Category Archives: affordable housing

NET WORTH AND ASSETS CONTRIBUTE TO FINANCIAL DISCRIMINATION OF SINGLES-Part 2 of 2

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NET WORTH AND ASSETS CONTRIBUTE TO FINANCIAL DISCRIMINATION OF SINGLES–Part 2 of 2

(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).

When politicians, government and the wealthy continue to perpetuate myths that net worth and assets are too difficult to calculate or should not or cannot be included in financial formulas, this continues to make it possible for the wealthy to maintain their wealth and impossible for singles and the poor to maintain or increase their financial well-being thus resulting in financial discrimination and poverty for these groups.

The following three examples show how inclusion or exclusion of net worth and assets perpetuates the myths proposed by financial analysts, politicians, government and the wealthy.

EXAMPLE #1

Affordable Housing (services)

One assistance program in Alberta is Community Housing which is a subsidized rental program. It provides housing to families and individuals who have a low or modest income. Program funding comes from the federal, provincial, and municipal governments.To qualify, applicants must be Canadian Citizens, independent landed immigrants, or government sponsored landed immigrants. Assets and belongings cannot exceed $7,000. Assets include, but are not limited to:

  • bank accounts
  • investments (excluding RRSPs)
  • equity in property
  • equity in a motor vehicle (assessed by reviewing the value in the most current Canadian Red Book)

EXAMPLE #2

Legal Aid Alberta (legalaid)

Financial Eligibility Guidelines – If income falls within the amounts listed below, person(s) may be eligible for legal representation and to have a lawyer appointed.  Representational services are not free. Repayment will be discussed if a lawyer is appointed.  Legal Aid’s Financial Eligibility Guidelines allow the following eligible monthly income for family size of 1 – $1,638, 2 – $2,027, 3 – $2,885, 4 – $3,120, 5 – $3,354 and 6+ – $3,587.

An example of this is an actual court case going on at the present time.  Legal Aid has refused to assist client’s claim of defence for an estimated $25,000 in legal fees.  Legal Aid says client still has a large amount of property ($500,000 mortgage free), $34,000 in savings, tax free savings account (TFSA), and GICs and mutual funds worth another $21,000, plus $570 a month in old-age security payments with monthly expenses of $1,660.  Legal Aid does not give coverage to individuals with assets in excess of $120,000.  Legal Aid states: “client would be left with well over a half a million dollars in assets even after payment of legal fees.”

EXAMPLE #3

Family Tax Credits (tax-credits)

June 11, 2016 Financial Post Personal Finance Plan “Farm Plan Risky for Couple with 4 kids” shows how plethora of tax credits works for this family, Ed 32 and Teresa 33, stay at home spouse have four children ages 5, 3, 1 and newborn.  Government employee Ed brings home $2,680 after monthly tax income.  Net worth is already $502,000 including $200,000 paid for house.  Non taxable Liberal Canada Child Benefit for four children will be $1,811 per month bringing income to $4,491 per month.  (From ages 6 to 17, Canada Child Benefit will be $1,478 per month).

LESSONS LEARNED

These three examples show how the inclusion or exclusion of net worth and assets benefit the wealthy and families more than singles and poor families.  In Example #1, to receive housing assistance only $7,000 is allowed in assets.  Really, that is it? Compare that to Example 3 where a family already having significant net worth will receive benefit upon benefit upon benefit in addition to Family Tax Credits.  In Example #2, this could be said to be a good case where financial fairness has prevailed.  This client has plenty of net worth and assets to pay for $25,000 legal defence.  When the Legal Aid income scales are analyzed, it is apparent they have at least used some form of equivalence scales (finances). Hallelujah, here is one example where a family unit of two is not assessed at a value times two of that of family unit of one!

CONCLUSION

This post is just another example of the blatant hypocrisy and upside-down finances that financial analysts, politicians and government, and families perpetuate by not including net worth and assets in all financial formulas across the board whether they are local, provincial or federal or of a service type such as Legal Aid.  The blatant financial discrimination of singles and the poor continues while the wealthy get to write their own ticket to wealth by paying less and increasing wealth.

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice).

AFFORDABLE HOUSING NOT PART OF CONSERVATIVE PARTY DEFINITION

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AFFORDABLE HOUSING NOT PART  OF CONSERVATIVE PARTY DEFINITION

(These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice).

“Creb now” (published by Calgary Real Estate Board) June 24 to June 30, 2016 states:

‘housing officials increasing rates of overcrowding or “underhousing”  in Calgary’s housing market….Resolve says about 3,500 Calgarians were considered homeless in a recent survey, with about 14,000 at risk for homelessness – and that doesn’t include people “couch-surfing”…we know fundamentally that number is up.  It’s hard to get a handle; people are one paycheque away (from homelessness) or aren’t in appropriate housing.’

 

Appropriate housing definition is interesting.

‘Under the Social Housing Accommodation Regulation, such housing is considered overcrowded if more than two people must share a bedroom, with at least one individual in each of the other bedrooms, and if an individual over 18 “must share a bedroom with another member of the household,” or someone over the age of five has to share a bedroom with “an individual of the opposite sex.”  (Spouses or partners sharing a bedroom don’t count)…..”Affordable housing is intended to be appropriate housing-appropriate to needs of families.   If children age in place or additional children are welcomed into a family, they can transfer within the system…subject to availability.”

“Calgary Herald”, June 29, 2016 ‘City takes aim at failing affordable housing plan” states:

‘just 1,048 new affordable housing units created in Calgary over the past 14 years, the need for affordable housing was great in 2002 and it remains so today.  Calgary has half the amount of affordable housing as the national average, and a total of zero affordable housing units have opened in the city in the past three years….the city wants to see 1,500 affordable housing units built in the next two years – more than the number built in the past fourteen years – and staff believe it’s a goal that’s possible given money pledged from the provincial and federal governments, both of which have recently signalled a renewed commitment to affordable housing. Housing a homeless person has been shown to save taxpayers $34,000  annually….Currently 88,000 Calgary households earning less than $60,000 are in need of affordable housing.’

ANALYSIS

Married or coupled family units tell singles to go live with someone if they are having financial problems.  According to the definition above of appropriate housing this means singles appropriately should not live in a one bedroom apartment with one person couch-surfing, but should live in at least a two bedroom apartment.  By the above definition married or coupled family units with no children can live in a one bedroom apartment.

Affordable housing units of 1,048 divided by 14 years equals only a total of about 74.9 affordable housing units having been developed annually in Calgary.  In fact, zero units were opened in the last three years.   Calgary has 1.23 million population as of 2015.  The number of affordable housing units for a city this size is pathetic.

Alberta has essentially been under Conservative government for many years.  Alberta had a Conservative party in leadership for 40 years until New Democratic Party won the election last year.  During the Conservative reign (particularly in the latter years) money was squandered in what were essentially boom years because of the oil boom.  Oil, government and business persons and families became wealthy because of Conservative policies which favoured the rich. The Conservatives always talked about the Alberta Advantage. Federally, the Conservative party was in leadership for ten years until the Liberals won the election this year.

Right wing Conservatives have done nothing to provide affordable housing for singles and poor families except to line their own pockets and the pockets of their voters.  Just what is the purpose of politicians and political parties if they don’t provide government by the people and for ALL the people? Singles and the poor are not considered to be part of the ‘people’ definition.  There never was an Alberta Advantage for singles and poor families, only for the rich and the middle class.

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice).

HOMELESSNESS IN CANADA BIGGER PROBLEM FOR SINGLES AND POOR SINGLE PARENT FAMILIES

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HOMELESSNESS IN CANADA BIGGER PROBLEM FOR SINGLES AND POOR SINGLE PARENT FAMILIES

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.

(The author of this blog applauds Ron Kneebone and Margarita Wilkins for their study on homelessness for single employables in this country.  Words in italics are the words of the author of this blog.  Caveat: While we don’t agree with everything that comes out of Schools of Public Policy, we agree with the premise of this study, that is, single employables (singles and single parents) are having a very difficult time surviving on low wages and lack of affordable housing.)

