Despite Toronto’s red-hot market, Rob Carrick of The Globe and Mail says one of the best ways to build wealth in 2012 is to avoid “drinking the housing market Kool-Aid”. Among his other tips: “Explore your inner renter” (Gen X and Gen Y, and Boomer editions). Carrick is one of many experts advocating renting over housing as the market destabilizes. US apartment vacancies hit a ten-year low in December at 5.2 percent as rising foreclosures, tighter mortgage lending standards, and low housing starts made rental housing the best-performing segment of commercial real estate for two straight years. In addition to traditional low-vacancy locales like New York City, low vacancy rates abound in New Haven, CT, Minneapolis, MN, Portland, OR, and San Jose, CA; rents rose the quickest in Chattanooga, TN and Austin, TX. Canadians, holding on to the dream of homeownership with the grim desperation of Americans before the mortgage crisis, remain unmoved.

Last month, The IMF (that’s the International Monetary Fund, not the Impossible Missions Force) called for a review of the rules that govern Canada Mortgage and Housing Corporation, one of the largest financial institutions in the country, which operates without formal oversight. The IMF suggested the crown corporation needed stronger risk management because CMHC backs mortgages with less than 20% down through mortgage insurance, Canadians have record levels of household debt, and some cities have housing-bubble prices. With household debt at a record 150 percent of disposable income, the IMF warned that a drop in housing prices would be a blow to indebted consumers. The Canadian economy, which grew by 3.2 percent amid global financial meltdowns, is expected to weaken this year.

With the country in its 13th year of rising home prices, experts have been predicting a price adjustment for many years. CMHC has taken several steps to tighten mortgage lending and last year the federal government made changes to the National Housing Act to compensate the government for the risk it is taking through CMHC’s mortgage insurance. With the US housing market still in recovery and the Chinese government taking steps to prevent a housing collapse this year, Canada is poised for a tumultuous 2012.

Recently, journalist Neal Peirce advocated the return of rooming houses to address the need for smaller, more affordable units for young people, who have been adversely affected by the US recession (“Bring back the rooming house?” citiwire.net, November 12, 2011). Like other notable writers (Edward Glaeser, Richard Florida, Mark Hinshaw, Joanna Pachner), Peirce argues that it’s time to turn a new page on the postwar suburban single-family home:

“Unquestionably, tens of millions of oncoming youth will disconnect from the American vision of home as a “homestead”–the self-contained units of our American forbears, translated since World War II by a suburban home occupying its own lot.”  Neal Peirce, Washington Post Writers Group (citiwire.net)

Among the reasons young people will need new, affordable housing options: lower salaries, lower employment rates, delayed marriage resulting in more single-person households, a desire to live in mixed-use neighbourhoods near transit, and lower car ownership (does this sound familiar?) In Canada, the rising demographics (youth and young adults, immigrants, single-person and single-parent households, seniors) would probably jump at the chance to live in rooming houses, worker housing or affordable rental units, considering housing prices across the country. For example, where do you live if you’re an immigrant in Canada on a temporary worker permit? Your only real choice is renting a market-rate apartment, likely sharing with people you scarcely know. Downsizing senior? Good luck finding a condo that costs less than your house once maintenance fees are added in. Young adult working in your first job? You’ll be forking over about one-third of your salary to rent, even if you live in a mid-sized city.

Hinshaw, a Seattle-based architect and planner, argues that the recession has forced cities to think about Smart Growth rather than rushing forward into new development faster than public investments can be made (“Recession is producing a needed reset on land use”, www.crosscut.com, September 30, 2011). Now, cities and counties have the time to decide how and where to move forward. Some areas where local governments have made progress, according to Hinshaw: economic development through the construction of shared public spaces, redesigning streets to encourage different travel modes, and the development of rental housing.

