Affordable housing in Canada

The housing continuum includes non-market housing—homelessness, emergency shelters, transitional housing, supportive housing, community and social housing—and market housing— below-market rental/ownership, private rental, and home ownership.[7] As of 2018 approximately 80% of Canadian households acquired housing through the market-based housing system.[8]

Based on the Canadian Real Estate Association's (CREA) National Price Map, an average detached house in Canada costs $796,068 in March 2022.[9] According to Statistics Canada, in 2020 the median after-tax income of Canadian families and unattached individuals was $66,800. This represented an increase of 7% from 2019.[10] With a household income of $65,000 an affordable home would cost between $250,000 and $300,000. A home that costs from $450,000 to $500,000 is considered to be affordable for a household with an annual income of $105,000. By 2022, with an unexpected demand coupled with a diminishing supply of residential real estate along with historically low interest rates—set during the pandemic to stabilize the economy—the price of housing rose sky high in Canada. The BBC said that Canada faced some "of the worst housing affordability issues in the world". Based on Organisation for Economic Co-operation and Development (OECD) data, the "disconnect" between the average home price—$817,000—and household incomes is "one of the most dramatic". The price represents over "nine times household income".[5] Experts anticipate the high prices and continued strong demand will result in renters dominating the market, particularly in large cities as many people will be priced out of the housing market.[5]

About two thirds of Canadian households are home owners, and one third are renters. Of the latter, some rent market-rate and non-market units, and some experience homelessness.[11]

Defining affordable housing in Canada depends on who is measuring and how data is analyzed. Governments, financial institutions (banks, mortgage providers), housing sectors (real estate agencies), consumers, and advocacy organizations use different definitions of affordability.[1]

In Canada's market based housing system, the federal government intervenes when affordability of housing is stressed to the point home ownership becomes inaccessible even to individuals with full-time employment.[12]

The provincial and territorial governments provide the most funding for housing and they determine limits on municipal governments. Provinces and territories establish their own regulatory framework for housing and set their own laws which can restrict what municipalities can do.[11] The role of municipalities in housing policy is significant, particularly in setting policies related to zoning, land-use, and in the prevention of homelessness. They are also constrained financially however because they rely mainly on property taxes for funding housing strategies.[13] The federal government provides funding to the provinces, territories, and in some cases directly to municipalities, through bilateral agreements.

The federal role has expanded with the introduction in 2017 of the National Housing Strategy.[14][lower-alpha 1] In 2017 the federal government promised to spend $40 billion over the next decade on housing.[15]

In the 1990s, REITs, hedge funds, private equity firms, and publicly listed real estate firms entered the urban rental market in large North American cities, in the United Kingdom, and Australia; for the next 15 years they expanded exponentially.[6] REITs emerged in Canada when the Canadian Income Tax Act in 1995 allowed REITs to qualify as closed-end trusts.[16] The first REIF was established in Canada in 1997 in Toronto. In the fifteen years between 2000 and 2015, the ownership of Toronto apartments was increasingly concentrated among REITs, institutional investors, private equity funds and some large family-owned firms.[17][6] In a 2020 Housing Studies article by Megan Nethercote, the author investigated the financialization of rental housing in the private real estate market. She noted the paucity of literature on the provision of social or affordable housing provision, despite the significance of the expansion of the private rental sector on affordable housing. She focused on the private rental sector in "anglophone liberal welfare states" including Canada, the United States, the United Kingdom, Ireland, and Australia.[6] These countries shared similar "comparable 'model[s] of owner-occupation characterized by liberal-economic ideologies and market mechanisms". They all experienced significant growth in the private rental market since the financial crisis.[6]

At the 2018 National Housing Conference hosted by the CMHC, concerns were raised about a stark increase in the financialization of the housing sector that had extended into the private rental market.[18]^: 6 Canadian Federation of Apartment Associations disagreed with the premise, and described conference featured speakers as "progressives".[19] Issues included the rise of "amateur landlords", condominiums, Airbnb, short-term rentals, increased rents, and problems with evictions. Multiple-residential buildings are being purchased as housing assets to generate wealth at a time when rental units are in short supply.[18]^: 6