The following excerpts are taken from “Shrinking the need for homeless shelter spaces” (policthat is, yschool.ucalgary.ca) by Ron Kneebone and Margarita Wilkins from the University of Calgary School of Public Policy and the opinion letter “The secrets of reducing homelessness” (calgaryherald) by Ron  Kneebone also refers to this study.

‘In 2009, an estimated 147,000 people, or about one in 230 Canadians, stayed in an emergency homeless shelter.

….The chronically homeless, whether for long periods or with repeated episodes, are a minority (one-third due to personal challenges (sic such as alcoholism and drug addiction) not immediately associated with the economic conditions of the city in which they live) of those experiencing homelessness.  An implication is that the majority of emergency shelter beds are provided to meet the needs of people who experience homelessness for short and infrequent periods and do so as a result of poverty.  The remaining two-thirds of shelter beds are filled by people who make relatively infrequent use of shelters and are more likely forced into shelters by economic conditions….

A role is also possibly played by discrimination in the housing market; discrimination that leaves some people with no option but to use a shelter and for social agencies to provide for them.

But our main focus was on housing affordability. We found that cities where the income support provided by the provincial social assistance system to a single person was small relative to rent — that is, in cities where housing was expensive for a very poor person — social agencies found it necessary to provide more emergency shelter beds.

The policy implications of this result are clear; increase the affordability of housing to very poor people and the need for emergency shelter spaces will fall. There are a number of ways of accomplishing this goal and it would likely be wise to act on all of these policy fronts…

We show that providing a relatively small income increase — just $1,500 per year — to single people on social assistance would enable the closing of about 20 per cent of emergency shelter beds.

Attacking housing affordability from the other side, by reducing housing costs, would also be effective. There are many options available here, from increased rent supplements to tax and regulatory changes that enable housing to be built that is affordable to those with low incomes….

  Policy-makers need not focus too narrowly on just a few policy responses, and need not rely solely on publicly funded construction of low-income housing.  Many, more subtle, adjustments to policy levers can have equally important influences on the housing market and hence homelessness….

…We continue to be perplexed why governments fail to index for inflation the income support provided to those in poverty….

…two broad sets of policy responses are possible, those aimed at treating causes of homelessness closely tied to individual circumstances and those aimed at treating causes of homelessness related to housing market conditions….

…The theoretical connection between homelessness and housing market conditions is straightforward:  even if one can pay for the minimum quality of housing available in a city, if there is little income left over for other of life’s necessities (food, clothing, etc.) one might rationally choose to forgo conventional housing and try one’s luck doubling up with relatives or friends, or temporarily using a city’s shelter system.  Thus, to the extent that minimum-quality housing is priced such that it would consume an extremely high proportion of one’s income, a person may become homeless….

….Rapid population growth and strong labour markets (sic such as occurred in cities like Vancouver, Toronto, and Calgary) influence prices by increasing the demand for housing. For those unable to benefit from strong economic growth, housing costs can quickly rise out of reach. Changes in income distribution may also play a role as the types of housing available in a city with income skewed toward the high end will differ from housing options available in a city with income skewed in the other direction.

Public policy choices can also be expected to influence the affordability of housing.  Interest rates and tax policies influence the housing market by affecting new construction costs, the costs of rehabilitating old buildings, and the costs of maintenance and building abandonment….

…Report by TD Economics. (Affordable Housing in Canada):  Using data from 2002, the report provides information that allows one to identify what percentage of the total cost of building a modest rental apartment is due to local infrastructure charges, application fees and building permits. These local charges ranged from a low of 1.7 per cent of total cost in Montreal to a high of 11 per cent in Ottawa. In a study using U.S. data, Stephen Malpezzi and Richard Green show that moving from a relatively unregulated to a heavily regulated metropolitan area increases rents among the lowest-income renters by one-fifth and increases home values for the lowest quality single family homes by more than three-fifths. The largest price effects of such regulations occur at the bottom of the distribution in units that are disproportionately occupied by low- and moderate-income households….

…The influence seems to be large; providing an additional 100 rent-assisted units has been shown to reduce by four the number of people experiencing homelessness (from How to House the Homeless)….’

When conducting the study, Kneebone and Wilkins used the following variables:

‘….Our dependent variable is the number of emergency shelter beds (Beds) provided in each city as a fraction of that city’s total adult population (Pop). Our key policy-sensitive determinant of that dependent variable is a measure of housing affordability, the ratio of a relevant income measure to a relevant measure of housing cost….

…Our measure of income is the amount of social assistance income provided to a person defined in provincial social assistance programs as a single employable (Income). A person classified in this way is single and without an impediment to employment that is recognized by the provincial social assistance program. Our measure of housing cost is based on the average amount paid on a one-bedroom rental unit (Rent).

We use as our measure of income the aforementioned amount of social assistance paid to a single employable for three reasons.   First, the vast majority of homeless shelter users are single. Second, people most likely to experience homelessness are mainly, as emphasized by Burt et al.,  the “poorest of the poor.” At an average annual income of about $7,500 (our data are for 2011 and vary by province), social assistance is the income of last resort for a single person deemed healthy enough to find employment. Finally, our focus is on identifying public policies that might influence the perceived need to provide emergency shelter beds.  One possibly important policy lever is government-provided income support to the income-demographic group most likely to use emergency shelters….

…The estimated coefficient on our measure of housing affordability indicates that a one per cent increase in the ratio of social assistance income to rent is associated with a 1.15 per cent reduction in the ratio of shelter beds to adult population. An implication of this sensitivity is that increasing the annual amount of social assistance provided to a person identified as a single employable by $1,500 per year would, by increasing the ratio of income to rent, enable social agencies to close a total of 2,599 shelter beds across Canada, a reduction of 18 per cent….

An alternative policy – or perhaps one to be introduced in conjunction with the increase in income – would be to increase the size of the rent subsidy available to those with low Income.  Our results suggest that increasing rent subsidies by $100 per month would be sufficient to enable providers to close 2,975 shelter beds across Canada. Our two policy options therefore have similar effects.

DISCUSSION Our calculations suggest the potential efficacy of an approach that favours what might be broadly described as a market solution to shrinking the need for emergency shelter beds.  This is particularly so with respect to our suggestion to provide the very poor with a higher level of income support and allow them to purchase goods and services through the market.….What is important is that the income support enables the very poor the opportunity to be able to afford housing not otherwise available to them….Providing rent subsidies is another approach we have shown can be effective at shrinking the need for emergency shelter beds. That approach is somewhat more prescriptive – the very poor must use the support on housing – but is similar in the sense that rent subsidy effectively increases the income available to the very poor to purchase more of life’s necessities. If the declining stock of affordable housing is in part the result of rising income inequality and poverty, then providing the poor with income support in these ways is a direct way of addressing the cause of the affordable housing crisis.

This non-exhaustive list of possible influences on the low-end housing market emanating from public policy choices suggests that all levels of government have a role to play in addressing homelessness and that they have a wide variety of policy levers to adjust.  Policy-makers need not, therefore, focus too narrowly on just a few policy responses.  Policy responses that have more subtle and less direct influences on the housing market than, say, the publicly funded construction of low-income housing, may have far more pervasive influences on the housing market and hence homelessness.   What’s more, more subtle policy responses may prove to be less costly to the public treasury and may avoid the potential for direct government provision or subsidization of housing units to result in reductions in the unsubsidized housing stock….It is useful to emphasize that our suggestion to increase social assistance income is a one time expenditure made necessary by the failure of policy-makers to properly adjust those payments to inflation. For reasons that are unclear to us, provincial governments do not index social assistance payments to the cost of living in the same way they index income tax brackets relevant to better-off Canadians or pensions provided to seniors adjusted by the federal government. Instead, provincial governments periodically increase social assistance payments in a haphazard effort to enable the very poor to keep up with rising costs….Indexing social assistance payments to the costs of the key drivers of the welfare of the very poor – housing and food costs – would go a long way toward enabling them to stay housed and escape the necessity of having to sometimes rely on homeless shelters.

