“At this moment, 3 million Canadian households are precariously homed, living in unaffordable, substandard, or overcrowded housing conditions. Almost 1 in 5 households are currently experiencing serious housing affordability problems which puts them directly at risk of homelessness. In 2016 alone, an estimated 235-thousand people in Canada experienced homelessness with an average of 35-thousand people living on the streets on any given night. A true national housing crisis, these numbers are actually estimated to be even higher in today’s society.”
Limits to planning: demand, supply and incomes…
The situation described by Habitat for humanity (which I refer to as the housing crisis) seems to be getting worse as speculation, combined with low interest rates and rising incomes (mainly for white-collar workers in certain sectors) continue to drive house prices up. At the same time many people have lost their jobs due to COVID.
The immediate (and almost mechanical) reason for the housing crisis seems to be undersupply. Urban planners, who deliver building permits and regulate housing development, appear to possess strong levers for increasing supply. But would increasing supply alleviate the crisis?
Planners are doing their best, putting their skills and supply-side tools to good use. For instance it has become common for them to implement inclusionary zoning. The idea is to increase the supply of affordable housing by issuing conditional development permits: for development to procede it must include a certain percentage (typically 10 to 20%) of ‘affordable’ or social units. An example of this is Montreal’s recently updated 20-20-20 by-law.
However, regulation – seen by planners as part of the solution -, is sometimes seen as part of the problem: there are calls to simply scrap planning regulation, viewed as an impediment to house-building.
But the affordable housing crisis is structural and large-scale. A supply-oriented approach – whether pro-active (through inclusion) or naive1 (through deregulation) – will only put a small dent in it.
Consider the following chart, which documents the growing income gap, attributable not to any decline in social contribution of lower-income people but to changing politics, which have increasingly rationalised inequality on grounds of competition and merit:
Housing supply responds to demand: not to the number of households in need, but to the number of dollars chasing houses. As a lower and lower proportion of national income is conceded to people with lower incomes2, they simply can’t afford housing. They can’t compete against people in top income brackets or with investors. Of course, people with lower incomes can always afford some housing: they can cram into less space, or into space of lower quality. This happened at the end of the 19th century, leading to tenements, ill-health and miserable living conditions. It is happening again today.
Given building regulations, standards and codes, developers (who must reconcile these with the strictures of return-on-investment, finance and risk) are unable to build housing for lower income people. This is not because regulations, standards and codes are necessarily unreasonable (pace deregulationists); neither is it because developers are necessarily ill-intentioned (pace anti-development activists). It is because the cost of building housing to current minimum standards is more than many poorer households could ever afford: despite their need, they do not present effective demand.
The housing crisis: a crisis of politics and values
The housing crisis (which manifests differently in different places and for different people) seems to be driven by a series of incompatible but widely held values or beliefs:
- the belief, enshrined in planning regulations and in building standards and codes, that housing should be of some minimum quality;
- the belief, evident from current wages and incomes, that it is OK to pay people so little that they can’t afford houses built to minimum standards.
A possible way to reconcile these contradictory beliefs – effective national or provincial housing strategies – is precluded by a third belief:
- the belief, which governs current tax codes and policy, that tax reduction is inherently desirable and tax avoidance (especially by large multinationals and their owners) welcome (if it weren’t, why permit it?). A corollary belief (somewhat muted since March 2020!) is that it is necessary to shrink the public sector.
Other issues – such as land speculation and financialisation of real-estate – intertwine with, and exacerbate, these contradictions: they create value for investors by putting housing out of reach of people who simply want a place to live.
Decent housing has been recognised as a basic human right – as such it should not be treated as a simple market good. In markets, those who can’t afford something simply don’t get it, which is fine for Rolls-Royces, caviar and light-weight racing bikes, but not for decent homes, warm clothes and basic food.
This is the crux of the matter: decent housing, considered as a basic condition for human existence – i.e. as a basic capability – is a question of politics and values. Scrutinizing and manipulating interest rates, zoning regulations, building codes, standards, permits and other technicalities will not solve the crisis. A fortiori, neither will planners, one set of actors amongst many.
Since the housing crisis is political and touches upon fundamental issues of justice, planners seeking to address it – whilst they must be cognizant of technicalities – need to apprehend the wider nature of the problem. They can then engage in alliances, persuasion and politics.
This can be uncomfortable for professionals who value their status, impartiality and technical skills, and whose tools tend to focus on (de?)regulating supply.
1 I qualify the deregulation approach as naive, not because all regulations are necessarily good (they can be used to exclude just as they can be used to include), but because the absence of regulation, as I outline below, will not make housing more affordable, decent or salubrious. At least inclusive zoning, especially if it includes social housing, can marginally address the problems discussed in this post.
2 The housing problem for low income people (which is one of access to any type of decent housing) is not identical to the problem for slightly higher income people (which is often one of excessive cost of decent and well-located housing relative to income). There are many other aspects of the housing issue – such as discrimination, housing for people with physical mobility issues, housing for families, etc… that are not addressed here. The idea is to give a broad-brush approach and to point out that the housing crisis is not just (or maybe even mainly) a supply problem, nor one that planners have the tools to address.