HOUSING BIGGEST LIFETIME EXPENSE, NOT CHILDREN. IS HOUSING ALLOWANCE THE ANSWER?
(These thoughts are purely the blunt, no nonsense personal opinions of the author about financial fairness and discrimination and are not intended to provide personal or financial advice).
(This discussion on the housing crisis was presented to a Conservative Member of Parliament for future consideration on federal budget consultations. This is Part 1 of the presentation. Further suggestions for budget considerations will be presented in next blog post).
First, affordable housing, affordable housing and more affordable housing. Both Conservatives and Liberals have failed to provide solutions for affordable housing (Conservatives during their 40 year reign in Alberta had almost zero affordable housing, raised taxes for the poor from 8% to 10% with flat tax implementation and catered to the wealthy while having no financial plan for managing revenues from oil wealth, and therefore, were unprepared for the oil price crash-Peter Lougheed excluded).
FACT CHECK: FOREIGN HOME OWNERSHIP AND MULTIPLE HOME OWNERSHIP
Canadian residents spent $2.2 billion on Florida real estate in the 12 months ended June 2014, making them Florida’s No. 1 international buyer of residential real estate (canadian-snowbirds). About half of Canadian buyers spent less than US$200,000 on Florida purchase and just 16 per cent paid more than US$400,000. About half of Canadians purchased a condominium/apartment and 38 per cent bought a single-family detached home. More than half (53 per cent) of Canadian buyers intended to use their Florida home as a vacation property (resulting in empty houses during part of year), 14 percent planned to rent it out, 17 percent said they will do both. Forty per cent of Canadian buyers purchased real estate in Florida, 23 per cent in Arizona, and 10 per cent in California. Dollar value of Canadian sales for 2009 $8.9 billion, 2010 $17.1 billion, 2011 $13.0 billion, 2012 $15.9 billion, 2013 $11.8 billion, 2014 $13.8 billion (total $80.5 billion in six years). Fifty percent of sales were in four states of Florida, California, Texas and Arizona.
Both foreign home ownership in Canada and Canadian foreign home ownership in USA equal $80 billion (Canadian foreign home ownership is $80 billion in six years). There is so much hype about foreign home ownership in Canada, but Canadians are so hypocritical that they can’t look in their own backyard regarding snowbird foreign home ownership in USA, having their Canadian homes empty for six months of the year and spending their money in USA for six months. What does this mean? – those Canadians who are not so fortunate to be snowbirds like the poor are paying more to support the taxes and GDP of Canada.
Toronto – 121,100 people in the GTA owned at least one other home in 2016. Question: how many Canadians own multiple properties in Canada and USA (snowbirds) while in any given year 200,000 to 300,000 Canadians face homelessness?
Information from the following article provides an interesting perspective on housing: (Renter-Struggle-Ultimate-Housing-Problem)
‘More than four million Canadian households — about 30 percent of total households — rent.
Without federal help, low-income renters’ struggle to find homes worsens. There is, however, a lot of federal money reserved for homeowners. Owners selling their principal residence are exempted from capital gains tax, a tax break worth about $5 billion a year.
The federal government offers this aid for owners despite the fact they earn more than renters. Owners make more than twice as much as renters do at $67,522 a year, according to the last long form census in 2006. Owners also have 37 times the median net worth of renters, thanks to their homes, at $513,000, according to 2012 CMHC numbers. This wealth gap widens over time.
“The great thing about ownership is that you have an asset for when you retire… Politicians use the line that if you work hard and buy a house you’re going to be OK,” said the University of Toronto’s Hulchanski. “But what about renters? The rest of you are just lazy? And you’re going to suffer now? You’re going to suffer when you get old?” Hulchanski calls the neglect of renters and prioritization of homeowners discrimination. “That’s no way to organize society.” ’
- New data from the 2011 NHS (National Housing Survey) showed that 69.0% of households in Canada, or 9.2 million of 13.3 million, owned their dwelling.
- Four in five (82.4%) couple-family households owned their dwelling, while less than half (48.5%) of non-family households (singles) owned their dwelling. Just over half (55.6%) of lone-parent households owned their dwelling.
Dr. Ben Carson (appointee of Trump who was put in charge of housing but knows nothing about housing) made statement that many of the poor create their own poverty. This statement is so false. Politicians, private enterprise, corporations and society have purposefully or unknowingly pushed singles and poor families further towards poverty by making them pay more. Whether it is purposeful or unknowing still makes the perpetrators guilty of complicity in benefiting middle class and wealthy more.