A 2022 report by the University of Toronto's Institute on Municipal Finance and Governance calls for more co-operation between levels of government to respond to the affordability crisis in housing.[20][13] The National Housing Strategy (NHS) was introduced in the National Housing Strategy Act in April 2019 as part of the 2019 Budget Implementation Act. NHS is based on a human rights-based approach to housing and it says that "housing rights are human rights".[21]

In spite of lay-offs caused by the global COVID-19 pandemic, As of February 2022 the Canadian housing market was experiencing an unexpected boom with record-breaking high prices, combined with historically low interest rates and a decreasing supply of real estate. In both 2020 and 2021 real estate sales records were broken. By the end of 2021, the MLS Home Price Index was a record 25.3% higher than 2020.[22] During the pandemic inter-provincial migration was also strong and continued into 2022, which also contributed to high prices.[22]

In the 7 April 2022 federal budget, "A Plan to Grow Our Economy and Make Life More Affordable", federal government responded to concerns about the role of the speculative market in sky-high real estate prices. A two-year ban on "foreign buyers" was introduced.[23]

The budget also called for a review of tax treatment for large corporate trusts that use residential real estate as financial investment instruments. This review will examine the impact of housing as an asset class on Canadian homebuyers and renters.[24]

The budget also included $1.5B for housing co-ops as part of the solution to the affordable housing crisis.[15] From the early 1990s to 2020, 25 of the biggest financial landlords—including REITs—consolidated about 330,000 rental suites representing 20% of Canada's "private, purpose-built stock of rental apartments".[25] REITs alone had no rental units in 1996; by 2020, they owned 200,000 suites.[25] As of 2021, REITs and other financial landlords benefit from preferential tax treatment which August described as state subsidies. August has called on the CMHC to stop providing financial landlords with "preferential mortgage lending rates", which are effectively subsidies to firms that are not providing public good. She also calls on the federal government to disallow financial landlords form accessing National Housing Strategy loans and grants since these firms "eliminate affordable housing as a business strategy".[25]

A CBC Fifth Estate episode[26] and accompanying CBC News article investigated how Canada had fallen into a "rental crisis", which could affect a third of the Canadian population. [27] One of the major factors considered was the financialization of the rental housing sector. While Nethercote had investigated the financialization of rental housing in the private real estate market,[6] CBC examined the issue from the point of view of renters—single parents, large families, pensioners and others on fixed or low incomes, young people starting their careers—who felt that their voices were not being heard.[27][26] In a Fifth Estate interview, Calgary, Alberta based Michael Brooks–CEO of Real Property Association Of Canada (REALPAC) that lobbies the federal government on behalf of Canada's largest institutional landlords, said that the private sector was not "primarily in the business of providing a public good", such as affordable housing.[26] The private sector is "self-interested in maintaining and growing their income". They "want to be seen as contributing to the solution and not being part of the problem." Their obligations are to their investors or pensioners, which includes managing costs.[26] REALPAC members, an association that was established in 1970, comprised $1 trillion in assets under management across Canada by 2022.[28] Since 2019, Brooks has served on the Sustainable Development Advisory Council of the Canadian federal government and the United Nations Environment Program Finance Initiative, as a business advisor, and on the World Green Building Council (WGBC) since 2021.[28] The Brookings Institute lists REITs, along with large Canadian banks, and multinational corporations as the "most reliable dividend payers" and recommends that pensioners invest in these financial instruments.[29] During the pandemic REITs and other financial landlords "thrived" with individual REITs posting 100s of millions in profits in the first three months alone. They benefited from the historically low interest rates backed by the CMHC to buy and sell multi-family residential buildings, refinance debt, do renovations that allowed them to raise rents.[25]

