What is the solution to affordable housing?
Let’s talk about three issues that affect the housing market including rental properties.
The first is CHIP Reverse Mortgages. The CHIP or reverse mortgage is a financial product that was created to help people stay in the home they have lived in for a long time and don’t want to move. I understand why people want to stay in the home they have raised their children or lived in for long periods of time. They have memories from that home and want to keep those memories. Unfortunately memories dont pay to fix the roof, the hot water tank or pay the remainder of the mortgage.
The CHIP reverse mortgage was created to help people who are not in a financial position to afford the home they want to stay in. If we eliminated the chip reverse mortgage a number of those houses would be sold due to the fact that the people are unable to afford the home.
The second item is basement suites. Basements suites are seen as a great way to add more rental housing to the market. Similar to the reverse mortgage most people rent out the basement suite in their home due to the fact they are not in a position to afford the home they want to buy or live in and don’t want to move. If you are renting a portion of your home to a non-family member it means you don’t need a house that is the size you have purchased. Basement suites mask the government’s assessment of what type of housing needs to be developed in the future. If single family homes are built and people buy them and rent out a portion of the homes then developers will keep building this type of product. If basement suites were not permitted, developers would not be able to sel the homes they are building and would push governments to change the zoning to allow smaller housing products to be built in areas where single family homes are built. Eliminate basements suits to build more right sized housing needed in the market.
The third item is the most important and is the one the government could control more than either of the previous two examples.
For many years in many parts of Canada major cities have not built purpose built rental properties annually to keep up with the need of the rental market. This means that the majority of the rental housing is in basement suites, or individually owned condos which can be removed from the rental pool when the property is sold to new owners. This situation creates a very fluctuating rental market. Federal and provincial governments should fund the development of entry level rental housing for young and lower income people. This needs to be assessed annually to the need and producer need to be built annually. Building regularly would keep the rental and sales prices in a more competitive market.
What do you think if we made these changes to the housing market?
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