We live in a great city. The economy has been growing, we attracted more new Calgarians last year than ever before and are still in the top three of the best places to live – on the planet!
But we have a looming problem and a short window to fix it: housing affordability.
For a city to be truly great, it must be great for everyone. In today’s context, that means ensuring we meaningfully address an issue Calgary has not had to face as much as either Vancouver or Toronto, until recently: housing affordability.
It’s not something Calgary has often faced throughout its history, but it has become an issue that stands to compromise our ability to continue to attract new talent while keeping those who have come here searching for opportunity.
The numbers are eye-popping.
From the insufficient supply of rental housing to the 17-per-cent year-over-year increase in rental rates and a 1.8-per-cent vacancy rate – on top of higher interest rates, Calgary’s affordability advantage is at risk. An $84,000 annual salary is required to adequately afford a rental unit, but with the average Calgarian earning $61,400 per year, more than 30 per cent of before-tax income is being allocated to housing costs – higher than what is considered affordable.
How did we get here?
Dial back the clock to 2014 to the collapse in oil prices and a very uncertain outlook for the Alberta economy. Not only were developers uneasy about overbuilding, but the banks weren’t too keen to lend in that environment, either. Lots and parcels that were bought and serviced got built, but the approach was conservative and cautious. Additionally, there was a surplus of condominiums, which added to a high vacancy rate that persisted until recently.
A Scotiabank study last year showed Alberta having among the highest structural housing deficit in the country – second after Ontario – requiring an additional 138,000 units to bring it in line with other provinces. That was before the figures released by Statistics Canada showed Alberta is on track to experience its largest population increase since 1914.
When Calgary is singled out – with an additional 40,000 newcomers to the city in the last 12 months, that pace means we will require an additional 110,000 housing units by 2027. However, we’re only building one new home for every 2.75 new households. It also needs to be noted these numbers can’t be looked at in isolation. Everyone who comes to the city and province doesn’t bring their own teachers, doctors or power generating stations; they depend on the existing infrastructure, which is also being stretched.
As leaders representing businesses in Calgary across the spectrum, and not-for-profits and arts organizations, we urge city council to move on housing affordability, including a thoughtful implementation of the Housing and Affordability Task Force Recommendations.
The Task Force recommended moving quickly to add housing units, making it easier to build housing, which effectively means decreasing the regulatory burden as studies show a link between decreased housing affordability and greater land regulation. Simply put, having more homes is the best way to increase affordability, and the best way to get more homes is to make it easier and faster to build them. Also put forward was a recommendation the city find ways to increase the land available for construction, increase collaboration with home builders and ensure housing will meet the needs of a growing and diverse population.
There may be room for improvement in the recommendations. For instance, they recommend an evaluation of how rent controls have worked in other jurisdictions. That review will quickly show that such blanket policies have not achieved the affordability outcomes needed.
Additionally, we encourage the city to work with the federal government to secure GST rebates on construction of new builds to increase housing affordability and harness private capital to accelerate the building of new homes on an expedited basis.
All this is important because Calgary can only succeed if people have a place to live. Right now, one in five Calgary households is unable to afford their current home and 75 per cent can’t afford to buy a home. Housing affordability is critical to securing the talent businesses need and diversifying our economy; increasing housing supply will make Calgary a more competitive jurisdiction in the global race for talent, investment and opportunity.
Calgary is known as an innovative city. We solve big problems. We are doing that with the downtown office conversions – which has captured the attention of cities around North America. We moved from talk to action, faster than any other jurisdiction.
It’s time to do the same thing on housing affordability.
Deborah Yedlin is the president and CEO of the Calgary Chamber of Commerce.
Adam Legge is the president of the Business Council of Alberta.