Following the Great Depression and World War II many Canadians lived in inadequate housing as fewer new homes were built, older homes needed repairs, and families lived in over-crowded dwellings.[30] The 1935 Dominion Housing Act (DHA) established the focus of federal policies on housing programs as market- instead of social welfare-oriented for decades to come.[31]^: 19 For example, the DHA included no subsidized low rental housing; instead it introduced a joint government private lender mortgage loans for the 20% of Canadians who could afford to purchase real estate in the marketplace. During the post-WWII period federal housing policy included using taxation to revitalize the housing market, while also building social housing and subsidizing rental housing in the private sector.[30] In 1946, the federal Wartime Housing Corporation was replaced with Central Mortgage and Housing—now known as Canada Mortgage and Housing Corporation (CMHC), a federal Crown Corporation. The CMHC administers the National Housing Act providing Canadians with grants, loans to purchase homes in the market system, and with mortgage insurance on credit financing through private lenders.[32]

During the 1960s, Canada's economy grew at a sustained pace.[12]^: 22 In the mid-1960s, Prime Minister Lester Pearson said that in a democratic society the goal must be for everyone to have "decent housing."[30]^: 2 In the 1970s, public housing policy obligation was based on ensuring all Canadians were adequately housed. Through amendments to the National Housing Act in 1973, 20,000 social housing units were built every year.[30]^: 2

Homelessness was not an issue in Canada and other developed countries until the 1980s.

In 1984, the federal government began cutting back on social housing.[30]^: 2[lower-alpha 2] In the early 1980s, the concept of core housing need was developed in Canada as a basis for evaluating those eligible for federal funding under the 1986 Global Agreements on Social Housing, between the CMHC, the provinces, and territories regarding administration and cost sharing of social housing programs under the National Housing Act and the CMHC Act.[33][34]

There was a consistent increase in housing affordability problems starting in the early 1980s in "all regions and major cities" and for almost all social classes of Canadian households, according to a 2004 article in the Housing Studies journal.[35] Affordability problems were "highly concentrated" in low-income households, particularly in households led by women.[35] In the 1990s, although the price of houses remained "remarkably stable", income inequality increased and housing affordability problems became more prevalent and more severe.[35]

Throughout the 1990s, the federal government was focused on cutting the federal deficit, and began to transfer responsibility to supply social housing for those in need—including low-income housing—to the provinces and territories.[30] The provinces and territories transferred some of these responsibilities to municipalities without providing corresponding financial resources.[36] Between 1993 and 2003, while federal government revenues increased 12% and the provinces and territories increased 13%, municipalities' revenues only increased by 8%.[36] From 1993 to 2004, federal and provincial fiscal transfers to municipalities decreased from 25 cents per dollar of municipal revenue to 16 cents, representing a decrease of 37% while their responsibilities had increased resulting in a fiscal imbalance.[36] Since the early 1990s, the responsibility of providing support for affordable housing, and a number of other social issues related to the environment, First Nations, Inuit and Metis, public health and security, had been downloaded with no increase in sources of funding.

Starting in the early 1970s, for almost two decades there were approximately 16,000 non-profit or co-op homes built or acquired every year.[15] In the next ten years, the number of residential co-operatives dropped to about 1,500 homes a year.[15]

As of 2006 the CMHC directed those needing subsidized housing for low-income households to the municipal government.[37] In 2011 the Canadian Federation of Municipalities called for better coordination between the three levels of government as the expanded responsibilities were either "unfunded or underfunded".[38]

From 2009 through 2104, the federal government budgeted $388 million a year for the housing sector.[39]

A 2003 TD Economic report recommended that government initiatives should focus on raising market incomes at the lower end, as the number of low-income households was too high. The report raised concerns about low-income households that were subject to provincial and federal claw backs and tax backs, for example, on back to work and the federal-provincial National Child Benefit (NCB).[40] The report said that decreasing the number of low income household would be more effective than the inefficient, expensive, publicly funded expenditure-based or tax-based incentives to increase the number of affordable rental units.[40]