CONCLUSION Homelessness is an exceptionally complex social problem. It has root causes in the personal traits of those most likely at risk of a spell of homelessness and the structural factors that influence the housing options available to the poorest of the poor. The unintended consequences of public policies also play a role. Our focus in this paper has been on those persons who experience homelessness as a result of what we have described as structural factors, the state of housing and labour markets that destine the very poor to be unable to afford even minimum-quality housing.

Contrary to popular belief, most people who become homeless will remain so for a few days or weeks but not become homeless again. The chronically homeless (sic due to drug abuse, alcoholism, etc.) whether for long periods or with repeated episodes, are a minority of those experiencing homelessness. An implication is that the majority of emergency shelter beds are provided to meet the needs of people who experience homelessness for short and infrequent periods and do so as a result of poverty. Our results, and similar results from research using U.S. data, suggest that relatively modest public policies can make significant differences in the perceived need to provide shelter beds. Directing support toward those for whom housing costs consume a very large share of their low incomes can have a significant impact on the number of people experiencing homelessness and thus on the need for emergency shelter beds.

….Data on the total adult population aged 15 years and over, the total aboriginal population aged 15 years and over, and the number of recent international migrants to a city are from the 2011 National Household Survey (NHS) available on the Statistics Canada website at http://www12.statcan.gc.ca/census-recensement/index-eng.cfm .

A recent international migrant is a person who lived outside of Canada one year prior to the census reference data of May 10, 2011.’ (end of Kneebone/Wilkins info.)

From “Encyclopedia of Canadian Social Work” (books.google.ca)

‘…..low rates in Newfoundland reflect severe cuts in 1996 to benefit levels for single employable persons and the low rates in Alberta reflect the steady decline in benefit levels under the conservative provincial government…. the current reality of less generous social assistance provision in Canada is reflective of the global ascendance of neo-conservative philosophies and the accompanying pressures of neo-liberal economic policies. Ideologies emphasizing individual blames, rather than collective responsibility, foster more restrictive social programs.  Restrictions to Canadian social assistance programs began in 1990 with a federal cap to limit expenditures under the Canada Assistance Plan, closely followed by provincial/territorial cutbacks through tighter eligibility criteria, lower benefit levels, and more stringent conditions.’

An example of the deterioration of social policies in Alberta was the introduction of 2001 Alberta flat tax rate of 10%.  While most of upper income level persons benefited from the 10% flat rate, the tax rate for bottom level income earners went from 8% to 10%.

It appears that the most common recipients in need of social welfare are single employable and single parents, yet the most emphasis today by governments and politicians appears to be on children of all family types when majority of focus should be placed on single parents.

Too often, current social assistance programs fail to distinguish a single employable family unit  from a married or coupled persons without children family unit.  There is no recognition that it costs a single employable family unit seventy per cent to live of what it costs married or coupled persons without children family unit.  When reviewing the literature on social programs many only look at the family units of singles, single parents with children, singles with a disability and married or coupled parents with children in their analysis.  To achieve financial fairness for singles, single person family units finances in relation to married/coupled persons without children family units also needs to be analyzed.

The single employable adult population that is often financially compromised includes aboriginals and recent immigrants.  Immigrant singles will often be more financially compromised than married or coupled immigrants with or without children family units.  An example is immigrant singles without family supports in this country working multiple jobs in order to send money home to their families (i.e. to buy necessary medications).  Some of these singles as result of over work unintentionally will suffer illnesses such as strokes from undiagnosed high blood pressure or undiagnosed diabetes or even death because they have not sought medical attention throughout their intensive work schedules involving multiple jobs.

How many different ways can it be said that Canadian singles are feeling financial despair in this country, one of the major factors being housing?

Yet another example is the financial profile of Jessica, an age 54 Ontarian single with three grown children  in ‘Home Ownership Possible But Tight’ (buying-a-home).  She would like to buy a home in the $150,000 range which is  pretty much impossible except in small town Ontario.   This is the same profile as several other presented in this blog (real-financial-lives-of-singles) Jessica has a take income of $3,315 per month or almost $40,000 per year.  Her rental income is $877 per month.  She has a company defined contribution plan.  The financial planner estimates that on retirement she will have approximately $2,300 monthly income for expenses.  Without home ownership, how does a senior single live on $2,300 per month with $900 per month rent?  If singles are unable to support themselves with a $60,000 – $70,000 pre-tax income (more than $15 per hour minimum wage), how are those at lower levels supposed to afford housing, (rental or home ownership)?

Single employables (singles and single parents) deserve the same financial dignity and respect as married/coupled persons with and without children.  Singles and single parents (white, aboriginal and of immigrant status) deserve to be included in financial formulas at the same level as married or coupled persons with and without children.

This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.

RENTAL OR AFFORDABLE HOUSING – MISCONCEPTIONS ABOUT PSYCHOLOGICAL IMPACT ON SINGLES

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RENTAL OR AFFORDABLE HOUSING – MISCONCEPTIONS ABOUT PSYCHOLOGICAL IMPACT ON SINGLES

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.

A past post (to-rent-or-own) on this blog discussed rental versus affordable housing for singles.  The final conclusion of this post was that it is more difficult to do either rental or home purchases for singles than it is for married/coupled persons.

Financial management persons will say that it is much cheaper to rent than to own and that one should probably rent if there are financial constraints.  The advice is good from a financial point of view; however, the impact of this advice does not take into account the psychological well-being of singles.

Rental housing often means that singles have to choose second best to married/coupled persons and families.  Financial constraints often means rental properties singles have to choose from will be located in noisy, high traffic areas with no views except a retail space or another apartment across the way.  As well, there may often be a lot of noise between units.  There may not always be a washer and dryer within the apartment.  This means renters may have to  go down the hall, down several floors or even outside the building to laundry facilities.  Coin-operated laundry within or outside the building are very expensive and inconvenient.

Rental  housing for singles often means small apartments with small or no balconies. Meanwhile, the average size house in Canada is approximately 1900 square feet  and growing and it seems buyers’ expectations are very high.  They want for starters granite countertops, gourmet kitchens, a bedroom for each child, more than one bathroom, a playroom for the kids, a media room for the family and a large patio and yard for the barbecue as well as a basement and a garage in a choice location.  As has been explained in a past post, families buying these houses will often pay less per square foot than singles will for their smaller housing purchases.  In addition to the physical aspects, families will probably get much more for their house in psychological  satisfaction and well-being than singles will with their small spaces.

Rental in senior year for singles and the poor often means very little is left for a good financial quality of life after the rent has been paid.

Families and financial planners need to look on the other side of fence as to how all this impacts singles.  Singles need pleasant surroundings, the ability to make choices in what appeals to them, and affordable housing, just like married/coupled persons and families. Somehow, the perception by society is that because singles are single, they need and deserve less than married/coupled persons and families for housing.

Rather than telling singles and the poor that rental is the only option for them, upside-down financing for housing where families and those with the ability to pay get more and pay less for housing (upside-down-affordable-housing) needs to change.

Affordable housing for singles, poor families and the homeless is becoming more and more difficult to achieve in many countries including Canada.  Outside the box thinking where singles are included in housing solutions, not just families, needs to be addressed for the psychological well-being of all persons regardless of marital status and income levels.

This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.

SINGLES DESERVE AFFORDABLE HOUSING AND FINANCIAL FAIRNESS FOR SINGLES

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SINGLES DESERVE AFFORDABLE HOUSING

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.

(This opinion letter was published in a local newspaper on April 13, 2016)

The Calgary Herald April 9, 2016 article “Thinking inside the box” is an enlightening article on the financial plight of singles in regards to affordable housing.

