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“Why are we seeing such a dramatic increase in the number of people living in encampments?”

That’s a question I get asked regularly by Ward 1 residents. Truth is, there’s no easy answer.

But while housing affordability is an enormously complex topic, why housing is vital for all of us is relatively simple. It’s nearly impossible to complete school, get a job or even live a decent life without a safe, reliable place to sleep. It’s difficult to be healthy and to stay healthy without stable housing.

Like many other cities and towns across Ontario and Canada, Hamilton declared a homelessness crisis. There are signs of it throughout our city that are causing many residents and businesses, particularly in the Lower City, to demand immediate action. Emotions are running high, often pitting neighbour against neighbour. The City of Hamilton is working to find ways to manage this humanitarian crisis, but until the Provincial and Federal Governments join us in making affordable and supportive housing a priority, the task is simply bigger than the city alone can handle.

Homelessness and Housing Insecurity in Hamilton

Over 1,900 people are homeless in Hamilton, of which, 258 are visibly homeless, living in encampments. Another 6,000 to 8,000 Hamiltonians are waiting for more appropriate housing.

Housing First

Mental illness and addiction become amplified when appropriate housing is unavailable or at risk because of escalating rents. People living in these conditions risk homelessness or make finding a home almost impossible. But no matter the circumstances people are living with, housing must come first. But for people living with addictions and mental health challenges, housing must also come with appropriate support.

A Brief History

It’s impossible in this newsletter to detail all the mechanics of housing in Canada. I’m not a housing expert, but here’s my best effort at an overview. I hope it will spark productive conversations. I’ve also listed sources at the end of the article for your information.

A Housing System Rooted in the Private Market

Canada’s housing system is based on the private market and homeownership. Houses are built by that private market, and we, the public, buy them.

Since post-WW2, the federal government has used various programs to publicly subsidize homeownership, such as ensuring loans for mortgages by private investors and financial assistance to new home buyers. (1)

The deregulation of the financial sector, beginning in the late 1980s, led to lower interest rates. That enabled folks with access to some capital to enter the housing market, resulting in more people bidding on property and, of course, prices increasing.

The prices of homes have far outpaced income gains over the past 15 years. House prices have increased a minimum of 155%, while average wages have risen 49%. (2)

With easier access to financing, more people started to think of housing as a way to capture the growth in capital gains and build equity. Real estate returns started to outpace a family’s mutual funds or savings account performance. A key difference is that any gain on the sale of a principal residence is tax-free, which amounts to roughly $5 billion to $7.5 billion per year in foregone federal taxes. (3)

It’s telling that today, 75% of people purchasing houses already own a home. First-time home buyers represent less than one-third of the market. Most get financial help from their parents. (4) The income of homeowners has increased by 20% since the 1960s, which is about double that of people who rent. (5)

Given the dramatic increases in property value, investors have become significant players in the housing market. A recent Globe and Mail article reported investors accounted for 30% of all residential real estate purchases in the first half of this year alone. (6)

While total residential mortgage debt doubled from $1 trillion to $2 trillion between 2011 to 2021, the equity gain in property generated for some people during this same period was $4 trillion. All of this creates a very hot housing market with people who have gained significant equity willing to bid and pay more. (7)

In a deregulated housing system, this overwhelming dependency on private tenancy has generated serious problems on many fronts – social, economic and environmental. Some politicians are attempting to frame the situation in simplistic terms, offering simple solutions. They seem unprepared to make any connection between how this very system has contributed to the social crisis showing up in our shelters and, ultimately, in our parks. They also seem unwilling to talk about the implications of more of the same in the form of heavily subsidized sprawl in green fields, which will remain unaffordable to most, drain city finances and further burden local taxpayers. As a resident at a public meeting aptly described building on the Greenbelt as “lazy housing policy.”

Ours is a housing system that has created a private tenancy cliff for too many. At the same time, I think it’s fair to say that no government or want-to-be government would be able to withstand the political fall-out of doing anything that would intentionally deflate the value of houses to make them more affordable to others – especially after convincing Canadians to put all their savings into a single asset while simultaneously starving housing alternatives. A resident is not to blame for owning a house. Neither is a resident to blame for being unable to afford one.