Statistics Canada reported that while Canada's "real gross domestic product (GDP) per capita increased by roughly 50% between 1980 and 2005," and the workforce increased educational attainment and work experience during this same period and median earnings among the top 20% of full-time full-year employees grew by 17.9%", among those in the bottom one-fifth of the distribution median earnings decreased by 13.3%."[41] Full-time full-year median earnings of Canadians edged only slightly higher from $41,348 in 1980 to $41,401 in 2005.[41]

From the mid-1990s until at least 2010, the pace of growth in the Canadian economy was the strongest and most sustained since since the 1960s.[12]^: 22 In 2012, while Canada had a strong real estate market[42] many Canadian households faced housing insecurity.

By 1996, the federal government revoked the Canada Assistance Plan of 1966, which made it mandatory that people whose income was inadequate to meet basic needs (including the working poor) have access to an established appeals procedures in the provinces and territories regarding social assistance.[43] In the same year, the federal government transferred responsibility for most existing federal housing program to the provinces.[30][44]^: 9 During the 1990s, there was a devolution of new responsibilities, including affordable housing, from provincial governments to municipal governments without adequate revenue tools.[36]

By the mid-1990s Canada had a recognized national homelessness crisis. Homelessness, which is at the most extreme end of the housing affordability continuum—affected a diverse population of individuals and families.[30]

Lack of affordable housing is one of the complex set of factors that lead to homelessness. All levels of government in Canada began to include housing policies and strategies that responded to the crisis although anti-poverty strategies and programs to end homelessness. Activists said that the efforts were insufficient, inefficient, or unsustainable.[45][lower-alpha 3]

Since 2000 the cost of renting increased by more than 20%.[46]

The TD report concluded that municipalities need a more sustainable funding arrangement, and provinces need to play a more active role in affordable housing, becoming leaders within the Affordable Housing Framework agreement.[40]

By 2004, 1.7 million Canadians experienced housing affordability issues.[1]^: 4

The number of rental units declined starting in 2005.[46] By 2007, affordability of housing was a problem for low and middle income Canadians.[1]^: 4 Canadians in the lowest quintile who were in renters households were 18 times more likely than the average household to experience affordability problems.[1]^: 4[47]

The 2006 Canadian federal budget "provided $300 million for affordable housing in the territories."[48]

With historically low interest rates, and readily available debt and mortgage financing in 2007, Canada's housing market was in a period of strong growth. Affordable housing was a relative measure.[1] At the same time private affordable rental stock across Canada was low. In many cities the vacancy rate for affordable rental units was less than 1%.[1]^: 36

In the 21st century, the gap between incomes of the upper quintile and lower quintile reached unprecedented extremes according to reports in 2006 and 2010.[12][49] Households in the upper quintile—particularly in large affluent urban areas—could afford to purchase houses for investment and/or residency at higher prices by taking advantage of the low interest rates.[1]^: 89 Between 1997 and 2007, 1% or 246,000 Canadians earned average incomes of $405,000 representing 32% of all growth in incomes.[12] There were 24.6 million tax filers in Canada in 2007. The richest 1% made more than $169,000 and had an average income of $404,000. The richest 0.1% made more than $621,000 and had an average income of $1.49 million. The richest 0.01% made more than $1.85 million and had an average income of $3.83 million.[12]

Income levels in the upper quintile have increased exponentially while those in lower quintiles have remained stagnant.[12] As of 2010 housing prices and construction costs rose dramatically in Canada as they did elsewhere in the world.[12]

The 2009 Canadian federal budget allocated funds for the period covering (2009–2011): renovation and energy retrofits to social housing ($1 billion); to build housing for low-income seniors ($400 million); to build social housing for persons with disabilities ($75 million); to support social housing in the North ($200 million); low-cost loans to municipalities to improve housing-related infrastructure ($2 billion) as part of Canada's Economic Action Plan.

