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Affordable Housing is Really Unaffordable

Shane Wenzel

You will recall during the recent federal election all of the parties attempted to outdo each other by presenting as one of their key election promises to build millions of affordable homes over the next few years. If the elected Liberal Party keeps all their other election promises and platforms that affect housing costs, there will never be an opportunity for owning affordable homes anywhere in Canada in the future.

In addition, unless local governments make an effort to connect the suburb communities that have evolved due to new family formations with their inner cities, they will miss out on turning the suburbs into part of a unified economic base through a tax-sharing plan. Notably, on average, about 40 per cent of jobs are located 10 miles and beyond from the core downtown business district.

Promises to build millions of more houses make it seem as though politicians are fighting hard to keep the dream of home ownership alive, when in reality that is not a meaningful goal. There is no easy way to fix the current housing crisis in Canada for a variety of reasons. The reference is more appropriately “unaffordable housing.”

Take Calgary’s local market for example. Just gaining approval for development can range from five to seven years. However, this process can be sped up somewhat by the developer paying upfront costs up to $1.5 million for the City to dedicate staff to shorten those processes. This is followed by another three years to develop and install the infrastructure in readiness for any housing. Readiness for occupancy can then possibly be as far out as 10 years from beginning to build out stage. Also unknown to the public is that all servicing infrastructure, including sanitary, water, storm servicing, sidewalks, roads, local pathways, and parks are front-funded by the developer – not the City of Calgary. In addition are all the fees for development and building permits.

With no certainty to investors from a business perspective from day one of planning to approval to proceed, it is difficult to attract and keep investors with the costs increasing over the process. As a result, over the past 10 years we have seen capital understandably leave the city for elsewhere.

While onlookers might logically think that the continued increased costs of housing are due to increased cost of supplies, the biggest issue faced by industry today is available skilled manpower. Little has been done by a variety of institutions to encourage youth to enter the skilled construction trade industry. Hence, the infamous supply and demand issue has evolved. This inability to find skilled workers has increased the cost of homes exponentially. Unfortunately, regardless that approximately $11 million was invested by 11 developers and homebuilders into SAIT trade programs some 12 years ago, a changing of the status of SAIT from a college to university has seen those programs effectively put on hold or disappear.

Simply put, homes have now become too expensive for those who need them.