This article describes how a San Francisco man has created a private sleeping space in the living room of an apartment he shares with other roommates.  He sleeps in a wooden box that is eight feet long, four and a half feet tall and probably about five or six feet wide. Inside this box is a twin bed, a fold-up desk and some LED lights.  A fan and built-in ventilation help air travel  through.  He has spent $1300 for materials.  He is also working on fully soundproofing its walls.  One wonders what the owner of apartment thinks of this ‘renovation’.

This man apparently is gainfully employed as a freelance illustrator whose work has appeared in the New Yorker.  To his credit and frugality, he has a positive attitude and readily admits he is not in dire financial straits, but has developed the box as a creative solution so that he can have a ‘private’ bedroom rather than sleeping on the couch.

In San Francisco where affordable housing is futile, one-bedroom apartments rent for median of $3,670 per month.  The article states that his roommates live in conventional bedrooms paying about $1,000 per month.  He pays $400 and has full access to the amenities of the apartment.  He calls his bedroom space a ‘pod’.   Total number of bedrooms in this apartment are not stated.

The housing situation for singles in Canada is no better.   High-rise condos in Toronto average about $455,000.  Going rental price for one-bedroom condos in local town appears to be $1,300.

It appears that desired results have been achieved for what married/coupled persons and families think are appropriate for singles.  Singles can now sleep in spaces that are less than one hundred square feet in size.  It seems these same people no longer consider singles to be their children or part of the family.  Instead, the state of business has overtaken the value of family to the point of unadulterated greed.

Singles deserve better in affordable housing solutions.  When they talk to government, decision makers and families about lack of affordable housing, they are met with anger, shunning and deaf ears.  They are given the response that it is ‘what the market can bear’.

Every adult with marital status of being single deserves a living wage and a dignified place to live that is equal to adults in families.  Every adult with marital status of being single deserves to be included in financial formulas that are equal in benefits to adults in families. Every adult with marital status of being single and and part of a family unit deserves to be treated with same financial dignity and respect as married/coupled children of the family unit.

ADDENDUM

Singles are continually told by married/coupled persons and families that they can move in with someone else if they have financial constraints.

What is most ironic with the publication of this opinion letter is that another opinion letter was published on this same date in this same newspaper by the owner of a condo villa (which is much larger in square footage) discussing how owners need to be careful about reviewing contract details when purchasing.  Examples are sodding versus ‘naturescaping’, mulch or rocks and liabilities of people falling or using skateboards on sidewalks which are the private property of the condo.

While these are valid concerns, the juxtaposition of singles deserving affordable housing versus owners of expensive large condo villas is striking.

Postscript added May 25, 2016 – There can be no doubt that there is a housing crises for Canadian singles and the poor when information such as the following is published in local media and newspapers:  ‘A shortage of affordable housing is partially to blame for a number of ads offering discounted or free rent in exchange for sex, an advocate says’. (affordable-housing-behind-some-sex-for-rent-schemes)

This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.

TO RENT OR OWN AFFORDABLE HOUSING – THAT IS THE QUESTION

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TO RENT OR OWN AFFORDABLE HOUSING -THAT IS THE QUESTION

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.

This post will discuss whether renting or affordable housing are good housing options for single and low income persons.

  1. RENTING AS VIABLE OPTION FOR LANDLORDS AND RENTERS

Rental costs from landlord perspective:  A review of financial information shows that in order to generate a 5% annual return on  a $250,000 rental property with no mortgage costs, the expenses incurred will be  as follows:

What Landlords think they need to make renting their spaces a revenue generating business at 5 percent profit in the Calgary market:

              rent charged (2 bedrooms)            $12,500

              condo fees ($325 X 12)                 $  3,900

              PT taxes                                        $  1,500

              upkeep (paint, carpet, etc.)            $  1,200

               extra cost of wear (kids/pets)       $  1,200

          TOTAL RENT PER MONTH             $20,300 divided by 12 months  = $1,700

This does not include costs associated with loss of income when property is vacant, cost of major upkeep such as replacing appliances, cupboards every 5 to ten years, damages incurred from kids and pets, eviction costs, insurance, etc.

Arguments for and against high rental costs from perspective of landlords and renters

A review of an online article “Calgary Landlords war against the poor?” (landlords) shows pro and con comments on why landlords think they need to charge the present rental amounts and why poor are left out because they cannot afford to pay the present high rental  amounts.  Arguments are also made as to whether or not mortgage payments should be included in the rental costs; if included, then even higher rents need to be collected.

Comments on the side of the poor and low income include:

  • ‘So then I ask you, where are these people supposed to go?  No offense, but the “it’s just business, nothing personal” should have no place when talking about human lives.’

  • ‘Gouging is a very common competent of a working free-market.  The right (Conservative and like) just don’t want to admit they’re are (…..) for doing it.  It is not about right or wrong.  The difference between a renter and a landlord is that the landlord has assets.  So even if you are living in a home and renting a condo,  having to shell out money for repairs doesn’t exactly cost you as much (in the long run) as it would a long term renter.  Because eventually you can sell that property and retire in comfort.  It is very hard for a person who is just starting out with nothing to build themselves up to your level  It is not that we don’t want to be there, it is just that there may not be as much opportunity for us so called “low-lives” as one may think.  So when your entire income goes to shelter, food and clothing, there is not much left to save for any sort of down payment on anything…’

  • ‘You are already making money by charging a tenant the mortgage, the land tax and the insurance.  The mortgage part is already profit.  An accumulated investment  Beyond that, maybe a little more, is gouging.  These people can’t see that is wrong.  If they could charge a million dollars a month they would.’

One of the last reader comments submitted was the following (it is interesting to note that this comment pretty much shut up any further comments being made):

  • ‘When, by gouging people for the necessities of life such as food and shelter, you contribute to the cost of living being higher than a working person can afford.  You force me as a taxpayer in a rather high tax bracket, I might add ,to pay for the subsidization required to keep these people from starving or being out on the street or alternatively imprisonment when they steal to live, or more cops to maintain social order with a starving underclass.  I’m tired of deadbeat free-riders trying to shuffle the externalities of their greed onto me.  It is time for some controls being placed on the ability of landlords to  raise rents.  Rental increases being limited to 5% or double to rate of inflation annually, whichever is lower, seems reasonable to me.

Some comments suggested that most people should stay away from the landlord game as it is not a profitable business for the lighthearted.

Landlord profile and Financial Planner Advice

Financial profile of a married couple is as follows:  Calgary Herald, December 12, 2015 (and Edmonton Journal) Financial Post “Oil Crash Forces  Fix for Couple” (edmonton-journal)

This summary is about Gary, 60 and Wendy, 67, an Alberta couple who grew prosperous with Gary’s work as a petrochemical  engineer often earning as much as $200,000 a year doing consulting.  However, his work is now history as a casualty of collapsed oil prices.  Wendy worked as an administrative assistant earning $24,000 a year before she retired in 1990 (well before age 65, by the way).  Their income at the present time is $2,175 a month and is $3,240 less than their total monthly expenses of $5,415.  (Part of their income is $590 after expenses from their two rental properties.) They say they need to know if they can survive.  The article does mention one child is renting one of their rental properties.

  • Their net worth is $1,867,238.  Their assets include residence $550,000, rental property #1, $460,000, and rental property #2 $430,000.  Their investments include Registered Retirement Savings Plan $132,616, USA 401K in Canadian dollars $250,000, Tax Free Savings Account $39,334, non-registered savings/GICs $174,288 and two cars $17,000.  Their total  liabilities are two mortgages of $186,000 on rental properties.

The profile states the largest problem is that the couple’s income properties, which make up 60 per cent of their invested assets, produce little cash flow.  One unit is rented to the couple’s son and its $1,150 monthly rent is below market values.  Their other rental property generates $1,300 a month before expenses.