There was a modest improvement in housing affordability across Canada in the third quarter of 2011 after two consecutive quarters of deterioration. Part of this was due to decreased costs in home ownership resulting from lower mortgage rates.[50]

By 2012, the rising inequality gap had presented a significant challenge for Canadian households who were "priced out" of rental and ownership housing markets.[51] By 2012, there was a slight deterioration in housing affordability, according to the Royal Bank of Canada (RBC).[52][lower-alpha 4]

As of 2012 many parts of the country also reported that key workers—teachers, nurses, police officers, construction workers and others – who earned reasonably good income from their professions, were finding it increasingly difficult to afford the high cost of housing."[51] According to a Federation of Canadian Municipalities 2012 report, one third of Canadians were renters. The construction and rehabilitation of affordable rental units had not kept pace with the number of affordable rental units lost to demolition, urban intensification projects and the more profitable conversion to condominiums. Fewer than 10% of new housing starts were rental units.[46] The FCA finds the shortage of available rental housing is worsening at the same time that more Canadians are being priced out of home ownership.[46]

In a 1994 background paper commissioned by the Ontario Human Rights Commission, Hulchanski, who is the North American editor of the international journal Housing Studies, described how the ratio of housing cost as a percentage of income was 12% from 1900 to the early 1920s, when it was increased to 20%. This changed again in the 1960s to 25%. It was changed to 30% in the mid-1980s.[53] Determining housing affordability is complex and the commonly used housing-expenditure-to-income-ratio tool has been challenged. Canada, for example, switched to a 25% rule from a 20% rule in the 1950s. In the 1980s, this was replaced by a 30% rule of thumb.[54] When the monthly carrying costs of a home exceed 30–35% of household income, then the housing is considered unaffordable for that household. While the 30% rule continues to be used by the CMHC, banks, and mortgage providers, it has been challenged by Hulchanski and others.[54]

The City of Calgary refers to affordable housing in terms of need; a household is in need of affordable housing when it earns less than $60,000/year and spends over 30% of gross income on the cost of housing.[55]

Governments, financial institutions (banks, mortgage providers), housing sectors (real estate agencies), consumers, and advocacy organizations use different definitions of affordability.[1]

The Canadian census provides data on core housing need in municipalities, provinces and territories, including the percentage of Canadian households that live in core housing need.[2] Statistics Canada provides updates on housing related data such as the Canadian Housing Statistics Program (CHSP) which is reported by The Daily.[56] The Bank of Canada's Housing Affordability Index (HAI), the Royal Bank of Canada Housing Affordability Measure,[50] and the National Bank of Canada's Housing Affordability Monitor[57] are examples of the ways affordability is measured in order to qualify for a mortgage in Canada.

Measuring affordability of housing is complicated by Canada's vast physical and human geography which includes remote northern communities and affluent urban regions.[12]

A 2011 article said that affordability of housing public policy analysts should also monitor other indicators that are more appropriate for the contemporary Canadian context such as, what proportion of rental units are affordable to a median income rental household, a comparison of wage requirement needed to rent unit, the demand for housing assistance, the number of households in core need as a milestone measure, the number of people using emergency homeless shelters, number of people filing notice of eviction, arrears or foreclosures, rental vacancy rates at market prices, rental vacancy units at modest-low income stock and the number of MLS sales affordable to marginal buyers.[58]

Market-based affordability

A large proportion of Canadians are housed in market-based suburban developments such as Markham, Ontario

Eighty per cent of Canadians are served by market-based housing, which includes individual home ownership and private rental housing.[59] In the market-based housing system, individuals finance their own housing, independent of government assistance.

A 2019 Royal Bank of Canada RBC Economics report on home affordability said that, in nine of the 14 market areas they track, a majority of Canadian families are able to purchase an average home.[60] The most affordable markets are Saint John, St. John's, Regina, Quebec City and Halifax, while the least affordable markets are Vancouver, Toronto, and Victoria.

However, the shelter-cost-to-income ratio (STIR) is well above 30% for the median income. Nationally, it is 48.7% for two-story homes. Major cities such as Vancouver rate worst in the world at 88.9%. Calgary is considered affordable at 36.7%. Montreal is 41.8% and Toronto is 53.4%. The RBC Indicator provides data on a quarterly basis on home ownership affordability, it measures the proportion of homes currently for sale that are affordable to a median income household. Measurements of affordability that are oriented exclusively to the ability to buy using mainly shelter-cost-to-income ratio (STIR) provide useful information for one end of the continuum of housing in Canada, home ownership in the private market at market price.

The Bank of Canada's 2011 "affordability index represents the proportion of the average personal disposable income per worker that goes toward mortgage payments, based on current house prices and mortgage rates. A decline in the ratio indicates an improvement in affordability."[61] Mark Carney—the Governor of the Bank of Canada warned in 2011, that even though measures of housing affordability in Canada were favorable in most cases—with some housing markets already severely unaffordable even at current rate—interest rates were at a record low. He raised concerns that Canadian household debt was high and therefore vulnerable to increases in mortgage interest rates which could cause housing affordability fall to "its worst level in 16 years."[61]

Mortgage lending institutions define affordability in terms of potential home buyers consider the relative cost of debt based on interest rates and average household incomes. This measure of affordability is not oriented towards renters.[1]^: 4

In its 2016 second quarter report Canada Mortgage and Housing Corporation warned housing prices are overvalued in 9 Canadian markets, with Vancouver at high risk. Strong evidence of "problematic conditions" also continue to exist in Toronto, Calgary, Saskatoon and Regina, while in Ottawa "problematic conditions" are weak.[62]

According to a 2012 Bank of Canada (BOC) report, the BOC's affordability measure (AFF), which was based on the "ratio of monthly mortgage payments to disposable income (DI)", was "consistently favourable by historical standards" starting in the late 1990s.[69] Affordability in the real estate market was increased partly because of labour market conditions that supported increased income and the low interest rates. As a result, there was an increase in home ownership, but also in mortgage debt.[69] The rate of home ownership in Canada rose from 62.4% in 1981 to 68.4% in 2006 in spite of an rapid increase in the price of residential real estate since the 1990s.[70]

The banking sector benefitted from the ""strong credit growth" and higher loads of indebtedness that these homebuyers incurred from 2001 to 2011. However, concerns were raised about the very high household indebtedness which had reached c. 150% of debt-to-income ratio by 2012.[71]

According to Mark Carney—the Governor of the Bank of Canada from 2008 to 2013—the demand for housing in Canada was consistent with housing supply.[61]

Carney warned in 2011, that even though measures of housing affordability in Canada were favorable in most cases—with some housing markets already severely unaffordable even at current rate—interest rates were at a record low. He raised concerns that Canadian household debt was high and therefore vulnerable to increases in mortgage interest rates which could cause housing affordability fall to "its worst level in 16 years."[61]

In 2000 the rate of home ownership in Canada was 63.9%; by 2021, it had reached 68.55%. About one third of Canadians rent their homes. Ontario and British Columbia have a higher rate of residential property rentals.[72]

During the COVID-19 pandemic housing supplies—particularly affordable housing—dropped to historical lows.[73] The average price of a home in Canada increased 17.1% to $779,000 in Q4 2021 compared to Q4 2020, according to a Royal LePage survey.[74]

A 13 January 2022 Bank of Canada report examined three types of buyers in Canada, first-time home buyers (FTHBs), repeat homebuyers, and investors or multiple residential property owners.[75] The CHSP April 2022 data revealed that in urban areas, the median income of renters was $25,000 compared to FTHBs whose median income was twice as much, $50,000, in larger census metropolitan areas (CMAs) across Canada.[56] Of the FTHBs, a family member had gifted money towards the down payment for 19% of the FTHBs.[74] Residential property owners are described as "repeat buyers" when they buy a new home while selling their old one; multiple residential property owners are described as "investors" if they purchase a new residence, potentially for rental income, while keeping their old one.[76] Investors or multiple residential property owners, who may be individuals or entities, own properties as an investment including rental income, as a recreational property which may be as a source of rental income.[56] The report describes investors as older, higher-income, and more indebted.[75] According to the Bank of Canada report based on mortgage data, since 2014, FTHBs have been the largest group of homebuyers in Canada, representing about 50% of all mortgaged home purchases; repeat homebuyers represented 31%, and investors represented 19% since 2014.[75] During the pandemic, FTHBs represented 47% in June 2021, compared to 53% in 2015.[76] The Bank of Canada reported a "rapid increase" in mortgage home purchases by all three groups, but the most pronounced increase was in the investors group.[75]

