Defining affordable housing.

In a June 10, 2025, CBC News article, "Non-profits are racing to save affordable apartments. But critics say we should just build new ones," housing and policy expert Steve Pomeroy is quoted as saying:

"The phrase affordability can be defined in many different ways – there is a wide range between someone who can afford three or four hundred dollars a month to someone who can afford three thousand a month."

Mr. Pomeroy notes further that Statistics Canada deems affordable a rent or mortgage payment if it does not exceed 30 per cent of a household's gross income.

Not mentioned is that defining affordability in terms of the price any particular household pays for housing ignores that spending by millions of households beyond what it costs to build and maintain the housing they inhabit drains onto FIRE (Finance, Insurance, and Real Estate) sector balance sheets trillions of dollars that could otherwise be spent modernizing infrastructure, training skilled workers to reindustrialize Canada's economy, and improving access to healthcare, education, and other public services.

Defining housing affordability as a percentage of a household's gross income treats what it costs to build and maintain housing as irrelevant to its price and amounts to extortion: "Hand over a third of your income to finance capital or you will be denied a dwelling in which to reside."

The Gross Debt Service Ratio (GDS), generally taken to be about 30% of gross income, is an estimate of the maximum mortgage that a household is assumed to be able repay. The risk of nonrepayment across a lender's portfolio at this level of mortgagee indebtedness has historically been considered recoverable by banks and more recently by banking system regulators.

The purpose of the GDS is not to make housing "affordable" but to maximize the price a unit of housing can sell or rent for at an acceptable level of risk of nonrepayment to a holder, bank, or other lender.

From another perspective – the macroeconomic – housing affordability is a measure of the overhead introduced into an economy to house the population it supports. In these terms, the affordability of a unit of housing is a function not of the maximum a holder or lender succeeds in demanding for it but the sum of the costs to build and maintain it.

Many of these costs are known, and if it is on the basis of minimizing the cost of building and maintaining housing that affordability is measured, then housing affordability is quantifiable.

Labour costs, including for architectural, engineering, project management, excavation, and other services, are generally publicly known and fixed for periods usually measured in years. Materials, such as lumber, rebar, concrete, glass, hardware, and other fixtures vary more often depending on market conditions but are still predictable on at a least a quarterly basis and in some cases for many months.

Other costs are far more difficult to quantify, predict, or control.

Land, for example, a key target of financial asset speculation, accounts in Vancouver for almost 80% of the price of a free-standing house; this means that "for every million dollars of a [house] you buy in Vancouver, you can expect about $200,000 worth of house."

Financing costs, which strictly speaking are not material inputs and depend on rentiers' demands for "returns," can not easily be predicted because they are set by speculators trading in financial asset markets and change for all intent and purposes instantaneously.

Markup, finally, to arrive at the price demanded from an end-user in the for-profit world is completely arbitrary and can therefore be quantified only after the fact.

In BC, for example, operating profit margin for "Lessors of residential buildings and dwellings (except social housing projects)" has increased steadily from 41.3% in 2012 ($2.2 billion) to 47.2% ($4.6 billion) in 2022 over the time span available for this particular data point.

Since in the not-for-profit world markup is zero and financing consists of no- or low-interest government loans, rent on a "market rate" rental housing unit, all other costs being equal, will always be higher than that on a not-for-profit unit.

Free-market fundamentalists argue that increasing the "supply" of "market rate" rental housing units will reduce rents, a position that rests on two demonstrably false assumptions: that for-profit holders and not-for-profit entities price rents on the same basis and that competition for tenants, not the willingness of "investors" to pay top dollar to acquire income-generating properties, drives prices in for-profit rental housing markets.

Rents for existing and newly constructed units are influenced by many factors, some of which apply specifically to new units, some to existing units, and some to both.

Rents on existing rental units depend primarily on who owns and operates them, which the CBC News article referenced above makes abundantly clear.

Large aggregators holding thousands of rental housing units exercise monopoly pricing power, not because they own every unit in any particular rental housing market (they do not) but because small holders, emboldened by rents that deep-pocketed aggregators demand, treat those prices as benchmarks and demand "market rate" for the properties they hold.

YieldStar, a rental price-fixing software being investigated in the U.S. and Canada for facilitating "anti-competitive behaviour among landlords and driving up prices for tenants," is "an algorithmic software owned by Texas-based RealPage Inc. that generates apartment pricing recommendations for landlords by reviewing market surveys, unit types, pricing categories and availability" and "leveraging real-time lease-transaction data."

Housing prices are seldom discussed in macroeconomic terms because finance capital, by providing opportunities for small holders to participate in extracting unearned income from housing, has normalized maximizing, not minimizing, housing prices.

These opportunities include: access to sufficient credit by households who meet particular financial criteria to be "in the housing market"; access by individuals and other entities to financing to repurpose as long- and short-term rentals houses, condos, and townhouses that were proposed, approved, and built with the assumption they would be held not by "investors" but by their occupants; and access by individuals to financial instruments such as mortgage backed securities (MBSs) or shares in real estate investment trusts (REITs) that facilitate exploitation of income-producing real estate without directly owning property.

To increase the affordability of rental housing in Canada, affordable – meaning publicly-financed, not-for-profit – rental housing should be built. Note that public money loaned to build affordable housing is repaid in the form of monthly rent by the tenants who occupy it and can therefore be loaned again in perpetuity.