The financial planner makes the argument:  ‘When Gary generated an income of $200,000 a year or more, they could afford to ignore investments, rent properties below market value and spend freely’. The financial planner’s recommendation is get rid of money losing rental property, cut expenses and reallocate assets to cut investment costs.  It doesn’t seem to matter to the financial planner that this couple has acquired huge financial assets in their rental properties ($700,000+ value).

Conclusions about Renting

Renting income properties from landlord’s perspective is that this is a business and needs to generate a profit even when renting to singles (son in above example)and the poor (many of whom cannot afford $1,700 for rent).  In other words, the goal of financial Utopia in a land of ‘milk and honey’ (Alberta) will never be achieved by the landlord with reasonable rents and certainly not by singles and the poor who are renting.  Maslow’s Hierarchy of Needs principle for singles and the poor will also be violated when basic needs of shelter as well as food and clothing will not be realized.

UNAFFORDABLE RENT = VIOLATION OF “MASLOW’S HIERARCHY OF NEEDS” PRINCIPLE

For landlords and families who think singles and low income persons deserve only a single room‘ or ‘should live with someone’ they should read the January, 2009 study “Social Housing Waitlists and the One Person Households in Ontario” (cprn.org) on what it is like to live in these housing circumstances.  An excerpt from this study reads as follows:

‘many households turn to shelters or make do with what they are able to find in the private market, often spending more than 50% of their income on rent. The focus of this study is one-person households under the age of 65 who make up approximately 40% of the applicants on Ontario social housing wait lists. This cohort has the longest wait times. How does this demographic cope during these waiting periods? What are their housing experiences? ‘

 

  1.  AFFORDABLE HOUSING AS VIABLE OPTION FOR SINGLES AND LOW-INCOME

From “Upside-Down Finances re Housing for Singles and Low Income – Part 1 of 3”, November 13, 2015 post (upside-down-affordable-housing), one example of housing shows condos presently being sold as follows:  1 bed, 1 bath, 1 patio micro-condo of 552 sq. ft. with starting price of $299,900 and $543 per square foot..   Two patio, 3 bed, 2.5 bath, 2 and 3 story 1830 sq. ft. condos priced from $649,900 to $749,900.start at $355 per square foot.

Singles and single parent with children are more likely to buy one bedroom housing.  Ripple effects are owners of micro-condos have to proportionately pay more house taxes, education taxes, mortgage interest and real estate fees on less house and less take home pay since these fees are based on price of property, not square footage of the property.  When it is sold, will seller recoup buying price?

Financial  world for singles and low income continues to be completely flipped upside-down and turned topsy-turvy for housing while the rich and middle-income families  pay less and get more.

COMBINATION SINK AND TOILET IN TINY SPACE

As in many parts of the world, parts of Canada are heading for a crisis in affordable housing.  Different solutions have been proposed to avert this crisis.  One is Attainable Housing, (attainyourhome), for example in Calgary, which allows maximum household income of $90,000 for single and dual/parent families with dependent children living in the home and maximum household income of $80,000 for singles and couples without dependent children living in the home.  While this method allows singles and low income to enter the housing market with a low down payment, it does not alleviate the problem of insane upside-down pricing of housing as outlined in the example shown above.  Another solution that has been proposed is an affordable housing action plan of inclusionary zoning where a certain percentage of new housing units built  would be social and community housing partly funded by government programs, and a certain percentage of new housing units would be affordable rental or ownership housing units built by the private sector.  However, developers and the housing associations will argue this will not work (as only new purchasers will be participating) and neighbors continue to have a “not in my backyard” mentality (NIMBY).  Tiny house NIMBY mentality also extends to homeowners who don’t want tiny houses near their properties.

Calgary Herald “‘Nothing new’ from housing collective” article, December 16, 2015 (calgaryherald) is a 46 – page document – 18 months in the making – and calls on homeless and housing organizations, the development industry and governments to ‘work  together differently’ for at least two years, developing ‘Calgary-based solutions with blueprints for action’ and providing support as required.  The mayor, in addition to other parties, is disappointed at how long study has taken and states that ‘time for talk’ is over.

Conclusions about Affordable Housing

There is no affordable housing for singles and low income persons when they are forced to pay more for less space with less income than the rich and middle-class families.  Inaction and NIMBY continues to be prevailing principle for Affordable Housing.

Conclusion overall for Renting and Affordable Housing for Singles and Low Income

Options for both renting and affordable housing continues to become more and more out of reach for singles and low income.  

 

rent-buy1

So, when both renting and affordable housing are out of reach for singles and low income persons, just what are they to do?

“Eggleton: Canada needs more affordable housing” September 20, 2015  (eggleton) article in the Ottawa Citizen states:

‘I think we all understand intuitively the importance of having decent shelter. A home anchors a person, anchors a family. It provides a foundation for people to move forward toward greater stability in the workplace or higher educational attainment. Health experts also tell us that adequate housing is a key determinant of health and long-term health outcomes’.

This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.

COUNTRY SHOCKED BY VETERANS HOMELESSNESS

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COUNTRY SHOCKED BY VETERANS HOMELESSNESS

(These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.)

March, 2015 study has revealed that approximately 2,250 veterans are homeless.or about 2.7 per cent of the total homeless population (homeless-veterans).  There is shock that there are homeless veterans and it took five years to track the data.  Average age of homeless veterans is 52 years of age compared to 37 years of age for general homeless population.  Review of online information reveals that many veterans joined armed forces because of lack of jobs as in Atlantic Canada, and then come back to again no jobs.  Age in fifties also makes it more difficult to integrate back into civilian life. Many of these homeless are single or if married/ partnered suffer broken marriages/partnerships because of the mental stresses of service.

Why should this be shocking when 300,000 Canadian persons or families are waiting for affordable housing ?  In addition immigrants are brought into country, given temporary free housing and jobs adding further insult to injury.  (In recent news immigrant family,while travelling to Jamaica, found their Canadian-born child is on a ‘no fly’ list – so what is this, immigrant family wealthy enough to have a nice little vacation while Canadian-born persons are homeless or waiting affordable housing?)

The mentality of government, decision makers, businesses and families in this country is to serve only the rich and middle class families while ignoring singles, low income and no income individuals and families.   When reading or listening to articles on housing for families, families will always talk about how important their housing is for them in regards to entertaining and maintaining close ties to friends and families.  They talk about how their ‘hearts are eternally and inexplicably changed’ when bearing their children, but same hearts appear to become ‘hearts of stone’ when these same children become adult singles, low income or no income persons and families.  The greed of business decisions takes over from family values and these disadvantaged persons are tossed out or are considered less important or non-existant in financial  formulas and decision-making processes.

Housing is just one example.  Those with the money and decision making powers continue the NIMBY mentality where they do not want to see tiny houses or condos in their precious spaces.  When tiny condos are built, for example 200 square feet, the purchasers of these spaces are often forced to pay more on less square foot living space and less take-home income than families paying for houses (thus violating Maslow’s Hierarchy of Needs (Maslow%27s_hierarchy_of_needs).  One example is a complex in Calgary where the 532 square foot condo is $299,900 or $543 per square foot, and the 1830 square foot condo begins at $649,900 or $355 per square foot.  The higher cost per square foot means that tiny space purchasers also will pay proportionately more real estate fees, education fees, house taxes and mortgage interest payments because all these fees are based on the cost of the housing, not square footage.  (See November 13,2015 post “Upside Down Finances re Housing for Singles and Low Income” – how is this any different than loan sharking or payday loans?)

Calgary Herald December 16, 2015 article “Nothing New from housing collective” (housing-affordability) (a study going on for 14 months) states:

’Mayor Naheed Nenshi says he’s unhappy with the city’s Community Housing Affordability Collective strategy, but hopeful  it’s members now understand the ‘time for talk is over.’

Talk, talk, talk, and study after study without action is just meaningless rhetoric.  In this so called democratic, civilized country all persons, whether they are immigrants or Canadian-born, single or married, male or female, low income or no income deserve the same financial dignity and respect such as being included in financial formulas.  All individuals deserve a living wage job and a place to  live in just like the rich and middle class families.

