The invention of homelessness

David Hulchanski, op-ed in Toronto Star, 18 September 2010

  

     As of late 2009, the English language contained one million words, and new words are being added every day. With such abundance in the language, we tend to forget how powerful words can be, and that the names we give to ideas can shape our world view. Consider a word that we take for granted, but that has far-reaching implications. The word is homelessness.

     A search of the New York Times historical database covering 1851 to 2005 reveals that the word “homelessness” was used in 4,755 articles, but 4,148 of them (87%) were published in the 20 years between 1985 and 2005. Before the 1980s, it is rare to find “homelessness” used to designate a social problem. What happened in

Report documents the extent of housing subsidy discrimination between homeowners ($15.8 billion annually), private renters ($1.3 billion), and social housing ($2 billion); Most of Canada’s housing-related subsidies do not assist those in need

A report, Government Subsidies to Homeowners versus Renters in Ontario and Canada, by housing economist Frank Clayton, estimates the size of the imbalance in the way that owners and renters are treated by Canada’s various housing subsidy programs. Housing-related subsidies include both direct budgetary expenditures and tax benefits (commonly referred to as tax expenditures).

When any household seeks a place to live there are two basic starting decisions: to own (buy a house or condo), or rent. Canada’s small social housing sector, about 5% of all housing, means that 95% of Canadian households must seek housing in the private sector – either buy a house or condo, or rent from the private rental sector.

A housing system ought to be neutral in terms of subsidies provided to owners and renters. Why should one form of housing tenure

Australia’s Housing Affordability Crisis -- Similar to Canada's: What to do about it?

Australia’s Housing Affordability Crisis

by Judith Yates, professor, economics, University of Sydney 

The Australian Economic Review, June, 2008

This very helpful and insightful overview, written just before the global financial crisis, provides an excellent analysis of what is meant by the popular / media term "housing affordability crisis" and what should be done aout it.

The Canadian and Australian housing systems are very similar.  Much, if not all of what Professor Yates writes about Australia is relevant to Canada's housing situation.

While some home owners face financial hardship due to the large gap between their incomes and housing costs, it is mainly renters who have difficulty accessing appropriate and adequate housing within their household budgets.  

"Although affordability problems for purchasers tend to receive most media attention, the largest group of households experiencing affordability problems are not purchasers but are households in the private rental market. For many of these households, home ownership is not something they can even aspire to."  p.201

"While 16 per cent of all households had high housing cost ratios in 2002–03, more than 28 per cent of lower income households were in housing stress.For lower income private renters, however, the incidence of stress was 65 per cent. For lower income purchasers it was 49 per cent." p.207

While the problem is not new, it is worse now than in the past.  The global financial crisis will likely make it even worse for most renters and for recent house purchasers.  

The key part of the solution is to deemphasize the investment use of residential real estate.  Providing special tax breaks for ownership helps inflate the housing market, harming many, especially lower income households.  

Housing policy in most countries has not been tenure neutral -- which means that ownership and rental are not treated equally by the regulatory, tax and subsidy systems of all levels of government. 

Housing policy needs to focus on inceasing "the supply of wel located affordable rental housing to meet the needs of those on lower incomes who are likely to be long-term renters." Profesor Yates concludes: "A strategic rental housing policy framework is essential to foster adequate and stable levels of investment in rental housing."

The full article is available on the internet.

From the conclusion:

      "This suggests that the most effective long run solutions to housing affordability problems lie in addressing the underlying determinants of demand and supply. With continued pressures from increased population growth and real per household incomes, demand is likely to be reduced only by reducing the attractiveness of housing as an investment asset. Demand side subsidies, such as the untargeted first home owners grant to first homebuyers are unlikely to be effective.

       "The second key observation is that the media tendency to define affordability problems by high or increasing housing cost ratios for purchasers is largely misplaced. Most home purchasers have relatively high incomes and are not forced into the undesirable trade-offs that lower income households face when their housing costs increase. There are significantly more renters than purchasers in housing stress and the incidence of housing stress is significantly greater among private renters. Many of these households face the prospect of never being able to gain access to the economic an social advantages provided by home ownership. 

        "This suggests that a change is needed in the direction of Australia’s housing policies away from those that focus on home ownership and towards those that increase the supply of well located affordable rental housing to meet the needs of those on lower incomes who are likely to be long-term renters. A strategic rental housing policy framework is essential to foster adequate and stable levels of investment in rental housing."