P.E.I. on pace to build more social housing than what's promised in strategy

The P.E.I. Housing Strategy, released in February, promises 560 new social housing units over the next five years, but Rob Lantz says that is not necessarily the limit.

"We haven't set specific targets," Lantz, the province's housing minister, told CBC News.

"We're making significant investments and building and purchasing as quickly as we can."

The strategy also sets a target of 10,000 new home builds over that same five-year period. If the province reaches that, 560 social housing units would represent 5.6 per cent of those builds.

That rate would be far below what some experts say is needed to solve Canada's housing crisis. In a report last year, Scotiabank economist Rebekah Young recommended a strong move toward social housing as part of that solution.

Young pointed out that social housing represents just 3.5 per cent of Canada's housing stock. On P.E.I. it's lower, about three per cent. Among the 38 member countries of the Organisation for Economic Co-operation and Development (OECD), the average is around seven per cent.

Young recommends doubling the stock of social housing in Canada, bringing it up to that seven per cent average. In order to do that, she suggested, 20 per cent of Canada's new housing builds should be social housing.

P.E.I.'s strategy would bring the province's social housing ratio to about 3.3 per cent. Reaching seven per cent would require more than 3,000 new social housing units over those five years.

While not setting a target, Lantz noted that P.E.I. recorded 1,139 housing starts in 2023, and in that same year there were more than 250 social housing units under construction — well above the pace required to build 560 in the next five years.

"That's within that 20 per cent benchmark," he said.

"We're making progress, ramping up every year and building capacity to do that. There's a lot in the pipeline."

'Never going to be able to keep pace'

At the heart of the need to build more social housing is affordability.

"For a subset of Canadians, particularly renters, low-income renters, they're never going to be able to keep pace with where market prices are going," Young told CBC News.

The most common benchmark for housing affordability in Canada, a rate used by Statistics Canada to define affordable housing, is 30 per cent of income.

According to Statistics Canada, family income for the lowest 20 per cent of earners on P.E.I. topped out at $30,200 in 2022. Average monthly rent in the province that year was $1,009, or 40 per cent of that income.

That average rent was just barely affordable for families in the top 30 per cent of earners.

"So we really need quite substantially more social housing stock," Young said.

This is not a new situation, said Carolyn Whitzman, a housing policy researcher at the University of Ottawa. Through much of the 20th century, social housing played a big role in Canada.

"From the 1930s onward, which is really the creation of federal housing policy, there's been a recognition in Canada and also internationally that housing for low-income households isn't going to be provided by the market," Whitzman said.

By the 1970s, she said, Canada was creating about 20,000 social housing units a year. But that approach changed in the 1990s. Social housing creation fell to about 1,000 units annually. It's hard to know how many are being created now, she said, because it's no longer being tracked.

Whitzman recommends pushing even further than the 20 per cent mark for public housing.

"Maybe even a third, to make up for 30, 40 years of just not building very much at all across Canada," she said.

'An ambitious number'

While it is uncertain at this point whether P.E.I. is on a path to reach the OECD average for social housing, Young is pleased with the government's direction.

"It's heading in the right direction, and to be honest there is no magic number," she said.

"I said, pick an ambitious number."

And she noted the 10,000 total for new homes is indeed an ambitious number, and building a lot of new homes across the spectrum will be an important part of pulling Canada out of the housing crisis.

The P.E.I. target could be described as more than ambitious. Building 10,000 homes in five years has never been done on the Island before. In fact, only once has the province built more than 2,000 in one year, 1973.

The Island got off to a roaring start toward reaching that target in the first quarter of 2024. The winter months are typically slow for construction, but the 394 starts were the province's best quarter ever.

The second quarter, however, was lacklustre. The 317 starts were the lowest since 2018, the year the recent acceleration in housing construction began.

Despite the poor second quarter, the 711 housing starts in the first half of 2024 is the best first half on record. It is still, however, a heavy lift to reach 2,000 by the end of the year.

Subsidizing rents

Lantz argues that affordable housing solutions do not lie solely with public housing.

"The important thing is to build the affordable housing sector, and that's the whole community housing sector, which would include our public housing but also the non-profit sector, co-operative housing," he said.

"We have partners in the community, and the whole community housing sector we want to lift significantly."

The province has launched a $10-million pilot project this year to support non-profit and co-operative housing groups.

Another approach of the P.E.I. government is subsidizing Islanders living in market-rental units. These subsidies allow them to live in units charging market rates while only paying 25 per cent of their income for rent.

The province supports more Island households with subsidized rents than it does with social housing, with 1,895 social housing units and 2,065 receiving rent subsidies.

Transfers — any sort of monthly cheque that may be going from government to individual households — was simply not enough.— Rebekah Young, Scotiabank economist

Whitzman said the approach of subsidizing rent in market housing is costly and not necessarily effective.

"It's very, very hard to make up the difference between what's affordable to a person on a pension or a person on welfare or disability," she said.

Young's research supports this view. She found the lowest 20 per cent of earners on P.E.I. would require about $500 extra a month to make up the difference between market rent and what was affordable for them. Even the next 20 per cent of earners would require about $100 a month.

"Transfers — any sort of monthly cheque that may be going from government to individual households — was simply not enough to cover the shortfalls of the average market rents across the country," she said.

"That speaks to the magnitude of [the] affordability challenge, and also the realism that the government wouldn't be able to cover that shortfall."

While social housing and rent subsidies can ease the burden, data from the 2021 census suggests that the system as structured is not a perfect solution for bringing families below the affordable housing threshold.

The census found 20,000 households renting on P.E.I. and 6,000, or 30 per cent of them, were paying rents that were not affordable.

Crucially, it made no difference if those renters were living in subsidized housing or not. For both groups, those in subsidized housing and those in non-subsidized housing, 30 per cent were paying too much.

Bedrooms versus homes

P.E.I.'s housing situation has been described as a crisis since 2019. It took years to get here, and it will take years to build a way out.

Young suggests there may be a way to get out more quickly.

"We often hear there are enough bedrooms in the country, they're just not accessible to everybody," she said.

The country's aging demographic has implications beyond the workforce. It has also resulted in a lot of empty nesters still living in the homes they raised their families in.

Finding ways to move those empty nesters into more appropriately sized housing may be part of the solution.

"Are there incentives and alternatives for aging in place, but aging in perhaps more appropriate places, providing more options for Canadians as they get older, such that they want to move out of their house with many bedrooms and making space for others," said Young.

"Co-habitation, multi-generational living, rental units within existing structures — all of these are going to be, inevitably, part of the future of how we live."