When it comes to finding a solution for providing enough affordable housing, there are options, but no one idea will address the situation.
"There's no silver bullet solution to affordable housing," said Tyler Mathies with Innovative Assets Inc. in Saskatoon when he spoke at a Regional Housing Conference held in Yorkton last Tuesday.
Mathies said there are programs in place which can help some, pointing to the Mortgage Flexibilities Support Program. He explained the City of Saskatoon, Canada Mortgage and Housing Corporation (CMHC) and the Saskatchewan Housing Corporation created the program to increase affordable homeownership opportunities in Saskatoon.
With a five per cent down payment grant from the City of Saskatoon and mortgage loan insurance from CMHC or Genworth Financial, qualified homebuyers have the means to finance the purchase of a new home. The total household income of the buyer must meet the provincial Maximum Income Limits; $44,500 for singles and couples, and $52,000 for families with dependents - $52,000.
The program began by delivering 50 units per year, but has grown to 75, said Mathies.
For the City it has proven pretty much cost neutral, said Mathies, noting communities often offer tax rebates for new construction. In the case of the program the City gives the money up front to help with the down payment.
"There's no tax abatement," he said, adding the City of Saskatoon recoups the money over five years in taxes.
Mathies said the program is one of four in Saskatoon, each having aspects which while not working for every would be new homeowner, can help some take the step to ownership.
As a second example in Saskatoon there is a tax sponsorship which "helps reduce the cost of ownership," said Mathies, adding it "provides up to $200 a month in the form of prepaid taxes over 10-years."
"Out of 100, three, or four might fit," he said.
Terry Pollock, a landlord in the city said there is a need for rental units, but something is stopping their creation.
"If demand is strong enough you would expect to see some built," he said.
Pollock said there are barriers to seeing new rental apartments springing up.
One of those is the impact of the capital gains taxation when selling off an apartment building. With the rate at 46 per cent on a portion of the gain he said there are simply other avenues to investment which are more attractive.
Pollock added the tax is also a disincentive to improving existing buildings, noting that might be one of the reasons there are so-called slum lords, simply because investing as one nears the time to exit the business makes bad financial sense based on the capital gains tax.
As for building new, Pollock said the costs of construction leave owners needing rental rates most would see as prohibitive in the Yorkton market. He said a four-plex with a price tag of $750,000, would require rentals of $1200-to-$1400 monthly, plus utilities to recoup the investment.
That has led to the situation where outside of publicly funded units, no apartments have been built in the city in near 30-years, said Pollock.
With the likelihood of new rental properties in the immediate future remote, Pollock said in "the short term we have to look at existing inventory," he said.
One of the quickest paths to offering more rental spaces would be to encourage "suites in existing houses," said Pollock, adding that can extend to offering incentive "to build suites into new houses." He said in Alberta there has been a $10,000 incentive program to encourage suite development.
Pollock did remind what goes up may come down, even rental demand and rates. He said in recent months rents in Calgary have dropped by more than 25 per cent "because of over-supply."
