Affordable Housing: Are we Ready to Discuss Real Solutions?

Mike Lewis's picture

It’s a sad case. In Vancouver a 50-foot lot on the west side with a single family home was only $1.2 million a year ago. Today it is $1.65 million. For the somewhat less pricey average two story Vancouver home, it would take 94% of the average families household income.

As for apartments, a small, 2-bedroom downtown went from $542,000 to $610,000, less than half the average house but still completely unaffordable for an average income family. Since the 1970s, real household incomes increased by 9% while the price of a condo has gone up 280%.

And the debate roars about what to do about it. Reduce red tape at city hall! Get rid of excessive charges on developers! Get government out of the way and let the market do its magic; there is not enough supply and too much demand.

The discussion is dominated by tinkering, much of it shaped by the interests of developers in maximizing profits and minimizing risks. For instance, one developer recently warned the city of Vancouver not to make any public land available on a low cost basis because it would be unfair to private developers.

I am not “expert” in housing but I know enough to know that fundamental issues are missing from the discussion. That is because I have been exposed to solutions that are creating significant stocks of permanently affordable housing.

Key to both is what I call an “ownership” solution. In many, if not most settings, the private property system is failing to deliver affordable housing. And I am not just talking about developers here. Many of us are implicated. Owning a house is a good investment, a way to make money well beyond recovering the price and a modest return on capital. There is some juicy potential for pocketing a bundle. The problem is that all that unearned profit pocketed on every sale puts the price of housing increasingly out of reach for us modest wage earners.

The route to reform highlighted here is two-fold: first, remove land from the market and put it under the ownership of a community land trust (CLT); and second, ensure owner-occupied housing on this land has a resale formula built into it to ensure equity gains are limited and affordability preserved.

It works, as you will see. “Affordability Locked In,” the latest i4 release, explains how the CLT model is delivering bottom line returns to households, to communities, and to taxpayers in the U.S. That is why an increasing number of municipal governments there are making CLTs a centrepiece of their affordable housing strategy.

The CLT is also the basis for the Mutual Home Ownership Society (MHOS), a new model now being pioneered in England and Wales. MHOS combines the CLT reform with tenant co-operative ownership of the building. A lease geared to income is fair while still providing members with some modest equity return. Find out more about that in a second i4 release, “The Best of Three Worlds.”

It’s all part of the radical reuniting of the “I and the We” which Pat Conaty and I call for in our book The Resilience Imperative (New Society Publishers, 2012). Prepare to be excited by how, after 40 years of work, this “ownership” solution is taking off the America and the U.K., including some major, high-cost urban areas.

If we can SEE the world just a wee bit differently (Socially, Ecologically, and Economically), new solutions can be forged. When markets are excluding more and more people, it is up to us to shape markets to ensure meet basic human needs are met and community well-being advanced. Shame on us is we fail to take up economically viable solutions that clearly demonstrate permanent affordability if both possible and practical.



It never ceases to amaze me!  We Canadians love to think that we are so much more "progressive" than our American friends, yet it takes us over 20 years to start talking about real solutions to housing affordablility..such as Mike has done with this latest blog.  With the Occupy movement still fresh in our minds, the launch yesterday across Canada, of the International Year of Co-operatives, the time has come to speak about.... the "3 ton elephant in the kitchen"...democracy...economic democracy to be more specific.  If we are really concerned about economic democracy, then Community Land Trusts, co-operatives, etc will be seen as natural next steps.  If we do not value democracy..which for me equates with "ownership" then we will not put our efforts into solutions that make this possible. For too long we have built and maintained a system to support "clients' and not "citizens".  Let 2012 be the Year that we as a society made a choice for real solutions to achieve democracy, ownership and citizenship!

Hi Mike...

I agree that more emphasis has to be place on hosuing affordability and offering housing options for all segments of the population that comprises a viabile community.  

However, I have a different take on this challenge from a rural prairie perspective.  Here out challenge is to get governments and financial players to alter their "no growth" assumption about our rural prairie populations.  In a surprise to the grand designs of demographers, our declining rural communities are actually expanding and growing.  The problem is that there has been an implicit assumption in public policy that this trend would not emerge and as a result, we have limited mechanisms to release land for new housing development.

In my opinion, what we need is more market investment, and particularly investment from pension funds, that can finance the long term process of opening up new land for development that is required to support expanding economies and populations.  Governments with the limited time horizons have not done a good job in dealing with this challenge.