This post is about a report that revisits a housing policy debate in Canada from the 1990’s. The results will be of interest to decision makers, policy makers, advocates, and most importantly, tenants with low incomes.
The debate in the 1990’s occurred when the Canadian government cancelled all spending for new non-market housing1. The question was whether the public cost of building and operating non-market housing paid off the long run. Although research at the time demonstrated there was a long run benefit for public investment in non-market housing, the government didn’t change its mind.
The current study tackles this question again with more data and the benefit of 30 years of hindsight. It compares rents in private market units with non-market cooperative units over the period 2006 to 2021 in five Canadian cities. The rents in the non-market co-operatives in all cities were lower than in the private rental throughout the study period.
The rents in the non-market co-operatives cover their building’s operating expenses. Over the time of the study, the costs of operating the non-market co-operatives increased, but not as much as the increases in rents charged in the private market units. The study attributes the higher rents in market units to profit and housing demand.
The lower rents in the non-market units mean they are affordable to a wider range of incomes. For example at the end of the study period, the average rent for a two bedroom apartment in a market unit in Edmonton was $258 more per month than the average rent in a co-operative non-market apartment2. This difference means that the tenants in the private market would need to earn $10,000 more per year for their home to be affordable than if they were paying the rent charged in a co-operative. The lower rents of the co-op units are evidence of the long term benefit of public investment in non-market housing.
This report is written for a Canadian audience, but the methodology provides a way to take a long term view of spending on non-market housing, which may be interesting for readers in other countries.
You can read the full report at the Co-operative Housing Federation of Canada: The Co-op Difference: Comparing Co-op And Market Rents In Five Canadian Cities
Human Rights Perspective
The United Nations guidance urges governments to “make every possible effort, within their available resources, to realize the right to adequate housing and to take steps in that direction without delay” (page 7 of The Right to Affordable Housing). The results of this study suggest that public investment in non-market housing will confer permanent benefits in the long term.
Footnotes
- The majority of non-market housing in Canada is operated by co-operative and non-profit housing providers
- The difference between market rents and co-op rents in Edmonton was smaller than the other cities in the study. The difference in rents in Vancouver was the largest. The average rent for a two bedroom private market apartment was $911 more than the average rent in a co-operative non-market apartment.
