Sorry to Burst your Bubble: Toronto’s Housing Crisis
There was a lot of talk about affordable housing during Toronto’s recent elections. People were intrigued to hear about John Tory’s plan to build 40,000 units in 12 years, or the even more ambitious claim of 100,000 in 10 years by his chief opponent, former chief city planner Jennifer Keesmaat. If you don’t pay for mortgage or rent however, it might be more difficult to imagine what the housing situation looks like in Toronto—and boy, is it a mess.
But before we get down to it, what does it exactly take for housing to be “affordable”? In Canada at least, units must cost less than 30% of a household’s before-tax income to be given this label. This does not only refer to government-subsidised rental housing, but also all many other types of housing: private and non-profit, as well as owned units can also fit into this category, as long as they pass the base benchmark.
With a median monthly rent of over $2,000 just for one bedroom suites, it might be difficult imagining yourself living on a full-time, minimum wage job, where’d you’d probably earn $2,400 before taxes in the same period of time. Professor Richard Florida, professor in the University of Toronto’s School of Cities and Rotman School of Management, states that over 240,000 households are currently facing affordability issues, and more than 90,000 are on the affordable housing waitlist. According to UBS, a multinational Swiss banking and financial services company, Toronto stands as the 3rd largest housing bubble in the world—which means over inflated housing prices are dominating the market. These realities have and still are pushing people to relocate to outside municipalities like Vaughan and Markham, raising prices in those areas as well.
On the flipside, the report shows the market has actually somewhat cooled down in the past year, in some part thanks to Ontario’s Fair Housing Plan, which taxed foreign purchases and vacant apartments, and imposed stricter rent controls. Prices have stabilised over the past four quarters.
Despite this respite from the new law, what other solutions could be laid on the table to address our still seemingly dire situation? Florida has suggested policy changes on higher levels of government, such as ending federal financing policies subsidizing construction of luxury rentals, in favour of more affordable units and the rededication of funds from the National Housing Strategy to ensure construction of housing that remains affordable for perpetuity, rather than the current countdown of 25 years. Another idea is to build on the current transportation networks connecting Toronto to neighboring municipalities, to improve accessibility to workers who need to work in the city but cannot afford the housing.
Whether governments and developers pursue one program or another to curb the ominous housing bubble, two things are clear: overvalued, sky-high pricing for a basic living necessity is both detrimental to long-term economic stability and, more importantly, unacceptable to basic human dignity.