Housing is a prime example. Singles and poor families pay more for housing while being shoved into smaller and smaller spaces. Examples of inequality of Canadian values in housing are as follows:
- One condo development in housing complex includes 1 bed, 1 bath, 1 patio 552 sq. ft. micro-condo with starting price of $299,900 or $543 per sq. ft. Three bed, 2.5 bath, 2 patios, 2 and 3 story 1830 sq. ft. condos in same complex are priced from $649,900 to $749,900 or $355 to $409 per sq. ft. Ultra-deluxe model master bedroom suite with his and hers closets and spa bathroom covers entire third 600 sq. ft. floor. Third bedroom is bigger than total square footage of $299,900 condo and sells for $150 to $200 less per square foot for two-thirds more space.
- Vancouver 100-square-foot apartments equivalent to size of two jail cells rent for $570 a month (again most likely to be occupied by singles). Renters in the 50 units share 11 bathrooms and laundry facilities over the four floors (and no kitchens?).
Where is the critical thinking of ripple effects where owners (most likely to be singles) of micro-condos have to proportionately pay more house taxes, education taxes, mortgage interest, insurance and real estate fees on less house and likely less take home pay for their biggest lifetime expense?
Which of those who spout family values as a personal issue believes females should go traipsing outside of their apartments to use bathroom in middle of the night? Who believes it is humane to stick anyone into a 100 square foot or smaller units (90 square foot units in Vancouver) plus charge excessive rents?
Who makes the decisions behind loan-shark or pay day loan type pricing where financial targeting of the most vulnerable occurs? It is private enterprise, land developers, cities (government), and greedy ‘what the market can bear’ persons that make these decisions. Where does the bafflegab of neighbor helping neighbor, personal discipline, caring, responsibility and respect fit into these decisions?
HOUSING IS BIGGEST LIFETIME EXPENSE, NOT CHILDREN
Housing is a necessity regardless of whether or not households have children. If lifetime length of paying for housing is from 20 to 80-90 years of age, then housing is a basic necessity spanning over sixty to seventy years. Look at any Living Wage study, and it will show that as number of persons decrease per household, the greater the proportion of income will be spent on housing, yet most government benefit programs target only families with children or senior married or coupled households, thus leaving single person and poor households out of financial formulas.
If a household pays $1000 rent per month, then housing may cost $720,000 over a lifetime with nothing to show for it financially while supporting greedy real estate owners who pass their greed unto renters (and often ignoring renter psychological impact of excessive internal and external noise, being kicked out by landlord under guise of needing to renovate so prices can be raised, and dingy secondary suites, etc.). That is three quarters of a million dollars ‘lost’ to the renter over a lifetime!
Homeowners after twenty five years and $1400 mortgage per month will likely have a $300,000 paid for house ($15,000 down payment and 3.70 interest rate for 3 years amortized at 25 years) which may or not increase in value as part of their assets and wealth financial portfolio (minus maintenance and house taxes) They have the ability to move up or down in housing as dictated by their lifestyles changes.
Raising children covers only twenty to twenty five of those years, but both the Conservatives and Liberals have brought in child care benefits that benefit only households with children and in some cases child care benefits even pay entire mortgage and rental housing for these households. Pension splitting government benefits apply only to senior married or coupled households.
Rent controls, rental vouchers don’t work and the greed of “what the market can bear” will not control the outrageous upswing of housing prices. Charity is not the answer as charity masks the problem, but doesn’t solve it.
The Liberal proposal for a housing allowance is a step in right direction. Instead of Liberals and Conservatives continuing their infighting and vote getting tactics, how about doing right thing and making housing allowance a permanent solution throughout entire lifetime, just like healthcare? How about involving all political parties in defining a solution, now wouldn’t that be a novel idea? Housing allowance should be based on not just income, but also assets and wealth. Those who own their homes outright or more than one home should get zero assistance for housing allowance. Housing is a human right.
One suggested housing allowance (renting or mortgage) formula based on of equivalence scales or LIM (Low Income Measure) (equivalence-scales) could include starting point of $500 (based on 1.0 LIM value) per month for one adult person household, $700 (1.4 LIM value) for two adult persons households or one adult, one child households and $1,000 (2.0 LIM value) for two adult, two children household. Amounts would be based on level of income AND assets and wealth). Households who have fully paid for ownership in housing, own more than one home and/or have ample wealth would get zero dollars for housing allowance.
Housing is a basic human right and is just one element of Maslow’s Hierarchy of need. The inaction by politicians, governments, private enterprise and society on housing, especially in the so called free democratic world, is an egregious moral and ethical affront to the most vulnerable of our society.
(This blog is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice).