Solving Canada’s housing affordability crisis
Making the link between house ownership and public pensions is key to a way forward.
Last week I attended the inaugural National Housing Conference hosted by the Canadian Mortgage and Housing Renewal Corporation (CMHC) in Ottawa—and it got me thinking about the connection between housing affordability and pensions.
CMHC is the lead government agency on the National Housing Strategy. CMHC’s goals for the conference were to engage researchers and stakeholders (like bankers and developers) in strengthening the federal government’s national housing strategy: A Place to Call Home.
The national housing strategy is one component of the federal government’s poverty reduction strategy: Opportunity for All. The conference had two main themes: 1) financing and supply-side management of the country’s housing stock, and 2) social inequality and inclusion.
While attending the conference it became abundantly clear these two themes are the poles of tension within Canada’s housing sector. The tension between, on the one hand, housing as a necessary human right and, on the other hand, housing as a market commodity subject to ever-intensifying speculation on the global market. Besides not offering enough money, the main criticism of the national housing strategy is that it does not deal directly with speculation and financialization of the housing sector.
Much of the debate at the conference centred on how to balance the need for housing with the desire for profit. Cree elder and architect Douglas Cardinal was pointed in his call for housing and community planning to be led by the values of caring for each other and all life rather than market values.
Manuel Aalbers, a geographer from KU Leuven near Brussels Belgium, left a distinct impression on me. His research focused on the financialization of housing.
The unfortunate reality is that housing as a financial investment is the dominant frame within Canada. This leads to housing becoming more of a commodity than a human right.
Indeed, it was noted that the housing market is driving economic growth in Canada. With this shift in housing, we’ve seen the housing price-to-income ratio shift dramatically. Income has not risen with housing prices. Mortgage lending has become a more significant form of lending.
Housing has been used as a spatial fix—or temporary solution—to the problems of the global economy.
Aalbers explained that large pension funds are some of the largest owners of housing and real estate. According to the Financial Post Canadian pension funds held over $188 Billion in real estate assets in 2016. “Pension fund capitalism” is dominating the global housing sector and it’s a beast we haven’t truly grappled within Canada. This situation is coupled with middle-to-high-income Canadians buying housing as a private investment for retirement.
Understanding that in our current social structure income is the predominant determinant of health gives me pause: how do we grapple with the reality that pensions and retirement are so deeply interwoven with the housing market? Given the gutting of defined benefit pensions, abrupt regulation or taxation would undermine retirement savings. Yet continuing to deny affordable and decent housing to low-income people and younger middle-class workers impact their health and well-being.
Without a robust public pension plan to fall back on, if we regulate the housing market working people could be left in the lurch for retirement, with their investment in private property and their private pension drained of capital. Therefore, public pension reform and income security programs for the elderly are necessary companion strategies for providing housing as a human right.
We need to explore solutions that balance the needs of all generations for income and housing security together, rather than let “pension fund capitalism” continue to shift the burden to future young workers and marginalized peoples. This likely means we need to rebuild the Canadian Pension Plan to offer all Canadians a healthy and thriving retirement regardless of the income they made during their working years.