Concerns have been raised that while the investors group provide a significant portion of rental housing supply but may also be responsible for the rapid escalation of residential properties. Scrutiny of this buyers group increased during the COVID-19 pandemic as the housing supplies reached crucial lows.[73] The CHSP April 2022 data revealed that in urban areas, the median income of renters was $25,000 compared to FTHBs whose median income was twice as much, $50,000, in larger census metropolitan areas (CMAs) across Canada.[56]

According to Statistics Canada's Canadian Housing Statistics Program (CHSP) data for 2019 and 2020 on home ownership reported on 12 April 2022, which compared first-time home buyers (FTHBs) and multiple residential property owners, the latter own about a third of all residential properties in Canada. Of these the top 10% wealthiest represent 25% of residential housing value.[56] While investors provide a significant part of the rental housing supply, they may also exacerbate the "so-called boom-bust cycles in housing markets" causing economic instability.[75]

Homeless man living in a bus shelter in downtown Toronto (2010)

There are concerns about aggressive marketing that began in the mid-1990s making secured personal lines of credit (PLCs) (often secured by housing assets) much more widely available. By 2011 secured PLCs represented 50% of consumer debt. This places many households in a vulnerable exposed situation if housing prices drop, mortgage rates rise, or their income decreases.[71]

Concerns over high Canadian household debt levels led to changes to mortgage regulations announced June 2012 by Finance Minister Jim Flaherty. The federal government lowered the maximum amortization period for a government-insured mortgage from 30 to 25 years. The upper limit Canadian homeowners could borrow against their home equity was lowered from 85% to 80%.[77]

Londerville of the Macdonald-Laurier Institute argues for 40-year amortizations in "certain markets and for certain age groups, perhaps with limits on the house price" for example in the case of young households in the high-priced Toronto real estate market who "may need a 40-year amortization period on their first home to make it affordable."[68]

As well, government-backed mortgage insurance purchased at a flat, upfront fee for mortgage insurance through Canada Mortgage and Housing Corporation is obligatory for home buyers with down of less than 20% of the home's value."[77] In a 2005 article the Canadian Business journal reported that, "According to the federal Bank Act, every mortgage from a federally regulated institution with a down payment of less than 25% is required to carry mortgage insurance. Last year [2004], 45% of all home buyers, or 500,000 Canadian families, were required to buy a total of $1.6 billion worth of mortgage insurance ... According to its annual report, last year it earned $1.1 billion in premiums from homebuyers and paid out $51 million in claims--a payout rate of less than 5%. While 2004 was an exceptional year for mortgage insurance, over the past 10 years CMHC has paid out at an average rate of 45%, far lower than most other forms of insurance. In fact, there is probably no more lucrative line of insurance in Canada than mortgage insurance."[78]

The CMHC turns a large profit from this mortgage insurance collected mainly from first time buyers and those unable because of lower incomes to pay more than 20% down payment. Between 2001 and 2010 this mortgage insurance amounted to a $14 billion contribution towards reducing the Canadian federal debt. Londerville of the Macdonald-Laurier Institute notes IMF concerns about some CMHC practices and the unnecessary burden placed on home owners at the lower end of income scale.[68] This erodes affordability.

