To put an end to the word “affordable”

The word “affordable” is in the news a lot these days.

There is the federal Minister of Finance, Chrystia Freeland, who has just announced a sum of $20 billion for the construction of 30,000 housing units per year, a portion of which would be reserved for “affordable” housing. There is provincial minister France-Élaine Duranceau who has also already committed to accelerating the construction of social and affordable housing. And there is the mayor of Montreal, Valérie Plante, who hopes to see affordable housing emerge from the ground on the site of the former Blue Bonnets Hippodrome.

But when I see the price of housing rising on the island of Montreal, when I see very ordinary 5 ½ apartments renting for more than $2,700 per month, I ask myself: what does affordable mean in 2023? ? To be honest, we don’t know anymore.

Affordable, mais pwho?

“We try to never say the words “affordable housing”,” Adam Mongrain, head of the housing file for the Vivre en Ville organization, tells me. It confirms my discomfort and my confusion with this word used in all sauces.

The Popular Action Front for Urban Redevelopment (FRAPRU) recently published its black file on housing and poverty. According to 2021 data, there are 1,482,645 tenants in Quebec. Of this number, a quarter would spend a disproportionate proportion of their income on housing: 373,615 people would spend 30%, 128,795 would spend 50% and 49,895, almost all of their income, or 80% or more. We are talking here about people whose median salary is very low, somewhere between $9,900 and $23,800 annually. For them, affordable housing is an unattainable dream without government assistance.

Rule 30%

There are almost as many definitions of the word “affordable” as there are government programs, professor at the School of Social Work at the University of Quebec in Montreal (UQAM) Louis Gaudreau confirms to me.

The definition of affordable housing first came from the federal government (more precisely from the Canada Mortgage and Housing Corporation, CMHC). It designates housing for which a household spends less than 30% of its pre-tax income, regardless of whether the housing in question is private, public or non-profit.

According to this 30% rule, a person who earns an annual salary of $23,800 should be able to live in housing whose rent would be around $595 per month. To find such low rent, you must have access to subsidized social housing or look at cooperatives, where the wait can sometimes be very long.

Now, what about people who earn a more “decent” income and who don’t have access to affordable housing? If the average salary of a Quebecer is $55,000 per year (according to the Institute of Statistics of Quebec), this would mean that their rent should not exceed $1,375.

In the Montreal region, where the average price of an apartment would be around $1,022 per month for a two-bedroom apartment, according to the CMHC rental market report dated January 2023 (an average that does not take into account most recent increases), it is almost impossible to find affordable housing in central neighborhoods.

It makes you wonder if the word still has a meaning.

“The 30% rule does not hold,” Adam Mongrain, from Vivre en Ville, confirms to me. Let’s take a neighborhood like Outremont, where we can assume that the majority of owners spend less than 30% of their income on housing. This would therefore make Outremont one of the most affordable neighborhoods! »

FRAPRU also denounces the use of the term “affordable”, which it considers confusing. “It gives rise to distortions, like these $2,225 apartments subsidized by the federal government because their price was below the median market price,” explains its spokesperson Véronique Laflamme, referring to a column by my colleague Maxime Bergeron, published in October 2021^⁠1.

A market that has lost its landmarks

This way of determining the price of affordable housing by comparing it to the market price does not reflect reality. Indeed, “when the median market price increases, the price of housing also increases, regardless of the tenants’ ability to pay,” observes Louis Gaudreau.

“CMHC established this measure at a time when income and prices were connected,” notes Adam Mongrain. And they were both moving at the same speed. But today, it’s nonsense. »

Not to mention that the real estate market has lost its bearings in recent years. Finding an apartment for less than $2,000 in the central neighborhoods of Montreal is a challenge.

The fault, among others, is marginal buyers, Adam Mongrain explains to me. Who are they ? People who have sold their property and have a large down payment, foreign buyers who arrive from a much higher market (say a French city) and who raise the bids. Or all those Montrealers who left the metropolis during the pandemic to join the real estate market in the suburbs, contributing to driving up prices in cities like Granby. To think that prices will drop significantly one day is fantasy, or denial.

We can clearly see that the word “affordable” – which originally meant “cheap” or “reasonable” – has been stripped of its meaning.

“We should instead work to create a “context of affordability”,” suggests Adam Mongrain of Vivre en Ville. All households would have more than one option for housing, regardless of their means. »

This would require a greater supply of housing than demand. And with our slowness in building housing, it is clearly not for tomorrow…