“For far too long, elected officials and citizen groups have treated apartment developments like a pariah, relegating them to noisy arterial streets or slamming them behind strip malls. It’s as if only decent folk are those who own single family homes. If we learned anything from the past five years it is that the American ideal of home ownership has been cruelly oversold.”  Mark Hinshaw, www.crosscut.com

Changing development conditions (stricter lending standards, foreclosures, and a rapidly growing rental market) have made investing in multi-family rental housing a safe move for developers who, just a couple of years ago, would have built high-rise condos. Increased demand for rental units has resulted in rent increases in many cities that can provide developers a reasonable return on their investments (“Demand for Denver apartments exceeds supply”, November 29, 2011, NPR). NPR reports that this could be a lasting trend; one that harkens back to an era of when renting was more common than owning in many countries. In Canada, for example, pressing postwar housing needs were met through a boom in apartment construction during the 1950s.

If only Canadian provincial and federal governments would enable developers to build rental housing, rooming houses, granny flats and other housing types that would provide alternatives for various demographic and income groups. We’d have to turn back the clock to the 1970s, when experiments like co-operative housing became popular in Canada as foreclosures and interest rates rose. It seems that during economic crises, homeownership loses its rosy glow. Renting, co-housing, co-operatives, rooming houses, and rent subsidies make more sense to policy makers, developers, and planners during economic downturns, when few can afford to buy and governments are too poor to subsidize ownership. And yet, as all the authors cited in this article point out, North Americans still display a slavish dedication to the “dream of homeownership”; most have long forgotten that the “dream” was enabled by dirt-cheap postwar mortgages, artificially-low interest rates and government incentives for first-time homebuyers. If the current rental housing trend persists for more than five years in the US, and Canada finally passes its national affordable housing strategy, we might see the beginnings of a paradigm shift to rival the one that gave us single-family suburban homeownership in the first place.

SCARP professor Leonie Sandercock has been working with First Nations communities for several years. Her most recent work, the documentary film Finding Our Way, highlighted the decades of turmoil faced within the Ts’il Kaz Koh First Nation (Burns Lake Band), the Cheslatta Carrier Band, and the Village of Burns Lake, BC. Dr. Sandercock has been instrumental in working with the First Nations House of Learning and members of the Musqueam, Carrier, Nisga’a and Cree Métis Nations to develop the Indigenous Planning concentration at SCARP. Professor Ted Jojola of the University of New Mexico Community and Regional Planning program also advised UBC on the creation of the program; the planning program at the UNM School of Architecture and Planning has an Indigenous Planning component and hosts an Indigenous Architecture lecture series. Dr. Jojola visited UBC recently for an “Indigenous Planning Teach-In” hosted by SCARP and the First Nations House of Learning. At this event the Tsawwassen First Nation, Musqueam First Nation and Westbank First Nation presented their community plans, highlighting public participation processes and the role of external planners as consultants in plan development. Several non-Aboriginal professionals specializing in law, governance, community economic development, and cross-cultural planning spoke about their work with Aboriginal communities across Canada. (Watch a video about the development of the degree, featuring scenes from the Teach-In, here.)

There have been some fantastic examples of Aboriginal community planning in recent years: the Seabird Island First Nation in BC built its own housing in partnership with Canada Mortgage and Housing Corporation (CMHC), Indian and Northern Affairs Canada (INAC), National Resources Canada (NRCan), and 25 building industry and community groups in 2003-2004. They later launched the Seabird Sustainable Community Project to provide “information to First Nations and other communities across Canada solve housing challenges in an environmentally sensitive, healthy, energy-efficient and affordable way.” The Ty-Histanis Neighbourhood Development, about 10km from Tofino, BC, is a new community being developed by the Tla-o-qui-aht First Nations (TFN) in partnership with CMHC and NRCan (ecoAction and EQuilibrium Communities Initiative). It is applies the TFN concept of Hishuk nish tsawaak (all is one), through practical, sustainable community development principles. The new community will include 171 single-detached units, 32 duplex units and a 12-unit elders’ complex; a school, health clinic, pharmacy, recreation centre, youth centre and elder centre are all located in the core area. The project target is a 50 percent reduction in greenhouse gases, mostly through building and energy efficiency. Forty per cent of the development site will remain undisturbed protected habitat, bogs will be used for natural water retention, and walking will be encouraged through footpaths and the mixed-use design of the site.

