A first text published in The duty of November 6 expressed numerous concerns regarding the housing crisis that Quebec is going through. We saw the inequities created, the breakdown of the social contract against the youngest, the systemic discrimination which risks establishing itself against newcomers and the youngest. Add to this the social and economic misery caused by overpriced housing.
In the Quebec government and in city halls throughout Quebec, there is no doubt that elected officials take the worrying situation of the rental market to heart. But this sensitivity will not be enough. We will need significant changes in our approaches and a more realistic vision of what the rental market has become.
We must, first of all, break with economic thinking that has been completely downgraded by events. The balance of supply and demand no longer works in the housing sector. Leaving it to market forces to decelerate costs is like asking the chicken to stop laying eggs. It will not arrive. Especially since, as Stéphan Corriveau, general director of the Community Housing Transformation Center, recently mentioned, CMHC already intervenes in the private market by supporting it through various measures. In particular by insuring mortgage loans, which allows certain households to access property with a reduced down payment, which has the effect of rapidly increasing the demand for housing in a context where the supply is not keeping up, phenomenon creating upward pressure on prices.
Adding subsidies to try to restore the balance is useless and harmful from the moment the rental market is financialized and detached from its social value. Increasing the supply of housing is part of the solution, but it is essential that these new homes meet the needs of populations experiencing the effects of the housing crisis. There is a connection to be made between the fact that the construction of rental housing doubled between 2016 and 2020 and that the vacancy rate for housing over $2,000 per month is well beyond the equilibrium threshold. The housing built does not meet needs, the market responds to demands and not to needs.
We must therefore bring the rental and residential market back to capitalism with a human face.
We must take inspiration from metropolises like Vienna and Singapore, where a large part of the rental stock is off the market. A well-housed and safe population is an asset for a city. The race for speculation is a plague that diminishes the social and economic vitality of cities.
It is not necessary to hand over the rental market to municipal authorities to have an effect on prices. The use of public utility companies (a concept to be developed in Quebec), social utility trusts or even cooperatives would make it possible to remove this precious asset that is housing from the speculative market.
One day we will have to intervene to limit the number of doors that a conglomerate, often foreign, can own in a city. The rental market must be the business of Quebec businesses and citizens. We must break the belt of return on investment, which distorts the housing market. This return on investment characterizes purely speculative property.
It must be admitted, a tropism is at work in the world of construction. We establish as an absolute value a yield between 15% and 20%. Even when the construction cost is subject to financial support from the State. Let’s be clear: if a company wants to invest its money in the hope of getting a 20% profit, it should do so at its own risk. There is no reason for a project supported by our taxes to produce a 20% return. The sacralization of performance has become a constraint trivialized by all stakeholders. But this is not inevitable. A change in this regard would be infinitely more meaningful than a complex removal of the sales tax on construction materials.
That the government requires a performance estimate for companies that want to have access to subsidies. With the lowest bidder formula, too often, affordable and social housing has been designed, from the start, as an unsustainable construction, built with the least expensive materials. Result: rapid deterioration which immediately calls for new investments. Note that this search for performance and quality is already being done in various places in Quebec. We must therefore generalize the thing.
We must tighten the standards of CMHC’s APH Select program, which requires that 25% of housing built be affordable, but which fails to meet the real needs in terms of affordable housing and which unnecessarily enriches developers. At the very least, let us adapt the rents to the surface areas of affordable housing. For the moment, the program is designed to produce affordable studios and pocket the loan guarantee while renting the rest of the housing at a high price. It’s indecent.
It would also be relevant to increase the scale currently used by the Société d’habitation du Québec to provide access to affordable housing, that is to say an income of $67,000 for two people or $82,300 for three. people. An increase of at least 15% would help qualify more families who, at these income levels, do not belong in the wealthy class.
We can help with the implementation of construction sites by reducing municipal costs. Tax revenues will increase tenfold as soon as housing becomes available. This barrier to entry, in a context of crisis, should disappear.
Affordable housing projects should enjoy the same status as social housing with regard to local referendums, which in no way excludes local consultation. There is almost no place where new neighbors are kindly welcomed, regardless of tenure, except sometimes in the high-end market.
Given the circumstances, it would perhaps be wise for various governments to examine the possibility of delaying certain less urgent public projects in order to free up the workforce necessary for a large affordable housing project.
Very soon, the residential market will run out of fuel due to lack of buyers. There are very few projects that will be completed in the coming months. The housing crisis should therefore not be transformed into a crisis in the residential construction sector with à la carte subsidies. At least, not at the cost of the profits currently generated. It’s taxpayers’ money, it deserves a little respect.
The proposals we are making aim to open a window of hope to let in a little of the fresh air that social progress generates.
Let’s not wait for the market to stabilize on its own, that won’t happen. There are too many sharks in the aquarium. So you might as well opt for the social economy and empty the jar.