of good housing for all go beyond happiness. Children have more confidence, perform better in school, and are more involved in community activities. Family health, both physical and mental, improves. Household financial stability develops.  All of this benefits community. Employment increases, taxes and local government revenues rise, and households have more money to spend. Crime rates fall, health care costs drop, and reliance on social welfare programs reduces. Good affordable housing programs contribute to their continued development.

Canada, the United States, and Australia are not alone! Many other countries such as  Ireland, the United Kingdom, and France,  have a growing affordable housing crisis. Step one is a change in attitude and ambition. 

The usual reminders: 

• Buy better, buy less, reduce, repair, reuse and recycle 
• Shop local, support local businesses, buy from local farms, and support local artisans and manufacturers
• Wear face masks where required, practice social distancing, hydrate, and exercise
• Cancel Facebook and Instagram!