Clearly, there are many opportunities for planners in Aboriginal communities, whether they are local, community-based planners or  external consultants in the planning process. SCARP’s new Indigenous Planning concentration will consist of five core courses covering law and governance, community economic development, regional sustainability planning, cross-cultural skills, and indigenous planning as an emerging paradigm. It will also feature a one-year practicum working in a First Nations community in BC and an optional internship with a First Nations community in the Lower Mainland. It is hoped that graduates (both Aboriginal and non-Aboriginal) will go on to ensure immediate infrastructure concerns are addressed, help communities across the country plan for their futures and, over time, prevent crises like Attawapiskat.

This week, FCM and the Canadian Urban Transit Association met with members of the Standing Committee on Transport, Infrastructure and Communities to discuss the idea of a National Public Transit Strategy. They argued that fast and efficient transportation connections through public transit are crucial to strengthening the economy. MP Olivia Chow, NDP critic for transport and infrastructure, introduced a private member’s bill on September 30th (Bill C-615, An Act to Create a National Public Transit Strategy) calling for the federal government to work with municipalities in the creation of a national transit strategy and create a stable source of funding for municipalities. She noted the economic benefits and the disadvantages of long commute times: Canada’s big city mayors have been pushing for a national strategy since 2007. In the CBC’s unofficial poll on this topic, 88% of readers agreed that Canada needs a national transit strategy. I needn’t go into this issue here in Vancouver: this week, an Angus Reid poll of 504 Vancouver residents showed that 85% want improvements to transit service and 75% felt those improvements should be funded by the provincial government. As I wrote in my last post, the Mayors’ Council on Regional Transportation votes today on the adoption of the Moving Forward strategic plan, which includes a 2% hike in property taxes and the beginnings of a new provincial-municipal funding agreement to help pay for transit improvements.

It looks like public transit is becoming a hot issue among cities of all sizes. The Regional Municipal of Waterloo is in the process of constructing an LRT line (currently in the planning process) funded by the provincial and federal governments. A strong motivation for the Region, which includes the municipalities of Kitchener, Cambridge and Waterloo, was increased immigration to the area, a point they raised at this year’s Metropolis Conference on Immigration and Migration in Vancouver. It’s very humbling to see the recommendations I made in my Ph.D. dissertation being echoed at the municipal, regional and federal levels. Considering the numbers of immigrants settling in Canadian cities every year (approximately 250,000 Permanent Residents and 200,000 Temporary Workers), governments need to do a better job of helping them integrate, and that includes more housing and transportation options. Maybe after decades of research and policy innovation in municipalities, we’re finally reaching the tipping point: let’s keep a close watch on Bill C-615 and Bill C-304, the bill creating a national affordable housing strategy, which passed third reading in the House of Commons last year and is now under Senate consideration.

Until now, the city has remained in limbo in terms of building affordable housing, despite millions of dollars in contributions to its Affordable Housing Fund through density bonusing and a 20% social housing requirement for major rezonings of lands to multiunit residential use. Leaving construction of affordable homes to private developers hasn’t worked, so the city will partner with developers by providing grants and land in exchange for social and supportive units. The city will also lever its land resources and capital projects against funding from provincial and federal governments. The plan also calls for the city to approve more laneway housing and secondary suites. New affordable rental units have been achieved recently through the City’s Short Term Incentives for Rental Housing (STIR) initiative.

Like many municipalities tired of playing chicken with upper levels of government, Vancouver now has its foot firmly on the accelerator. The housing affordability crisis in Canada has reached ridiculous proportions, but we’re still working on the national affordable housing strategy (Bill-C-304), which passed third reading in the House of Commons and is now under Senate consideration. Industry warnings of a housing market collapse have been circulated. And yet, the price of renting has increased much slower than the price of ownership over the past twenty years, as Canadian Business illustrated recently (“Rental Complex”, July 14, 2011). This article, the latest in a series of pieces in the popular press exploring the follies of ownership in today’s market, exposes the increasingly doomed love affair Canadians seem to have with homeownership:

“With widespread warnings that we’re approaching the peak of the housing boom, with Canadians more indebted than ever…why aren’t more of us re-examining the math? The reasons are cultural and emotional, backed by ill-conceived public policy. This Canadian Dream is an expensive delusion. There’s never been a better time to rent.” Joanna Pachner, Canadian Business

Along with increased acceptance of renting, the fallout from the US mortgage crisis includes recognition that the suburban, single-family home is no longer in huge demand: households without kids will increase by 90% from 2010 to 2020, according to Arthur Nelson, professor of planning at the University of Utah. This means far fewer buyers than sellers for single-family housing and an increased demand for multi-family and rental housing. As demographics and attitudes towards housing shift, the City of Vancouver is once again on the leading edge of policy innovation, though the plan is not without its critics. Hopefully elements of the plan will be evaluated throughout implementation, and discussed in other municipalities, which could help accelerate Bill C-304: the absence of a national affordable housing strategy has been holding up programs and funding between all three levels of government.