(This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice).

 

SENIOR SINGLES PAY MORE – Part 4 of 4

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RESPONSE TO LETTERS ON UNFAIR SINGLE SENIORS TAXATION

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to provide personal or financial advice.

(This opinion letter was originally published in a local newspaper on September 9, 2015.  Since there is a space limit for number of words that can be submitted to newspapers, additional comments that do not appear in the original published article have been added here in italics).  This blog post was updated on December 1, 2017 replacing 60-70% of living costs to 1.4 equivalence scale (equivalence-scales) for singles.

 Here we go again.  Opinion letters from last two weeks show married/coupled people cannot put themselves into singles’ financial shoes without dumbing down singles’ opinions and sticking singles’ finances into family financial boxes.  Unfortunately, singles finances don’t work that way.  Following is a response to both letters.

Re TFSAs (Tax Free Savings Accounts), caps must be set on TFSA amounts.  Otherwise, wealth spread between married/coupled people and singles and low income people will exponentially widen with less money collected in tax systems, and ability to pay for public programs such as education disappearing.  Most singles, single parent and low income families are unable to max out TFSAs at lower limit, let alone higher limit (and RRSPs-Registered Retirement Savings Plans).

Re income splitting benefits, multiple discussions show wealthy families benefit more than other families.  Present format implies households with singles, single parents (don’t get to stay home to raise kids) and parents with equal incomes don’t deserve same financial equality.  Re pension splitting married/coupled people already get two of everything including pensions.

You say bizarre conclusions have been reached.  Let’s talk bizarre.  Re Allowance Program and Credits benefits, 2009 Policy Brief, “A Stronger Foundation-Pension Reform and Old Age Security” by Canadian Centre for Policy Alternatives, page 4 policyalternatives.ca, states:

‘this program discriminates on basis of marital status as confirmed by case brought under Charter of Rights where federal court agreed program was discriminatory, and ruled it would be too expensive to extend program on basis of income regardless of marital status.’

So what is happening?  Age eligibility for Allowance benefits will change from 60 to 62 beginning in 2023 with full implementation in 2029.  In this democratic, civilized country let’s just ignore federal court rulings and continue a $? million discriminatory program.  Article also suggests that:

‘OAS (Old Age Security) and GIS (Guaranteed Income Supplement) combined should be increased to at least bring it up to after-tax LICO (Low Income Cut Off) for single individuals.’

Why should married/coupled people get discriminatory marital status benefits where unused credits like Age Credits benefits can be transferred to spouse?

Conservatives are so proud they have initiated targeted tax relief benefit where single senior can now earn $20,360 and senior couple $40,720 before paying federal income tax.  Using simple math, tax relief for single seniors is only $1,697 per month, for senior couples $3,393 per month.  Rent or mortgage payment of $1,000 per month is barely covered for singles, but is amply covered for senior couple.

BMO Retirement Institute Report “Retirement for One-By Chance or Design” 2009 .bmo.com and other reports state present tax systems give huge advantages to married/coupled people with singles never married or divorced at some point throughout their entire working career usually subsidizing married/coupled people.

Russell Investments “Spending Patterns in Retirement”, February 2010, russell.com states:

‘government transfers, such as CPP and OAS are generally not sufficient to cover Essentials of Retirement.  Problem is magnified for single retirees.  For example, in $35,000-$60,000 income category, couples spend only about 12% more than singles on essentials, yet receive about 80% more in government transfers’.

Eighty per cent more in transfers, why can’t married/coupled people grasp this fact?  Why can’t families understand that ‘ever’ singles have not used medical services for baby delivery, maternal/paternal paid LOA’s from work and many have not used any EI benefits?  Instead ‘ever’ singles are financially supporting and subsidizing families.

Reader #2 letter also talks about how expensive it is to raise a disabled child.  It is no different living as a disabled adult.  The Assured Income for the Severely Handicapped (AISH program in Alberta) allows only $1,588 a month for an unemployed disabled person of single status.

True living costs for singles must be recognized.  Using equivalence scales it is a well-established fact that living costs for singles are 1.4 to that of a couple.  If married persons own their homes outright, the cost of living is even less to that of singles who rent or have a mortgage.  If programs such as pension splitting and survivor benefits continue for married/coupled and widowed seniors, then at same time, singles and not widowed single seniors should get 1.4 equivalent scale enhancements through GIS and OAS relative to married/coupled persons’ baselines.   Equivalence scale of 1.4  for couples to that of singles’ federal tax relief of $20,360 income should equal $28,504 ($2,375 per month) not $40,720 for couples.  Why is that too much to ask?

Politicians and most families are financially illiterate in financial affairs of singles.  The Conservative political parties (provincial and federal) are particularly guilty of this as many marital status benefits have been implemented under their watch.

Further advice from reader letters state singles can live with someone else when they are already living in studio, one bedroom apartments, and basement suites.  Senior singles who have lived productive lives while contributing to their country want and deserve their own privacy and bathroom.  Many senior assisted living dwellings have in recent years built more spaces for singles who with one income pay more for that space than married/coupled persons.  Just how long should shared arrangements go on for (entire lives?) instead of correcting underlying financial issues?

Following examples show financial dignity and respect for singles (and low income families).  Attainable Housing (attainyourhome), Calgary, allows maximum household income of $90,000 for single and dual/parent families with dependent children living in the home and maximum household income of $80,000 for singles and couples with no dependent children living in the home.  Living Wage for Guelph and Wellington allows singles dignity of one bedroom and living wage income that is 44% of a family of 4 income and 62% of a family of two (parent and child).

Assumptions that middle class singles can live on average after tax income of $27,212 is bizarre.  Suggestion of $200 food budget and $110 transportation per month for singles is unrealistic.  At present gas prices, $150 per month is barely adequate for 30-40 minute drive to and from work.  For comparison, Living Wage for Guelph and Wellington (livingwagecanada) (2013 living wage of $15.95 per hour), a bare bones program to get low income and working poor families and singles off the street, allows a calculated living wage income for single person of $25,099 with no vehicle, food $279, transit and taxi $221 (includes one meal eating out per month).  (It should be noted that men require more calories; therefore, their budget for food will be higher.  Also in 2015, the living wage for Guelph and Wellington has been set at $16.50 per hour).

Reader #2 letter seems to include expenses such as utilities, insurance, and phone bill in family expenses, but excludes them from the single person expenses.  Reader #2 seems to think that $500.00 after food, transportation, clothing and rent expenses per month is ample money to cover miscellaneous expenses such as laundry, recreation and eating out plus the non-mentioned utilities, insurance and phone bill. The reader #2 letter then goes on to say:  ‘And, if a single person cuts out some of the recreational activities and eating out, could break even at the lower end.’  Once again there is that assumption that singles spend too much on recreation and eating out.  And, of course, there is no mention of singles having to save for emergencies or retirement.

While singles are living in their small spaces (average size of new studio, one bed and one bed/den new condo combined being built in Toronto is 697 sq. feet), majority of Canadian married/coupled people families are living in average 1950 sq. foot houses (2010) with large gourmet kitchens, multiple bathrooms, bedrooms for each child and guests, basement, garage, yard, and nice patio with barbecue, etc.

Families don’t take their own advice which they dish out to singles.  Senior couples or widowed don’t want to give up their big houses, but ask for reduced house taxes and senior’s school property tax assistance programs (Calgary Herald, “Not Now” letter to the editor, August 26, 2015).  If you can’t pay your house taxes, how about moving to smaller place or go live with someone (tit for tat)?  If families with kids don’t pay school property taxes as seniors, then homeowners who have never had kids should not have to pay school taxes throughout their entire lives.

Financial discrimination of singles is accepted in mainstream and is, indeed, celebrated.  Article like “Marrying for money pays off” (researchnews) implies married/coupled persons and families are more financially responsible.

