The Affordability Gap – A Challenge and an Opportunity
By: Henri Cullinan
Creating the conditions for success begins with a right-sized dialogue. When it comes to the housing market, being cognizant of the broader issues doesn’t preclude us from selecting one spot along the housing spectrum to make a start. However, before we can start addressing possible solutions, the first question should be “why housing matters?”
For communities everywhere, our building blocks are our people, profile, partners and our approach to sustainable delivery.
Housing remains the common denominator for prosperity in any community. Access to secure, appropriate and affordable housing is not only a basic right, but also an essential component of an inclusive, dynamic and sustainable city.
Regular priority setting and management are a part of our daily lives. When having to decide on where to live, we consider proximity to job opportunities, support services and public amenities, access to transit options and many more criteria. However, all these considerations hinge around one primary objective – what is available and at what cost.
“I just need something that is affordable.”
Most of us translate this cost as a percentage of our monthly income, which in turn determines whether a property is affordable or not. In many cases, though, we lose sight of those initial criteria, drivers and needs associated with such accommodations. Our rationale around location proximity and other supporting factors goes by the way, instead focusing on one simple fact – “I just need something that is affordable”.
Using the benchmark of housing costs being 30% of our household income forms the primary basis in our pursuit to find a suitable home – not that it is the right accommodation, but rather it is affordable.
We tend to settle for second best, having to absorb the additional knock-on costs, such as longer travel times and limited transportation options, all of which directly impacts our cash flow – often referred to as our transactional cost. The bottom line is that if we cannot afford to live in an area where it is possible to forego those unnecessary expenses, we will never get ahead, potentially saving for a down payment to own a home one day.
Finding a resolution is all in the way we design our future cities and provide a choice to the mixed spectrum of housing needs. Is this a dilemma of housing affordability, or the lack of appropriate supply of purpose build housing? Do we have our facts correct within the context of what future cities are moving towards? These are all good questions, each with its own merit and challenges.
Housing as the primary economic driver in cities will prevail, with the gap continuing to grow between those who can afford it and what the market can deliver. It is in the shared vision of all the housing factors where communities can make a difference, each playing its part.
Four major parts of housing delivery are land, building, financing and O&M, all uniquely framed within their own policy context and environment. There is no one-size-fits-all solution, but considering the supply side, cost reduction is critical to successfully addressing housing affordability. It is a mind shift, but challenges with affordable housing can be seen as an opportunity.
There isn’t one quick-fix to meet the diverse housing needs in cities big and small. A variety of housing types, subsidy programs, and legislative amendments involving coordinated approaches are required. The development of a delivery agency, a community housing trust, and/or establishing partnerships, as well as private sector confidence, will be important elements of a given city’s response to the affordable housing issues.
We need a new approach with new outcomes. A culture shift that says affordable housing is not a bad thing, but is badly needed.
Henri Cullinan is a Strategic Planner and Local Government Consultant in our Kelowna office. For over 20 years, he has worked with various International, National, Provincial and Local Government Structures, becoming a specialist in his field. He also has exceptional experience and knowledge in strategic and spatial planning, including design and financial modelling of social and affordable rental housing schemes. This article is a first in a two-part series examining the challenges and potential solutions to addressing the growing housing affordability gaps in cities large and small.