I realize this is an unusual stance to take in Canada: voter apathy is said to run rampant here (voter turnout is usually between 70 and 80 percent of registered voters, which represents 40 to 50 percent of the country’s population). Moreover, it’s an unusual stance for someone who supports the NDP. Given the fact that cities never fare well in federal elections due to the distribution of seats across Canada, and the parliamentary first-past-the-post system, I will probably never see an NDP Prime Minister. Like many Canadians supporting the left, I’ve become resigned to the fact that I probably won’t even see an NDP MP elected in my riding. When I lived in Ottawa, it was in Ottawa-Vanier, which has been Liberal since its establishment as a federal riding in 1935. In Vancouver, the two ridings I’ve lived in have also swung Liberal; this year, I’m in Hedy Fry‘s riding (she’s been in power since 1993). So am I just “wasting” my vote?

I was raised by immigrants from a strongly democratic country: Indian citizens (both men and women) have had the vote since 1935. Influenced by British rule, India shares the Canadian experiences of the first-past-the-post system and minority governments. Yet despite acknowledged corruption, years of coalition governments, and parties that have changed their political leanings over the years, voter turnout in India has remained between 55 and 60 percent for half a century, without the declines that most Western countries have experienced. Probably because I have parents from the world’s most populous democracy, I voted in my first federal election when I was 19. I have felt the powerful force of democracy most strongly when voting in federal and provincial elections.

Government, particularly at the federal and provincial levels, plays a major role in making our lives better or worse. I’m going out on a limb here: urban planners have long espoused the values of the local community. Many planners believe that it is only through local initiatives, community-led efforts, and intuitive knowledge of neighbourhoods can our cities become healthier, more environmentally conscious, and more economically robust. But here’s the thing: federal and provincial jurisdictions cover a lot of what happens in cities. We have a direct say in who is elected to federal government, something (lest we forget) citizens of other countries would love to have. And because of our parliamentary system, a vote for our local Member of Parliament contributes to federal leadership.

How does your MP affect what happens in your community? And how does voting in federal elections impact local issues? Let’s look at three issues: affordable housing, public transit, and immigration. All three are issues that cities large and small have struggled with for many years–and there’s only so much they can do on their own.

Affordable housing

Most municipal governments have acknowleged that their cities have high rents and low vacancy rates. They have limited or banned the conversion of rental housing to condominiums. They have started affordable housing funds. They have begun building smaller household types: condos, townhouses, granny flats. They have legalized secondary suites to help create lower-rent apartments. In short, cities have done just about everything they can to encourage the construction of affordable housing and protect what they do have. If you think this is just a big city problem, think again: even the City of Kelowna (with a population just over 100,000) has an affordable housing fund. The problem is so serious that in 2009, the United Nations declared that Canada had a housing crisis. But the federal government developed the National Housing Act, and it was changes to the federal Income Tax Act in 1972 that eliminated tax incentives for developing rental housing. In 1993, the feds (Liberals) delegated their authority over housing to the provinces and municipalities, but did not dedicate any funding. So cities remain in limbo while Bill C-304, An Act to ensure secure, adequate, accessible and affordable housing for Canadians, makes achingly slow progress through the House and the Senate (it’s been on the books in one form or another since 2004, and been re-introduced after each election and proroguing of Parliament). Bill C-304 could be a major breakthrough, if it ever becomes law: it will enable provinces and municipalities to work with the federal government to develop affordable housing programs that meet local needs. (And the best part, local readers: the bill was introduced by long-time Vancouver East MP Libby Davies (NDP).

