White Paper: The National Housing Strategy, Affordability, and Existing Housing Stock
Canada’s National Housing Strategy (NHS) is a $55 million, 10-year plan unveiled by the federal government to reduce chronic homelessness by building 125,000 new homes across the country. The strategy is designed to ensure more affordable homes for Canadians, bringing together the public, private and non-profit sectors “to create affordable, stable, and livable communities.”
As an organization built on investing in the everyday — particularly multi-family housing — it’s vital we understand the challenges and opportunities that come with this new strategy. This understanding can help us formulate a strategic plan going forward and continue to represent our stakeholders as we engage with policymakers as the NHS comes to life.
Housing affordability has long been on our radar as we continue to invest in the everyday, especially now, as communities across the country feel the effects of the COVID-19 pandemic. We’ve been working with municipalities to see how we — and our industry — can best ensure all Canadians have access to housing. 90 per cent of rental stock was built before the year 2000, accounting for a majority of housing available for Canadian renters.
The Canadian Mortgage and Housing Corporation (CMHC) exists for one reason: to make housing affordable for Canadians. There are various housing programs available through CMHC, but only one facilitates the acquisition of existing housing stock for affordable housing. The program opens the door to the acquisition of existing rental stock for the purpose of affordable housing and provides mortgage loan insurance flexibilities and other tools to pave the way for the production and preservation of affordable housing. However, one of the eligibility criteria for determining affordability is 80% of the units in the project must be at or below the 30th percentile of rents in the subject market for units of a similar type. Research concludes that the rationale for the 30th percentile eligibility criterion is not specified, much less empirically validated. This narrow definition cuts off many owners and operators of aging rental stock from participating in the program.
“We commissioned this white paper so we could better understand the National Housing Strategy from a private company’s perspective,” says Anthony Giuffre, CEO of Avenue Living. We asked Dr. Grant Wilson of the Edwards School of Business to assess the strategy and the CMHC’s approach to help us understand the challenges facing policymakers. “We need to gain a good understanding of what it is, what it has been, and what it could represent strategically to us and companies like ours.”
This paper examines how existing housing inventory — the class B and C buildings Avenue Living invests in — fit into Canada’s plan to increase affordable housing inventory. The paper also identifies potential gaps in the strategy and highlights how some owners and operators may be left out of the narrow definitions of “affordability” — especially in the Prairies.
This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at www.avenuelivingam.com for additional information regarding forward-looking statements and certain risks associated with them.