Third-Sector Housing

Today, 94% of Canadians are housed in the private market (homes, condos and apartments), with another 4% in non-market housing such as co-operatives and not-for-profit housing. Unlike private homeownership programs, this third-sector housing has not fared as well in terms of political support and public investment.

For example, in 1979, the Toronto Real Estate Board (TREB) lobbied to have the already small amount of federal investment in the co-op and non-profit sector be directed to homeowner subsidies. According to TREB, “homeowners make better citizens” and “people are poor because they have either little ability, or have not worked hard enough.” (8) That marked the beginning of the end of real third-sector housing support, particularly for families, under Prime Minister Brian Mulroney (1984-1993). At the same time, provincial investment across most of Canada also dried up.

Despite warning of the real poverty consequences of having no federal role in affordable housing when he was on the opposition benches in 1990, Canada’s Finance Minister Paul Martin Jr. withdrew the federal government from public housing in his consequential 1996 budget.

“CHMC (Canada Mortgage and Housing Corporation) will phase out its remaining role in social housing, except for housing on Indian reserves. The first step has already been taken – there has been no funding for new social housing units since 1993. To further clarify jurisdiction in the social housing field, the federal government is now prepared to offer provincial and territorial governments the opportunity to take over the management of existing social housing resources.” (Budget Plan, Tabled in the House of Commons by the Honourable Paul Martin, P.C., M.P. Minister of Finance March 6, 1996 pg.43)

Ontario Premier Mike Harris followed suit in the late 1990s. The Provincial Government turned its back on public housing. Premier Harris downloaded a stock of ageing public housing to municipalities and onto local property tax bills. No provincial government has since moved to right this ill-advised and ill-informed wrong.

The downloading of public housing onto Ontario municipalities was particularly consequential for older municipalities like Hamilton, which had, and still has, a significant concentration of urban poverty and a greater proportion of Provincial public housing compared to, for example, Halton Region (Burlington, Milton, Halton Hills, Oakville). Unlike Halton, Durham and York Regions, the downloading of public housing had a crippling financial impact on Hamilton. That impact endures.

Hamilton is also home to a psychiatric hospital and a prison. Discharged patients and former inmates are typically unable to return to suburban and rural communities that offer no supportive housing or residential care facilities to meet their needs. Consequently, many of these individuals have no choice but to remain in Hamilton.

Until 2017, Canada was the only industrialized country without a national housing strategy.

Restrictive Zoning – Exclusion by Income

To be sure, municipal councils haven’t helped matters. Zoning has been used to restrict more affordable and varied housing stock from many parts of existing neighbourhoods. By permitting only single-family homes, zoning has effectively been used to exclude many by income and has limited the supply of other housing types. It’s a modern-day form of restrictive covenant. If you can’t afford to buy a home here, you can’t live here.

Fortunately, this is changing. The City of Hamilton is enabling more density and hopefully more “missing middle” housing throughout all parts of the city and higher density housing around high transit and GO stations. It is in our collective self-interest to get behind these changes to enable public, third-sector and private tenancy housing within the existing urban boundary.

This year, the City of Hamilton has far surpassed the housing target of 4,700 units set for it by the Province of Ontario. From January to September of this year, 12,300 units have received development approval - - or 160% above target. Building permits for approximately 2,900 units have been issued to date. Herein lies the problem – the city can put in place planning permissions for new residential units, but it is dependent on the development industry to act on these permissions and actually build.

Income

Income policy is housing policy, particularly in a housing system rooted in the private market.

Renters in Hamilton are usually households with low to moderate incomes and are much more likely to experience core housing needs – a combination of having to spend 30% or more of their household before tax income on shelter, their housing requires significant capital repair and is not suitable for their housing needs.

The Conference Board of Canada highlighted the polarization of Canadian incomes over the past twenty years. The richest group of Canadians have become richer, while poorer Canadians have become poorer, and Canadians in the middle have lost ground. (9)

A recent study looked at total welfare incomes from social assistance recipients in all provinces and territories over one year.

The black line at the top of the graph represents Canada’s Official Poverty Line. The grey line indicates the deep income poverty threshold, defined as 75% of this official poverty line. Literally “below the poverty line”. Most individuals and families on social assistance live well below this deep income poverty threshold.

Figure: Welfare incomes at a percentage of the Market Basket Measure, for example, households with children in Ontario, 2002-2022

Source: Welfare in Canada, 2022 Jennefer Laidley and Mohy Tabbara, for Maytree Foundation, July 2023, p.135

Urban Poverty in Hamilton & Growing Health Gaps By Income

The concentration of urban poverty in Hamilton is among the highest in Canada. Our own Board of Health tell us that people living in extreme poverty are three times more likely to die prematurely from potentially avoidable causes of death.

Rapid Loss of Low-Income Units in Hamilton

In the last ten years, Hamilton has lost 16,000 low-income private-sector rental housing units. These are units priced at $750 per month or lower. For every one unit of affordable housing created by the third sector, Hamilton lost four in the private rental market. And we continue to lose ground.

With the values of private rental property increasing, investors have turned their attention to Hamilton’s aged, and historically cheaper, housing stock. Like other municipalities, Hamilton has lost rental units to condo conversions. Additionally, affordable units have been lost to “renovictions”. This occurs when a tenant is displaced when repairs are undertaken, and the property owner increases the rent of the unit following displacement.

What This Means to Us

The problems of ensuring all residents have access to safe and affordable housing are as old as they are big. We cannot solve this problem by relying solely on local resources. Hamiltonians simply cannot be asked to provide the kind of investment needed to address a problem that all three levels of government have created through their policies and actions over many years.

The City of Hamilton is trying to marshal local taxpayer resources to ensure people are not dying outdoors. In 2023, the City of Hamilton will spend 33% more on homelessness and housing services than the provincial and federal governments combined. The City is also working to put in place bylaws to halt renovictions and ensure basic health and safety rental standards are met. The municipality aims to shift from an emergency response to a prevention mode. But we need the provincial and federal governments fully and completely at the table. We are at the point of crisis, and people are dying. Please contact your Member of Provincial Parliament (MPP) and Member of Federal Parliament (MP) and tell them your City needs help. All residents of Hamilton deserve nothing less.

Footnotes:

1. Patricia Begin, Housing and Parliamentary Action, (Parliamentary Research Branch, 1999), 43.
2. Steve Pomeroy, Canadian Housing Evidence Collaborative, McMaster University, “Examining the Housing Affordability Crisis,” (Presentation, AMO Conference, August 16, 2022). 
3. Sharon Chisholm & David Hulchanski, Canada’s Housing Story, Chapter 4 in Shaping Futures: Changing the Housing Story. 
4. Pomeroy, Examining the Housing Affordability Crisis.
5. Chisholm and Hulchanski, Canada’s Housing Story, Chapter 4 in Shaping Futures: Changing the Housing Story,(Glasgow: University of Glasgow). 22.
6. Rachelle Younglai, “Investors account for 30 per cent of home buying in Canada, data show.” (Globe and Mail, September 8, 2023).
7. Pomeroy, Examining the Housing Affordability Crisis.
8. John C. Bacher, Keeping to the Marketplace, The Evolution of Canadian Housing Policy, (McGill-Queen's University Press, 1993), 255.
9. Canadian Income Inequality, Conference Board of Canada.

Reading List

• City of Hamilton, Housing Sustainability and Investment Roadmap,  April 2023
• Duncan Maclennan, Hal Pawson, Kenneth Gibb, Sharon Chisholm and David Hulchanski, Shaping Futures: Changing the Housing Story. Final Report
• Gregg Colburn and Clayton Page Aldern, Homelessness is a Housing Problem, University of California Press, 2022
• John C. Bacher, Keeping to the Marketplace: The Evolution of Canadian Housing Policy, Montreal: McGill-Queen’s University Press, 1993