Public transit

Municipalities and regions have the responsibility to provide public transportation, which is funded in part by the provincial and federal governments. Cities large and small operate public transit services across Canada, and many of them have experienced increases in ridership throughout the past 15 years. But there is no national transit act. This means that public transit organizations do not have a steady source of support for capital projects or operations. Their operating costs are partly covered by fees, local taxes, and other mechanisms, depending on the municipality. Capital costs require outside help: each time a city wants to build a new LRT line, expand its fleet of buses, or build some new stations along an existing line, it must apply to the provincial and federal governments for funding. Success depends on the identity and priorities of the provincial and federal Ministers of Transportation. In Vancouver, while TransLink strongly supported construction of the Evergreen Line (Coquitlam) and the UBC Line (Vancouver), then-Minister Kevin Falcon preferred the Canada Line (Vancouver-Richmond). Toronto Mayor Rob Ford just convinced Premier Dalton McGuinty to approve one future subway line instead of four LRT lines, after the City had spent years begging for money to fund transit improvements across the inner suburbs. The Regional Municipality of Waterloo just got provincial funding for an LRT line linking Waterloo, Kitchener and Cambridge. Public transit in Canadian municipalities was identified as a major issue early on in the federal election, and yet not a single federal leader has discussed it at this point. (Note: the Pembina Institute has info on how the parties stand on a variety of environmental issues, including transit). Meanwhile at the provincial level, the BC NDP leadership race has featured several arguments for better public transit (notably from candidates Adrian Dix and Mike Farnworth).

Immigration

Canadian cities grow substantially from immigration, and most municipalities welcome new immigrants, who contribute to their economic and social development. Immigrants rent housing in local neighbourhoods, find jobs locally, and enroll their children in local schools. In a country with low birth rates, immigration accounts for the majority of population growth. And while today’s immigrants are increasingly drawn to Toronto, Vancouver, and Montreal, smaller cities like Kelowna and Cambridge accommodate substantial numbers of immigrants each year. But immigration is a federal mandate: the feds decide what types of immigrants enter the country (Skilled Workers, Temporary Workers, Assisted Relatives) and how many. Since the Conservatives have  been in power, Temporary Worker permits (for jobs as varied as Starbucks barista and oil sands worker) have risen steadily to the point where there are about a quarter million permits issued each year; on the other hand, the other categories have remained stagnant. Provinces also have a strong say, particularly through the Provincial Nominees program. Several notable partnerships between all three levels of government, such as the Canada-Ontario-Toronto Memorandum of Understanding, have helped fund and operate immigrant settlement programs, which cover a range of settlement issues like finding jobs, getting foreign credentials recognized through bridging programs, and learning English. These programs are operated by local non-profits and community organizations, but could not exist without federal and provincial support. Certain cities, like Fort McMurray, Alberta, have been seriously affected by changes in immigration policy (in their case, a high number of Temporary Workers settling in a city with high rents and a low rental vacancy rate).

Vote locally-federally

So even if you’re an “act local” type who thinks that community and municipal agendas are all that matter, it pays to vote provincially and federally. Cities can’t do everything, and the beauty of our system (one of the few advantages, really) is that you can vote locally for a federal result. Your MP has a local office where you can find out what they’ve done in your community (click here to find out what riding you’re in). Have they voted for or against initiatives that may have benefitted your neighbourhood, like settlement programs for new immigrants? What is your MP’s stance on key issues that you value, like public transit? (Click here to see how the federal parties measure up on major issues) Do you feel they represent the needs of your community (if you live in Fort McMurray, does your MP support more rights for Temporary Workers?) Does your MP go to community events and interact with local people? Who is running against your MP in the federal election? Do the other candidates make good points? With today’s technology, you can follow the candidates on Twitter, YouTube and Facebook. The Globe and Mail, National Post, CTV, CBC, and your local newspapers all have lots of articles and information on your riding and your candidates (click here for the Georgia Straight‘s view on Vancouver candidates). Elections Canada has voting information in 27 languages and a web feature on youth voting. Don’t complain about lack of time: there’s no need to spend any more time or effort on this than you would spend checking out the latest videos on YouTube…unless you find the issues interesting.

