Communities Mobilize to Address the Housing Crisis

The Institute of Southern Georgian Bay > News/Newsletters > Newsletter > Communities Mobilize to Address the Housing Crisis

By Marilyn Struthers for the TISGB’s Social Finance and Housing Group
Thanks to Liz Buckton, Senior Planner, Grey County for data and to Jack Vanderkooy & Carol Merton for editorial support. Housing spectrum image is from CMHC.

No question, the affordability of housing is out of whack locally. Many people employed in the industries our communities rely on most – hospitality and tourism, retail, and healthcare – are unable to find an affordable home. This is particularly so for renters – those for whom home ownership is out of reach. Yet, as we discovered during the pandemic, PSWs, grocery store clerks and restaurant workers are some of the most important people sustaining our local economies. If workers cannot find affordable housing, the future of the businesses they work in is jeopardized. No housing, no employees, no business. This is a systems view – looking beyond the impact on individuals to how the housing crisis is affecting the health and sustainability of our local municipalities. This is a problem for all of us.

The Institute’s Social Finance and Housing Group has been studying the South Georgian Bay version of the national housing crisis for three years. We have read the various expert explanations of how we got here and about the policy shifts that may or may not be required. More importantly we have been scanning the horizon for the solutions other communities are developing at the local level. What can we do here to buffer our small communities in the larger systems collapse?

We have been watching the rapid growth of the social finance movement as communities mobilize to address the housing crisis. Community bonds are being used to create local investment opportunities in affordable housing. Municipalities in Newfoundland are working on the launch of a charitable REIT. Foundations, including our own Community Foundation Grey Bruce, are learning to invest some of the assets they hold in trust to social purpose lending. Land trusts are being created, not just for conservation, but to hold land and buildings expressly for affordable rental housing over the long term. Communities are learning to use the tools of developers – patient capital, leveraging and stacking investment strategies – and to work much more closely with municipalities and other partners who share a common interest in community sustainability.

Canada has long had one of the richest ecosystems of citizen-led organizations in the world: charities, nonprofits, social enterprises, co-ops, trusts and credit unions. These organizations are built to solve problems at the community level. This is where the idea of mobilizing community wealth began, in new financing practices and instruments that serve public benefit over individual profit some twenty years ago. It is a field of innovative practice growing exponentially now, during the housing crisis, as communities search for solutions. Just as we have learned to buy locally to support local businesses, communities are learning how to invest locally in housing solutions.

Social finance solutions are systems solutions, because they alter the financial chemistry of community to enable access to affordable homes. They create the mechanisms and the incentives to engage many parts of a community, donors, foundations, businesses, and municipalities, in new ways. In rural areas, municipalities are especially important partners not only as development decision-makers, but as the largest holders of community resources in “the commons”.

So precisely what is the housing problem our communities must solve? Since the pandemic, there has been plenty of investment and plenty of new building, but low to moderate income households (earning $58,300 or less) are not living in them. With average home purchases ranging from $635,000-$715,000, these families have no option but to rent. That service worker with the low to moderate income can afford $1,460/month for housing costs while the average rental listing in Grey County in 2022 was $1,850 plus utility costs. It has only gone skyward from there. This is a problem – a recent report from RBC says will become 4x worse in Canada by 2026.

So why are local developers not building to meet this demand? In an open market system, there is no incentive to build at a loss. Traditional strategies of financing and building are working against affordable solutions. Land costs, material costs, labour costs, debt servicing, municipal levies and other soft costs have made it nearly impossible to build affordable rental or ownership homes, especially for lower income working families. It is simply more lucrative to build large luxury homes than smaller, simpler ones. You can see acres of new builds on the green stretches of our landscape – lovely new subdivisions along the highway and in the hills, where there were once orchards and farmlands. So, more housing is good right….? Yet, most of our communities are struggling with homeless and precariously-housed people and employee shortages.

There are three main kinds of housing across a spectrum in Canada. We can cluster them as subsidized housing: emergency, transition and supportive housing usually operated as social services by governments or nonprofits. Social housing is also supported by governments to offer rent geared to income for people with marginal incomes. Finally, we see market housing – rental and ownership homes built, sold, or leased at market pricing, affordable at different levels of wealth, and often the backbone of a family’s equity and retirement financing.

graphic of housing continuum

In Grey County, during the pandemic, households eligible for subsidized housing rose from 600 in 2019 to 1,500 households by September 2023. Clearly this is a growing “market” which demonstrates the shift of the cost burden to government, as wages and market housing costs become increasingly out of alignment.

Somewhere between social and market housing there has always been a narrow band of housing focused on affordability rather than profit. “Non-market housing”, is not the same as social housing or public housing. Non-market housing is protected from market forces, offering affordable rents or ownership in perpetuity. Housing co-ops, land trusts and nonprofit housing corporations are all variants of non-market housing. This segment of the housing market is now rapidly expanding using new social finance tools, still in the market, but with a priority on affordability over profit.

The variety and inventiveness in this emerging work is astounding. John Q Built is a development corporation owned and operated by nine small Manitoba municipalities who demonstrate that “governments can work as a team” reducing risk, getting better value for their dollars, and reducing project timelines. Formed to build community daycare facilities, they have set their sights now on affordable housing. Waterloo’s Union Cooperative raises funds from community members, charitable foundations and institutional partners who become members of the co-operative to invest in affordable housing. The Ottawa Community Land Trust uses both grants and social finance to acquire existing rental properties and hold them as nonprofits, ensuring affordability over time. They also secure vacant land to offer a “headlease” to nonprofit and cooperative housing organizations, to achieve both scale and growing leveraging capacity. None of these organizations existed even two years ago.

The housing system in Canada was made by people, and it can be remade. It takes time and collaboration across sectors and levels of government. Our focus is on our communities, and we already see a building engagement, openness to social finance solutions and the collaboration we need to address this issue. Using the new data tool, the HART Index, we can predict that we need approximately 2,600 units at under $1,000/month in Grey County.

This is a cross-sectoral voyage of discovery and we need all hands on deck. What would we be doing if we were 10x bolder?