In Calgary Herald article, August 7, 2012, Financial Post “Ten Events in Personal Financial Decathlon Success” (personal-financial-decathlon), the Family Status step says:

‘From a financial perspective, best scenario is a marriage for life.  It provide stability for planning, full opportunities for tax planning and income splitting and ideally for sharing responsibilities that can enhance each other’s goals and careers.  One or two divorces can cause significant financial damage.  Being single also minimizes some of the tax and pension advantages that couples benefit from’.

How nice!

There is no need for another political party as stated in Reader #1 letter.  In present political system, singles are losing financial ground.   Words ‘individuals’ or ‘singles’ rarely come to the financial lips of politicians, families or media.   What is needed is to bring financial issues of singles to same financial table as families and to make positive changes for both parties to financial formulas.  Singles are not asking for more financial benefits than families, but equivalency to family benefits as applicable at rate of 1.4 to that of household comprised of two persons.  They deserve this as citizens of this country.

So when singles are no longer able to live with financial dignity thus creating financial singles ghettos (financial bankruptcy because they are not included in financial formulas), just what will society do?  Apparently, they are looking for people to go to Mars.  Singles could always be involuntarily sent there.  Out of sight, out of mind.

This blog is of a general nature about financial discrimination of individuals/singles.  It is not intended to provide personal or financial advice.

 

UPSIDE DOWN FINANCES RE HOUSING FOR SINGLES AND LOW INCOME – PART 3 OF 3

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UPSIDE DOWN FINANCES RE HOUSING FOR SINGLES AND LOW INCOME- PART 3 of 3 LOST DOLLAR VALUE LIST AND PSYCHOLOGICAL IMPACT

These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to be used as personal or financial advice.

As stated in Part 1 and 2 of this series, one example of financial unfairness is condos presently being developed in Calgary by a developer including 1 bed, 1 bath, 1 patio micro-condo of 552 sq. ft. with starting price of $299,900. Two patio, 2 bed, 2 full bath, 2 story 1232 sq. ft. condos were already sold out so price not available. Then there are 2 patio, 3 bed, 2.5 bath, 2 and 3 story 1830 sq. ft. condos priced from $649,900 to $749,900. Apparently, ultra-deluxe model has master bedroom suite covering entire third 600 sq. ft. floor. The third floor bedroom is bigger than total square footage of $299,900 condo. When price per square foot is calculated, micro-condo is selling for $543 per sq. ft. while three bed condos are selling from $355 to $409 per sq. ft.

Average square footage of Canadian house is 1950 sq. ft. (2010) so how can a developer socially, morally and ethically justify charging $150 to $200 more per square foot for two-thirds less space? “CREB now” http://www.crebnow.com/, Aug. 28 to Sept. 3, 2015, page A5, talks about Calgary developer selling 440 sq. ft. condos in north inner city tower for $149,000 ($339 per sq. ft.) in 2012 and 440 sq. ft. condos in south inner city tower for $219,000 ($498 per sq. ft.) in 2015. Two and three hundred sq. ft. condos are now being sold in Vancouver and Toronto for around $250,000 ($1250 and $833 per sq. ft. respectively). Salaries for low income and singles has not risen to same level, nor has Canadian housing for the middle class and rich ($400,000 and up (except perhaps in Vancouver).

So who is more likely to buy micro-condos? Possibly low income couples, single parent with one child, or environmentally conscious, and probably an individual/single person. Who gets to pay $150 to $200 more per square foot for two-thirds less space? Ripple effects are owners of micro-condos have to proportionately pay more house taxes, education taxes, mortgage interest and real estate fees on less house and less take home pay for biggest lifetime expense. When it is sold, will seller recoup buying price?

To further magnify the issue, lottery in major northern Alberta city has first grand lottery prize of $2,092,000 for 6,490 sq. ft. house ($322 per sq. ft.), second grand prize of $1,636,000 for 5,103 sq. ft. house ($321 per sq. ft.), and third grand prize of $1,558,000 for 5,097 sq. ft. house ($306 per sq. ft.). First house has elevator, games/theatre area, kid’s lounge, gym, and music room. Second house has hockey arena with bleacher seating, lounge and bar. Third house has spa, gym, yoga studio, juice bar and media room. Need anything more be said about the rich? They always get more while paying less and acquiring choicest spots.

As stated in a recent real estate article, Watermark, a deluxe complex in Calgary is selling an ‘inspired’ (so stated in article) 8,644 sq. ft. estate home and its guest house for $3.45 million or $399 per square foot which is less per square feet than 600 square foot condo mentioned above. Article goes on to say that beyond homes, Watermark garners interest with both natural and man-made beauty. It has 17 cascading ponds and more than five kilometers of interconnected walking and bike trails. Then there’s the central plaza with its 1,000 sq. ft. pavilion, kitchen, barbecues, a sports field and NBA-sized basketball court. One family’s daughter is looking forward to booking the plaza and using the outdoor kitchen for her birthday party. The family goes on to state that space between homes and low density was also very important so they weren’t looking into someone’s back yard. This same complex has a show home with 17 sinks.

Another real estate article talks about another family with three children moving from 1900 sq. ft. house to a 2,837 sq. ft. house with price starting from $900,000s. They are moving because they need more room for the kids as they grow. Their new house will provide 567 sq. ft. per person at a starting price of approximately $317 per sq. ft. Yet again other articles state that owners are happy they don’t have condos in their back yard and their children can experience nature from their own bedrooms.

Further advice usually given by married people states singles can live with someone else if they can’t afford housing when they are already living in studio, one bedroom apartments, and basement suites. Senior singles who have lived productive lives while contributing to their country want and deserve their own privacy and bathroom. Many senior assisted living dwellings have in recent years built more spaces for singles who with one income pay more for that space than married/coupled persons. Just how long should shared arrangements go on for (entire lives?) instead of correcting underlying financial issues?

Following examples show dignity and respect for singles (and low income families). Attainable Housing http://www.attainyourhome.com/, Calgary, allows maximum household income of $90,000 for single and dual/parent families with dependent children living in the home and maximum household income of $80,000 for singles and couples with no dependent children living in the home. Living Wage for Guelph and Wellington livingwagecanada allows singles dignity of one bedroom apartment and a living wage income that is 44% of a family of 4 income and 62% of a family of two (parent and child).

While singles are living in their small spaces (average size of new studio, one bed and one bed/den new condo combined being built in Toronto is 697 sq. feet), majority of Canadian married/coupled people and families are living in average 1950 sq. foot houses (2010) with large gourmet kitchens, multiple bathrooms, bedrooms for each child and guests, basement, garage, yard, and nice patio with barbecue, etc.

LOST DOLLARS VALUE LIST

For a 700 square foot condo where price is $50 more per square foot than lowest price of largest condo in complex, it can be assumed that the purchaser will be paying $35,000 more than purchaser’s base price of largest condo, if the price per square foot is $100 more per square foot then purchaser will be paying be paying $70,000 more, if the price per square foot is $150 more per square foot then purchaser will be paying $105,000 more and so on. The amount of house and education taxes, real estate fees and mortgage interest will also incrementally increase.

Our Lost Dollar Value List is still a work in progress, but when lost dollar value for real estate is added to the list, $50 will be used as the example as well as gestimate loss for taxes and real estate fees, interest charges based on $50.00 per sq. ft.

PSYCHOLOGICAL IMPACT

There seems to be very little understanding of the psychological impact that decision makers and policy makers have on singles regarding housing.

Many families live in houses where their young children have separate bedrooms, and likewise, there is a trend towards ‘man caves’ and ‘she sheds’ so family members can have ‘alone’ time, but when children become single adults, singles are consistently told that they can live with someone if they have financial problems with housing while paying more.