Take a page from Rick Mercer’s book and spend 20 minutes “doing something young people all over the world are dying to do: vote”. All you need is two pieces of identification with your name and address on them: trust me, I’ve moved across the country and had to do this many, many times. Even a piece of mail (like a hydro bill) will do for the second piece of ID. Students, you can vote in the riding where you live by taking in ID to the polling station–it’s that easy. All your friends are doing it! (click here to see vote mobs from campuses across the country).

Don’t feel like your vote is “wasted”, because you never know what can happen. Hey, the first time I voted in a federal election, the Tories suffered a crushing defeat and we ended 9 long years of Mulroney–I mean Conservative rule. The first time I voted provincially, the unthinkable happened: the NDP was elected in Ontario. Even if you live in a federal riding where your party has no hope of winning (like me), your vote matters. In the 2004 federal election, in the Liberal bastion of Ottawa-Vanier, 5 percent of voters supported the Green Party. Although the Greens had no possible chance of winning, their low level of support across the country (4.3 percent) raised the party to federal status, giving it federal funding for future elections. There are always close calls in ridings: when the election was called this year, the Globe and Mail featured a list of 50 ridings to watch across Canada where it’s a tight race (Vancouver Quadra voters, cast your ballots; Liberal Joyce Murray only won by 150 votes back in 2006). Left-thinking young residents are changing traditionally conservative values in suburbs across the country. So regardless of where you live or your political stripe, your vote does matter. (That said, if all you want is to prevent a Harper majority, Project Democracy tells you which party is best positioned to defeat the Conservative in your riding.) If you care about what happens in your city, you need to vote in this year’s federal election.

After a few years passing through the first and second reading, the bill finally reached third reading debate in November. Most of the debate was in favour of the bill. Following Parliamentary procedure, on November 24th it went back to the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities (HUMA) for an amendment requested by the Bloc Québecois. It then went back to the House for its third reading. It passed in the House and proceeded to the Senate for consideration.

Am I the only one who thinks it’s crazy that it took a year to get from second reading to the debates preceding third reading? And that this bill, in one form or another, lingered in the Parliamentary process for over four years? I realize Harper prorogued government a couple of times, but still…that only cost us a few months. We need this legislation badly. It is interesting how other governmental initiatives, like proroguing government last winter and cancelling the long-form Census this summer, seem to occur quickly and with devastating consequences for Canadians (the Liberals’ move to reinstate the long-form Census–introduced on September 30th–will take far longer). How is it that the American government has elected a new President, had an entire housing crisis, introduced funding to support affordable rental housing, and introduced its first-ever health care legislation in the time it’s taken us to pass a single bill in the House of Commons?

Florida’s map shows the same differentiation that David Hulchanski did three years ago in his excellent report Toronto divided: A tale of three cities. This report received a lot of media attention, in part because its complexity and rigor left little doubt in its findings: Hulchanski, Associate Director (Research) of CUCS, carefully mapped many different characteristics using Census data spanning a thirty-year period, including income, housing tenure, transit use, ethnicity, immigration status, household size, and employment. The carefully-worded report raised some red flags: the decline of the middle class, the decrease in housing choices for low-income households, the shift of poor neighbourhoods from the inner city to the outer suburbs.

It’s common to say that people “choose” their neighbourhoods, but it’s money that buys choice. Many people in Toronto have little money and thus few choices…When most of the city is in a middle-income range, city residents can generally afford what the market has to offer…It is only when the percentage of those in the middle declined that we began to hear about “housing affordability” problems. If the incomes of a significant share of people in a city fall relative to the middle, the gap between rich and poor widens. Those closer to the bottom are more numerous and find it increasingly difficult to afford the largest single item in their budget–housing (either in mortgage payments or rent).   J. David Hulchanski, Associate Director (Research), CUCS

Hulchanski, who has written volumes about affordable housing policy in Canada, wrote persuasively of the policy options that can help reverse these trends, and many writers echoed his concerns. Florida himself wrote an article in response in the Globe and Mail.

Florida, on the less thorough end of the spectrum, mapped “creative class”, “service class”, and “working class” occupations in the Toronto CMA. The Geography of Toronto’s Service Class, published by the Martin Prosperity Institute at U of T, shows how the “classes” were defined. Artists, doctors, teachers, managers, architects and computer programmers were all considered “creative class”. Cashiers, salespeople, police officers, food preparers, medical assistants, and administrative assistants were “service class”. And miners, welders, carpenters, truck drivers, production workers, and construction workers were in the “working class.” If you know Florida’s work, you know that he is preoccupied with class and that he tends to use loaded terms; “class” is not a casually-used word in the Canadian research arena.

The kind of work people do is the hallmark of social-economic class and the map shows a city where the dominant classes occupy, literally, two different social, economic, and geographic spaces.  Richard Florida, www.creativeclass.com

Map from www.creativeclass.com

It is true that Toronto’s postindustrial shift has led to a decrease in manufacturing jobs, suburbanization of workplaces, concentration of high-paying service-sector work in the inner city, and gentrification around subway lines (all of which Hulchanski pointed out earlier, not to mention Tom Hutton and David Ley). But Florida’s definitions are directly responsible for his findings: how is a doctor in the “creative class”? A manager or computer programmer? And how do police offers and medical assistants get grouped in with cashiers and administrative assistants? It seems as though he has just mapped by salary level, not occupational category…in which case his results aren’t surprising.

Research involving income, occupation, ethnicity, and polarization need to be carefully articulated and worded to avoid clichés like “upper class people live in desirable areas while lower class people do not.” There is much more depth to the story than Florida lets on, although he is fairly well-versed in housing issues. The recently-released report on Canada’s Housing Bubble, produced by the Canadian Centre for Policy Alternatives, outlines how housing prices have risen faster than inflation, household incomes, and economic growth. Echoing Edward Jones’ report earlier this year (see my previous post), CCPA says that the housing market is “more unstable than it has been in over a generation.” All major cities in Canada are now experiencing housing price increases above their historical range, meaning the time is ripe for a crash. For Florida, who advocates the creative class and advises cities on how to bring these types to their cities, real estate is crucial: he has written about the need for more rental housing, which in his opinion keeps people mobile and able to search for employment in a wider range of locations. His recent publication on Toronto’s class divide has more to do with the city’s political landscape than housing, of course, and it has served its purpose of being provocative.

In Toronto, new home sales in June 2010 were 43% lower than they were twelve months earlier, and July was the third consecutive month of decreasing sales. Housing starts in June were 15% lower than they were in May. But not much hand-wringing is going along with these trends: many experts, like Toronto Real Estate Board president Bill Johnson, say the market “has become more balanced.” After all, average prices are still 6% higher than they were last year, and most of the decline seems to be in first-time buyers. Higher-than-average buying in the first quarter of 2010 means that total sales this year are still up by 11%.

Vancouver has also seen record drops from last year, a 45% decline from last July and the third-lowest July in a decade. But again, this had little effect on prices: the average house price in Vancouver fell by just 0.2% to $793,193. Real estate agents estimate that about a third of the buyers are first-time buyers.

Outside of the major centers, where listings were lower and the market appears to be cooling, there are plenty of houses for sale in small- to mid-sized cities. Nevertheless, both economists and the general public are becoming concerned about the state of the housing market and economic instability, as well they should be. I’ve written before on the instability of housing as an investment and the major government supports that encourage the vast majority of people to believe homeownership is the only option. Is this really the only way to house our population? More specifically, should it be the only housing alternative to receive such funding and policy support? Although there has been some tightening of lending policy and mortgage availability, there are still a lot of policies and incentives supporting homeownership. What about using some of this leverage to support rental, co-op and other types of housing?

“Why doesn’t the president of the United States ever get up and say, ‘You can be a full-fledged American citizen and rent an apartment — it’s OK.” David Wessel, economics editor, Wall Street Journal

Americans now pay more for housing than ever before, according to a report by Harvard’s Joint Centre for Housing Studies. In its annual report The State of the Nation’s Housing 2010, researchers write that 18.6 million Americans spend more than half their incomes on housing, up from 13.8% in 2001. While this figure includes both owners and renters, 45.1% of renters are in the bottom income quartile. Homeownership is at a historical low, household income barely increased in the past decade, and rental vacancies are at a historical high. No wonder the authors are calling calling the first ten years of the 2000′s “the lost decade.” But housing “unaffordability” isn’t anything new, nor are our solutions to the problem.

