Canada’s housing agency tries to slow the exodus from big cities

Canada Mortgage and Housing Corporation (CMHC) is attempting to curb the outflow from big cities.

iamge: HuffPost Canada

Toronto saw a net loss of 50,375 last year as people moved to surrounding small cities; places such as Oshawa where the population increased by 2.1 per cent according.

Municipalities around Montreal also experienced growth with Farnham seeing an increase of 5.2 per cent.

People are migrating out of Vancouver to small Interior cities, as well. In Kamloops, home sales totalled 3,044 units last year, up 6.4 per cent from 2019. Sales were brisk with homes on the market just of 2.6 months on average, compared to 5.8 months the previous year.

The pandemic has resulted in millions of new workers from home. As of December, 2020, 4.8 million Canadians worked from home. For 2.8 million of those, working from home was a new experience.

The influx of highly successful, mid-career professionals and knowledge workers has an effect on the character and culture of a small city. On the plus side, professionals have more to spend and support the arts making small cities more vibrant. Conversely, they drive the price of houses up making them less affordable for low-income wage earners.

CMHC, a Crown Corporation responsible for affordable housing, is promoting big cities. In a two-page ad in The Walrus magazine, they point to the advantages of living in denser communities:

“CMHC is also increasingly recognizing that intensification, or creating denser communities, can play a positive role in addressing not only housing affordability but other challenges — such as access to services, health status, and climate change — that factor into where people choose to live.”

Part of the appeal in moving out of a big city, it seems, is the seemingly lower rates of COVID-19 infection. But most infections in big cities have been among those working in high contact jobs, not home-work environments. And the Kamloops region is now experiencing a spike in infections.

It might seem like commute times are less in smaller cities but Vancouver isn’t much different than Kamloops. In Vancouver, the average commute time by car was 26 minutes last year. While I don’t have averages for Kamloops, most drivers had a commute time of 15 to 29 minutes according to Statistics Canada. And fifteen per cent of Kamloops drivers had commute times longer than 30 minutes.

Big cities attract medical talent to specialized clinics, making health services superior in dense urban centres. Michel Tremblay, VP at CMHC says:  “You simply can’t offer the same level of service in smaller centres; it is just not economically justifiable,”

Everyday needs such as groceries, libraries, and community support services are not only more numerous and varied in a big city, but also easier to get to by walking, cycling, or public transit. People prefer to go on foot, which is the basis for an inherently healthy, active approach to living, CMHC argues.

Personally, I’m not convinced. Despite the disadvantages of living in small cities, Kamloops was a big draw for me when I moved to here from Calgary. I like the slower pace of life and living close to nature.

But I wonder what motivates CMHC, a housing agency, to promote big cities? Is it because they are worried about a collapse in big city housing markets where they insure the mortgages?

Kamloops’ rental shortage is no accident

The shortage of affordable rental units in Kamloops is the result of deliberate government policy starting with the Mulroney Conservatives in the 1990s. Not just Kamloops but all Canada was affected.

CSI low-income housing in Kamloops

Governments stopped investment in affordable rental units for a number of reasons: strong wage growth from 1996 to 2006 coupled with declining interest rates and modest housing prices enticed more renters into home ownership.

But by the mid-2000s, stagnant wages and the growth of low paying jobs along with escalating housing prices pushed people into rentals.

Now the federal Liberals in cooperation with the B.C. government and CMHC have reversed that trend with an investment in affordable housing.

Our society, the Centre for Seniors Information in Kamloops, is one of the city’s non-profits involved in the construction of affordable housing (I am the president of the society). We are building a five story apartment with112 units, ranging from studio-sized, to two bedrooms on the site of the old Cineplex Odeon theatre on the corner of Sixth Avenue and Victoria Street.

Judging by the response that our housing manager is getting, the building could be full when it opens its doors in just over a year.

The drought in affordable housing has had a devastating effect on low and middle wage-earners.

Canada’s five most common occupations are low-paid and often not full-time. (admin assistants, retail salespersons, cashiers, food and kitchen helpers, food and beverage servers) representing 1.8 million workers or 12% of all jobs,

According to calculations done by David MacDonald, senior economist with the Canadian Centre for Policy Alternatives, wages don’t pay the rent any more. He has come up with a measure of how much wages are short, something he calls the “rental wage.”

He defines the rental wage as the amount you would have to earn so that no more than 30 per cent of your wages goes to rent. In Kamloops, the rental wage is $25 an hour for a two-bedroom apartment. That would leave a reasonable remainder of 70 per cent for groceries, medicine, clothing, fuel, etc.

Another way of measuring rent is by the number of hours you would have to work at a minimum wage of $12.65. In Kamloops, you would have to work 78 hours a week to pay for an affordable two-bedroom apartment.

I suspect that many Kamloopsians are doing without essentials because they pay more than 30 per cent of income for rent.

Between 1980 and 1993, 49% of all rentals built were affordable. Federal tax incentives and loan programs to private investors also played a pivotal role in apartment rental construction over that period.

Now, new federal programs plan to deliver more than 110,500 new units by 2027-28. Combined with other provincial and federal programs, 15,100 and new affordable units were committed in 2017-18 and 16,600 in 2018-19; almost as many as from 1970 and the early 1990s before the cuts.

Canadians desperately need affordable rentals. One-third of Canada’s 14 million households rent their homes.

Without deliberate government policy, private investors can’t deliver the housing needed.

Everybody wins. Mortgages are given specifically for low income rentals, developers build the units and employ trades people, people can afford rent with money left over, and non-profits like ours take ownership of the buildings to generate much needed revenue.