Shared-equity housing and other programs are creating solutions to the city’s affordable housing crisis
Affordable housing advocates say more moderate population growth this year will not be enough to break down barriers to homeownership that many Calgarians continue to face.
Calgary Homeless Foundation vice-president of strategy Kevin McNichol said the housing market still cannot keep up with demand, with historically high prices prohibiting many people from owning a home of their own.
In late December, more than 3,600 people were on the Calgary Housing Company’s wait list for subsidized and affordable housing units — the largest number of Calgarians waiting for a home since March 2012.
“Things are so unaffordable here [in Calgary],” said McNichol. “We’re at a point where it has to change —it can’t continue this way.”
Net migration to Calgary CMA increased by 14,951 in 2015, and is expected to drop to 11,747 this year, according to the Conference Board of Canada. This has placed downward pressure of housing prices in the city – albeit not enough, according to McNichol.
CREB® forecasts resale residential housing prices in 2016 will decline by 3.44 per cent to $438,652. Canada Mortgage and Housing Corp. (CMHC) predicts average prices in the resale market to post a slight increase from $451,000 in 2015 to $454,000 in 2016.
CMHC says, in Canada, housing is considered affordable if shelter costs account for less than 30 per cent of before-tax household income.
“You need to be earning $70,000 a year to own a home in Calgary; those who are considered low income are earning $22,000 per year,” said McNichol.
In addition to Calgary Housing Corp., several organization in the city cater to Calgarians who need access to affordable housing, including the INHOUSE Attainable Housing Society, RESOLVE Campaign and Attainable Homes Calgary Corp.
In the inner-city community of Bridgeland, McPherson Place is allowing Calgarians to purchase condominium units without having to provide a down payment; this was made possible through a shared equity housing initiative by the non-profit organization INHOUSE Attainable Housing Society.
The model, which is new to Canada, offers market quality housing at attainable prices, and helps to bridge the gap between renting and owning a home.
McPherson Place is the first project completed by INHOUSE Society and real estate development firm New Urban Consulting. Tenants moved into the six-storey, 160-unit building in February 2013. The Calgary Housing Authority owns 58 of the units.
Prospective buyers at McPherson Place must meet certain criteria: they cannot be current homeowners, they must qualify for a five-year fixed CMHC insured mortgage and their net worth must not exceed 25 per cent of that mortgage.
Through INHOUSE’s Shared Equity Lender Financing (SHELF) process, qualified buyers enter a shared equity partnership with INHOUSE where they own 65 per cent of their unit and pay a reduced mortgage. The remaining 35 per cent of the unit is owned by INHOUSE.
If the property is sold within 10 years, owners receive their percentage of the new market price. The remaining amount will go back into the program, making it a self-sustainable model.
The partnership is dissolved after 10 years, and owners can choose to sell their property or refinance their mortgage for 100 per cent of the equity.
So far, 17 owners at McPherson Place have sold their units and all have profited from their transactions.
Bryan Mosley, 31, purchased a one-bedroom unit on the north side of McPherson Place for $228,000. His monthly mortgage payment is $650 – well below the $900 average monthly rental price of a one-bedroom apartment in Calgary, based on a fall 2015 CMHC report.
Mosley said the whole process was simple, and he plans to live at McPherson place for five more years while he builds personal capital and equity for his future.
“There should be more programs like this in Calgary,” he said. “If this program [INHOUSE] wasn’t here, I wouldn’t have been able to afford the $20,000 down payment.”
New Urban CEO and president Dan Van Leeuwen said the success of McPherson Place has prompted the development of a similar building in Edmonton slated for this year.
“Even with the soft economy, there was a big demand for this service,” he said. “The demand was stronger than we thought it would be.”