And, of course, singles never have claustrophobia, so it is okay to stick them in small spaces for which they have to pay more. And singles never have problems with noise, so it is okay for them to live in small units in less desirable areas close to airports and railway tracks, etc. (As one single person moving from one unit to another stated in a real estate article “I was very impressed with the pricing and the fact that they’re doing concrete floors and walls “. Concrete is said to restrict noise. “I work on Saturday mornings and a lot of people like to stay up a little later on Friday and Saturday nights”. With thinner walls, he adds, it is easier to hear “people in the hallways coming and going. It is not the end of the end of the world, by any means, but I am looking forward to something quieter above and below”. But for this person, the decision was less about sound and more about getting something larger, with better specifications and closer to work-moving from 615 sq. ft. two bedroom condo to 715 sq. ft. two bedroom condo. “The bedrooms are a little bit bigger with an ensuite. I really liked that and I liked the fact that it has a washer and dryer so I don’t have to go to the laundromat.”

Singles deserve same standard of living as married/coupled persons, i.e. having washer and dryer in their own home instead of  having to go  down a dark hall or to basement to do laundry or paying  per load at a laundromat.

When reading or listening to articles on housing for families, families will always talk about how important their housing is for them in regards to creating memories for their children, entertaining and maintaining close ties to friends and families, but apparently adult singles don’t have friends and families, so it is okay for them to live in micro condos, some as small as 200 square feet, where it is pretty much impossible to entertain or have friends and families stay with them.

SOLUTION

Singles and low income persons need to become more aware of financial unfairness by taking pricing down to the lowest common denominator, i.e. price per square foot and speak out about the financial atrocities being directed towards them. They need to start questioning why they are being targeted to pay more while getting less.  (While it is recognized that it is expensive to raise children, adult to adult it is also unfair to make one segment of the population like singles and the disadvantaged pay more than another segment).

The blog posted here is of a general nature about financial discrimination of singles. It is not intended to provide personal or financial advice.

UPSIDE DOWN FINANCES RE HOUSING FOR SINGLES AND LOW INCOME – PART 2 OF 3

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These thoughts are purely the blunt, no nonsense personal opinions of the author and are not intended to be used as personal or financial advice.

UPSIDE DOWN FINANCES RE HOUSING FOR SINGLES AND LOW INCOME-PART 2 OUTSIDE THE BOX SOLUTIONS FOR PRICING OF HOUSING

Part 1 of this series of three articles showed how singles and low income families buying the smallest units in the housing market are forced to pay more for less space while the rich are getting much more while paying less.

From Part 1, information restated here is one example, condos presently being developed in Calgary by a developer in one housing complex includes 1 bed, 1 bath, 1 patio micro-condo of 552 sq. ft. with starting price of $299,900. Two patio, 2 bed, 2 full bath, 2 story 1232 sq. ft. condos were already sold out so price not available. Then there are 2 patio, 3 bed, 2.5 bath, 2 and 3 story 1830 sq. ft. condos priced from $649,900 to $749,900. Apparently, ultra-deluxe model has master bedroom suite covering entire third 600 sq. ft. floor. The third floor bedroom is bigger than total square footage of $299,900 condo. When price per square foot is calculated for units in the complex, micro-condo is selling for $543 per sq. ft. while three bed condos are selling from $355 to $409 per sq. ft.

So who is more likely to buy micro-condos? Possibly low income couples, single parent with one child, or environmentally conscious, and probably an individual/single or divorced/separated person. Who gets to pay $150 to $200 more per square foot for two-thirds less space? Ripple effects are owners of micro-condos have to proportionately pay more house taxes, education taxes, mortgage interest and real estate fees on less house and less take home pay for biggest lifetime expense. When it is sold, will seller recoup buying price?

One could question how this is any different than gouging like loan-sharking, and pay-day loans rather than the welfare of singles and low income.

As in many parts of the world, parts of Canada are heading for a crisis in affordable housing. Different solutions have been proposed to avert this crisis. One is Attainable Housing (attainyourhome), for example in Calgary, which allows maximum household income of $90,000 for single and dual/parent families with dependent children living in the home and maximum household income of $80,000 for singles and couples with no dependent children living in the home. While this method allows singles and low income to enter the housing market with a low down payment, it does not alleviate the problem of insane upside-down pricing of housing as outlined in the example shown above. Another solution that has been proposed is an affordable housing action plan of inclusionary zoning where a certain percentage of new housing units built would be social and community housing partly funded by government programs, and a certain percentage of new housing units would be affordable rental or ownership housing units built by the private sector. However, developers and the housing associations will argue this will not work and neighbors continue to have a “not in my backyard” mentality.

Regardless of the above proposed solutions, outside the box thinking is required for affordable housing. How about the following suggestions?

OUTSIDE THE BOX SOLUTIONS FOR PRICING OF AFFORDABLE HOUSING

Solution 1 – for a housing complex as identified in the above outrageous pricing example, prices should be set where the base price of the unit with the smallest square footage cannot be more than the base price of the unit with largest square footage within the complex. Any changes and upgrades by the buyer would be added to the base price. (In the above example the base price of the 552 square foot condo could only be $355 per square foot to match the cheapest price of the biggest per square foot unit in the complex.

Solution 2 – Charges for house taxes, education taxes, and real estate fees should be based on square footage, not the price of the housing unit.  This would provide fairness where fees are based on largest unit and become proportionately less on smaller units. (Added January 7, 2016)

Solution 3– charge a fee such as a carbon tax fee for units greater than a certain number of square feet. For example, allow a maximum size of 2500 square ft. for a housing unit (assumption is that there is no need for excessive amounts of square footage in housing). For anything greater than 2500 square feet, charge an extra fee to the buyer with an incremental increase in the fee for every additional 500 square feet of space. (The rich have been paying less and getting more square footage while using non-renewable resources plus water at an alarming rate, i.e. 5000 square foot log cabin using twelve logging trucks filled with harvested logs and a showhome that has seventeen sinks). The monies collected from these fees could be used to build more affordable housing.

The following are excerpts from two published articles:

  • MoneySense, Sept./Oct., 2015, page 17 ‘Two ways to cool white-hot home prices’ (ABBREVIATED VERSION) (moneysense.ca)

“Concern should not be for how much houses cost, but how out of reach home ownership has become for Canadians….Developers motivated by profit have built mostly smaller one and two bedroom condo units…There is also rapidly increasing rental rates due to a scarcity of new rental units….One solution-taxing housing, not income. We don’t currently pay tax on the profit earned from the sale of our primary residence. We do, however, pay progressive tax on the income we earn. Thomas Davidoff, economics professor at Sauder University, uses himself as an example and selling a house in Vancouver for a large profit. ‘I was wrong about the prices, wrong about the future value, and I was still rewarded for my dumb luck’. He compares this to his professional life, where he spent the better part of 10 years completing a bachelor, master’s degree and PhD. Today, he pays the government $0.42 in tax for every dollar he earns. ‘Getting my PhD damn near killed me. Why is my dumb luck rewarded but my hard work penalized?’….He suggests the federal government tax capital gains made on the sale of a property. The tax could also be progressive. More important is what a new tax structure would do to affordability. By taxing property profits, you reduce the number of speculators and real estate investors who help to inflate housing profits. This would be politically challenging, since homeowners are a politician’s biggest voting block….Still, those elected to political office need to take initiative—and put housing affordability for the many before the political aspirations of a few. To do nothing would mean we accept that $1 million for an average home is the new norm in Canada”.

 

  • Calgary Herald, September 12, 2015, page F3, ‘Builders frame up the coming year’ (calgaryherald):

“Canadian Home Builder’s Association- Tally Hutchinson, president ‘Our message on affordability is being heard. We still believe there are some large issues on the table that need to be ironed out. One being inclusionary zoning’….This zoning would require the private sector to construct and sell a percentage of units within a development at a pre-determined percentage, below market price….’The issue we have with inclusionary zoning is that it transfers that broader societal obligation of subsidized housing onto a small group of homeowners. We believe these costs should be shared by all members of a community, not just those who are buying new homes for condos. It still is a large issue on the table that needs to be ironed out’.”

The blog posted here is of a general nature about financial discrimination of individuals/singles. It is not intended to provide personal or financial advice.