The push is on to find creative ways of opening the door to affordable home ownership
Tucked away on a small crescent in Scarborough is a tidy corner of 36 Habitat for Humanity townhouses. Dressed in beige siding with a small front porch, the very last unit is distinguished by a long wooden ramp leading to the front door.
With a big smile, Leomina Valderrama opens the door.
“Come in, come in – welcome to my home,” the petite, dark-haired woman says of her 900-square-foot, two-bedroom house.
Although the house is small by today’s standards, Valderrama is as proud of it as owners of much larger homes might be of theirs. Since she arrived from the Phillipines in 1989, it has been her dream to own a home that would give her family hope for the future.
“This will be our children’s home one day,” she says, looking affectionately at her sons, 11-year-old Bryan and Brendell, 4, who was born prematurely and cannot walk or talk.
Because this is a Habitat house, she and her husband, Gilberto, a courier with ICS, had to provide 500 hours of labour toward its construction. It was worth the effort, she says, because it meant they didn’t have to come up with a down payment, and their monthly mortgage costs are lower than what they were paying to rent a cramped apartment.
It’s also an opportunity to establish equity for their old age and to raise their children in a better environment.
But with the majority of government funding directed at rental subsidies, only a tiny fraction of families like the Valderramas will ever have the chance to benefit from affordable home ownership. Habitat can only afford to build up to 200 homes a year across Canada .
David Hughes, president and CEO of Habitat for Humanity, Canada, says the “powerful thing about our model is that for less than what people pay for rent, they are able to build equity and live in a better quality home and community.”
But there are very few government grants to support ancillary programs, he says. “All levels of government understand the merits of home ownership, but it’s not on their radar.”
Mike Labbe, president of Options for Homes, a non-profit builder that offers a mix of housing including low-income condos, believes home ownership can significantly reduce poverty in Toronto . He says some of his condos would be affordable for people earning incomes as low as $19,000 a year.
“If Regent Park allowed 50 per cent of its tenants to be owners, these owners would be more willing to deal with problems concretely because they (would) own their property,” he says.
“The crime rate would then fall … And if you rent an apartment for life, and are not able to save for retirement, when you’re retired you may not be able to afford your apartment. But if you own and save, you won’t be evicted financially.”
Sean Gordon, director of partnerships at the City of Toronto ‘s affordable housing office, admits that “renters don’t gain equity, so this is considered a short-term approach.”
He explains that the focus is mainly on renters because this is the highest need, with 66,000 people on the waiting list for affordable rental accommodation.
“We redirect federal and provincial funds and the majority goes to rental projects,” says Noreen Dunphy, senior planner for policy and research with the city’s planning division.
“Some money is set aside for affordable home ownership, but ownership is never a main part of the package. Within the next few months, there will be some kind of program aimed at ownership, likely for Regent Park . The Toronto Community Housing Corp. wants 300 affordable housing units in Regent Park when it is redeveloped.”
Both Hughes and Labbe would like to see more funding going to affordable home builders, but Dunphy disagrees, arguing that it’s hard to define affordable and that as home values increase, the affordability decreases. This means low-income people in the future won’t benefit from today’s “affordable” homes.
“We’re thinking about people 35 years from now,” she says. “We don’t want people to make a windfall profit at the public’s expense and take out the affordable housing.
“It’s also important to note that 90 per cent of all new housing built is ownership. Only 5 per cent is rental, which is really out of whack.”
Michael Shapcott, senior fellow in research at the Wellesley Institute, an organization aimed at improving the wellness and health of Torontonians, sides with Dunphy. “We need to concentrate limited resources on those lowest-income people,” not developers, he says.
Shapcott also believes that the credit rating and income required to purchase a home makes it extremely difficult for people at the lower end of the pay scale. A good solution, he says, is the establishment of equity housing co-operatives where everyone owns a piece of the building, and equity can be accumulated. This form of ownership is popular in the U.S.
Finance incentives are another way to create affordability for both low- and highrise homes, as found at Daniels’ Wave Lakeshore West condominium. Here, qualified buyers put down 5 per cent of the new home price. Daniels matches this by lending 5 per cent, payment-free for five years. This is then payable at 5 per cent interest. Finally, through an initiative from Daniels and the federal and provincial governments, a second 5 per cent loan is given, payment-free for 20 years. At this time it becomes a grant with no interest payable. The result is a $119,900 mortgage that carries for $883 a month.
This combined effort on the part of the developer and governments is a good example of what can be accomplished. But much more is needed. Mark Salerno, district manager for the Greater Toronto Area at the Canada Mortgage and Housing Corp., says “I don’t think there is any shortage of potential families who can benefit.”
Valderrama, who says she is grateful for her home “every day when I come down my stairs,” is living proof of the power of ownership.
“We are enjoying our new community and everyone takes good care of their homes. Because we all own our houses, we must work to pay the mortgage.”