Canada Mortgage and Housing Corporation (CMHC) deemed that 20% of Canadian households (1.7 million households) fall within the core housing need. These households could not find adequate and suitable housing without spending 30% or more of their pre-tax income. CMHC found that a disturbing 656,000 households (7%) spent at least half of their before-tax income on shelter in 1996, up from 422,000 households, or 5%, in 1991. While accounting for only 35% of all households, almost 70% of those in core need were renters.[37]

The United Nations Committee on Economic, Social and Cultural Rights issued a highly critical and detailed report on Canada's social policies in its 1998 review of Canada's compliance with these rights (United Nations, 1998) particularly about disastrous levels of homelessness. It concluded "that while Canada has a long history of housing successes, the housing cuts starting in the late 1980s have effectively prevented Canada from meeting its international housing obligations."[79][44][80]

The mayors of Canada's largest cities, declared the lack of affordable housing a national housing disaster in 1998. The federal government responded by announcing cost-shared conditional federal-provincial initiatives to construct affordable housing, worth $1 billion. However, during this period of tax cutting and debt reduction initiatives, the devolution of federal responsibilities to the provinces, without an accompanying transfer of funds, made it impossible for the provinces to contribute their share for affordable housing projects. Provinces were focused on reducing government size and increasing provincial tax cuts.[81]

in 2006 5.5% of Canadians, 1.7 million people of a total population of 31 million were under-housed or non-housed.[47](Canadian Housing and Renewal Association).

The federal government's CMHC stated in 2021 that $2,225 per month constitutes "affordable" housing in Greater Montreal. This led to condemnation from both New Democratic Party and Conservative MPs. CMHC said that its principal goal was to stimulate new housing construction, not keep prices low.[82]

A Conference Board of Canada 2010 report entitled "Building From the Ground Up: Enhancing Affordable Housing in Canada" argued that the shortage of affordable housing was "having a detrimental effect on Canadians' health, which, in turn, reduces their productivity, limits our national competitiveness, and indirectly drives up the cost of health care and welfare." Stress, asthma, and diabetes are connected to inadequate housing.[83]

By 1991, Canadian public policy on the affordability of housing was more aligned with the concept of need than in the United Kingdom in the 1980s, for example, where the concept of affordability was more market-oriented.[84][lower-alpha 5]

Housing policies across Canada that address the issue of affordability of housing acknowledge a housing continuum that encourages home ownership and rental in the private sector but also provides rental and/or income assistance to low income households, high level support services to the most vulnerable citizens (frail elderly, disabled, mentally challenged, single parents, etc.) from short-term transitional housing, longer-term supportive housing, to emergency shelters for the homeless. Housing policies and strategies consider repeat users and those who face multiple barriers to meet and maintain core housing needs and therefore provide a wide range of support services including life skills training and assistance programs to break the cycle of poverty (BC Housing Strategy 2006). In this way housing strategies and housing studies related to affordability of housing overlap with anti-poverty strategies and studies.

The Affordable Housing Initiative (AHI) operating from 2001 to 2011 was an intergovernmental multilateral housing initiative on affordable housing. The federal government, working through Canada Mortgage and Housing Corporation provided funding for the supply of new affordable rental housing under the Affordable Housing Program was CAD$1 billion from 2001 to 2008 (to be matched by provinces and territories).[lower-alpha 6] The federal government placed the AHI with the Affordable Housing Framework 2011–2014 to improve "access to affordable, sound, suitable and sustainable housing."[85] The Affordable Housing Framework acknowledged that a wide range of solutions were required to respond to the diversity of affordable housing program needs and priorities specific to each jurisdiction. Provinces and territories were reminded that it was their responsibility to design and deliver affordable housing programs, but they would have flexibility in how to invest federal funds (matched by provinces and territories) through programs and initiatives, as long as the overall intended outcome is reached: "to reduce the number of Canadians in housing need by improving access to affordable housing that is sound, suitable and sustainable... Initiatives under the Framework [could] include new construction, renovation, homeownership assistance, rent supplements, shelter allowances, and accommodations for victims of family violence."[86]

• Bill 28 (British Columbia)
• Snow washing
• Beneficial ownership
• Affordability of housing in the United Kingdom
• Affordable housing by country