Redefining affordable.

An August 15, 2024, Capital Daily article gives voice to the views, among others, of Jack Sandor, a spokesman for Saanich-based housing advocacy group Homes for Living .

I take issue with two of Mr. Sandor's assertions reported in the article.

First, his opinion that "Managing to deliver any below-market units without actually spending any money [by extending low-interest loans to for-profit developers] is, in our view, an absolute win, even if the units delivered aren't much cheaper than market rents," assumes that loaning money to for-profit developers and not-for-profit providers results in housing that is priced the same. This is not true.

Not-for-profit providers build for purpose, meaning affordability, and therefore price what is built as close to what it cost to build and maintain it as possible. For-profit developers build for profit and therefore either defraud the system, as has been reported in numerous analyses of many projects, or play games with percentages and craft slogans to pass off unaffordable housing as "below market" or some other deceptive phrase that translates in plain English into "unaffordable," if not immediately, after a number of years.

Mr. Sandor also claims that a "filtering effect" of new, expensive units "freeing" older, less expensive units whose occupants move into the new units increases the availability of less expensive units. This is a fallacy.

Speculators are willing to, and do, pay a premium for older buildings containing "below-market" units in markets where new, increasingly unaffordable housing is built. This is because as rents on new units increase and average rent moves to the right, a speculator can perform cosmetic improvements on an older property and increase the rents on the units in it.

Speculators in an inflating asset environment also buy older, affordable housing, tear it down, and build expensive housing in its place. One example out of hundreds if not thousands across Canada is the Village Green complex at Menzies and Niagara in James Bay. Municipal Councils approve projects like this because their budgets derive from property taxes, and more expensive buildings pay more taxes than less expensive ones.

Finally, small holders, far from keeping rents static, are emboldened by escalating "market rate" rents to demand higher rents for their units, in some cases because they perceive an opportunity to increase their income, in others because maintenance costs increase due to the generally inflating wage-and-price economic environment that increasing house prices and increasing rents help fuel.