Affordable Housing in St. John’s: We Have a Problem & The City Released a Plan

A full time minimum wage worker in St. John's is unable to comfortably afford a 1-bedroom apartment. So we know a problem exists.

The City of St. John’s council approved its affordable housing strategy on November 19, 2018. This plan will cover a 10 year time period from 2019 to 2028, and set the direction the city means to take on housing initiatives.

The report is 52 pages of buzz word salad with vague directions on how to achieve nebulous concepts. Once all of the synergistic synergies of innovative action, strategic road-maps for leading, and cultivating revitalization continuums are left by the wayside, what if anything, remains? Does the City of St. John’s have any concrete plans for addressing housing affordability? Let’s find out.

The Scope of the Problem

First we need to assess the scope of the problem. The city uses the definition for what qualifies as affordable housing of; it must cost less than 30% of a household’s pre-tax income, including all related housing costs such as mortgage/rent, property taxes, home energy, water, and repairs. According to that definition of the 47,625 households in the city of St. John’s, approximately 12,100 of them are living in unaffordable housing. This is especially true among renters. 64.9% of all tenant households find themselves in housing which is taking more than 30% of their income, as opposed to only 35.1% of owner households.

Someone working full time for minimum wage, $11.25/h, would earn $23,400 per year. However according to CMHC a bachelor apartment would cost $8,388, and a 1 bedroom $9,516, or 36% and 41% respectively of that full time workers salary. When a full time worker is unable to comfortably  afford a 1 bedroom apartment we know a problem exists.

Tourism: Good for the Economy, Bad for Renters

An average bachelor apartment rents for $699 a month, a 1 bedroom $793, and a 2 bedroom $956 with vacancy rates for each of 5.1%, 6.9%, and 6.8% respectively. There exists considerable debate on the subject, but vacancy levels of between 5 and 8% are generally considered healthy, they provide market rates which reflect that market’s carrying capacity. So why isn’t our relatively healthy vacancy rate producing affordable rental rates? A combination of things, but most significantly tourism. Tourism has had on the whole an extremely positive impact on our Province and city, but tourism has not been kind to our rental rates. The rapid increase in vacation rentals, AirBnb, as well as summer homes has removed a large percentage of rental apartments and homes from the resident market. These tourist rentals as well as the housing stock which has been set aside for our offshore corporate market has turned our healthy vacancy rate of 5 to 7% into something closer to an effective rate of 2 to 4%, thereby artificially reducing supply and increasing rental prices for everyone.

It all boils down to this, new apartment construction has not kept pace with the rapid growth of the tourism sector, and the way our housing stock has evolved to meet this new demand. The city of St. John’s does appear to fully appreciate the situation and are preparing to take corrective steps. This is where the buzz words end and the concrete ideas take over. The affordable housing strategy states unequivocally that the City of St. John’s will focus on households with an income too high to be eligible for social housing. but too low to afford market rents or purchasing options.

Highlights from the City’s Affordable Housing Plan

In addition to maintaining current waivers of development fees for affordable housing, here are the highlights of the city’s 10 year plan:

  1. A civic housing action fund and housing catalyst grants.  Almost no affordable housing gets constructed by the private sector for the simple reason that more profitable ventures exists, therefore some degree of financial stimulus or incentives will be required.
  2. Identification of all city owned vacant land and buildings for re-purposing. It will be essential to use the resources at hand if we are to increase efficiency and affordability.
  3. Allow subsidiary dwelling units in as many residential zones as possible. This has the potential to create many new rental units with minimal investment.
  4. Include provisions for tiny homes and support intensification and mixed use development. This should allow for an improved level of service, and create new homes in convenient areas without the need to increase taxation. We’re all aware that some degree of infill will be required, however, striking the right balance will be key.
  5. Support the Non-profit Housing Division, the Affordable Housing Working Group, and End Homelessness St. John’s. It takes continuous leadership and effort to make even the smallest improvement.

The city’s stated vision for this new strategy is: “a vibrant, inclusive, and thriving city with a wide range of affordable housing options that contribute directly to community health, sustainable growth, and economic security.”

The vision is laudable, the direction is sound, and the right tools have been highlighted. What remains now is to make it real, and that will take extreme effort. Will buzz words turn into results? One thing is certain, they will need our support.

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