While the Harvard researchers blame falling wages and high unemployment (9.9% in April 2010), high rental vacancy rates and low supply of the most affordable and smallest units are also major issues. Fewer homes were built in the US in 2009 than in any year since WWII, particularly multifamily homes: 62% fewer multifamily developments were begun in 2009 than in 2008. Demolition and conversion of existing low-income rental units is also a major cause for concern. Lower immigration rates are also taking their toll: there was a sharper decline in the number of foreign-born households under the age of 35 than in native-born households from 2009 to 2010. Minority households have been hit hard by the mortgage crisis. In 2009, minorities accounted for 37 percent of householders aged 25–44 and 39 percent of those under age 25. The minority homeownership rate is still expected to increase by 2020, despite lower incomes among foreign-born and minority households and lower immigration rates due to the economic recession.

Some progress has been made in terms of rental housing: rental conversions from foreclosed housing has already been done in many cities, but Housing and Urban Development (HUD) considering introducing market-rental units into its publicly-funded affordable housing developments in order to help pay for much-needed maintenance on the buildings. And the pro-homeownership policies keep coming, including the renewal of the federal tax credit for first-time homebuyers (and its expansion to repeat homebuyers) and Federal Reserve purchases of mortgage-backed securities to help keep interest rates low. But with the expiration of the tax credit program in April 2010, Harvard’s Joint Centre for Housing Studies warns that any good news may not be long-lasting. The problem, they say, is that there is unusually low demand for new homes. The ratio of housing and transportation costs to income has risen steadily over the past fifty years (see Figure 30 and 31 of the report).

As I’ve written before, without massive government programs to support homeownership and assistance for low-income renters, housing has ever been a good deal. Check out the CBC’s digital archives on the development of suburbs. In a video clip from 1954, the narrator explains how expensive homes are for the average person and how far people have to live (up to 50 miles from the city center) to afford them. In 1953, the average Canadian earned $971/month before taxes. Don Mills, the first suburb in Canada, had house prices beginning at $11,000 all the way up to $100,000. Rental rates at that time were $300/month for the average apartment in Toronto (already hovering around 30% of the average Canadian’s income, the level most housing authorities classify as affordable) and $100/month for a basic three-bedroom in the city centre. In the new market-rate high-rise apartment complexes in the suburbs of Toronto, apartments went for less than $100/month. In Montreal, then the largest city in the country, 70% of homes were apartments and the going rent was $70-100/month, only slightly more than the rents in Winnipeg ($80/month). A house in Vancouver was $2,000 cheaper than in the east at the time. While 1950s housing solutions (demolition of existing older housing to make room for low-income public housing developments in city centres, massive concrete high-rises in the suburbs) may have been questionable, they were quite desirable at the time: the wait for affordable housing, like the still-under-construction Regent Park) was 2 years for a $29-90/month rent-geared-to-income apartment. The average rent at Shannon Heights, a 1950s assisted rental development in Halifax, was only $90/month. Commuting to the city became a new drag, and buses quickly replaced streetcars and trains, steps were taken to make commuting more enjoyable. A 1963 video clip records a housewife saying that the lack of transportation options in the suburbs mean she spends considerable time driving her teenagers around; another says her family moved to the suburbs because that’s where they could get a mortgage.

Whatever housing problems we face today, whether it’s affordability or commute distance, they’re nothing new. Solutions to these problems, like artificially stimulating homeownership through tax incentives and policies, are likewise nothing new; housing affordability problems persist. Recently, researchers at the The New York Times compared the cost of living in a suburban house to an urban apartment in the New York City metro area, and found that the suburban option cost a surprising 18% more (“High-Rise, or House with Yard?” July 2, 2010): the big difference was the higher property taxes, and their comparison didn’t include the cost of home repairs. Even the The Wall Street Journal is publishing articles saying homeownership doesn’t work (“Is the Homeownership System Broken?”, June 22, 2010): WSJ economics editor David Wessel is quoted as saying, “So now we have a system where a lot of people own homes but don’t have any equity in them, which means you don’t get any of the virtues of investing in them. And the government has been forced to take over the mortgage financing system, which suggests that it wasn’t a very strong one if the government has to take it over.” This is quite a turn of events. Could North Americans be forging a new path in housing policy?