There continues to be a severe shortage of low-cost rental supply in Winnipeg, at the same time rental vacancies are generally on the rise. This problem is not unique to Winnipeg; it is a problem across Canada, and governments are doing a poor job solving it.

Opinion

There continues to be a severe shortage of low-cost rental supply in Winnipeg, at the same time rental vacancies are generally on the rise. This problem is not unique to Winnipeg; it is a problem across Canada, and governments are doing a poor job solving it.

The most recent Canada Mortgage and Housing Corporation (CMHC) rental report confirms that for the lowest income quintile earners— those earning less than $25,000 per year— options are scarce. An affordable monthly rent for this group would be less than $625; units renting at this rate represented less than three per cent of the total rental universe in 2021.

While low-income rental supply is near impossible to find, there is currently a five per cent vacancy rate for an average-cost two-bedroom purpose-built rental — considerably higher than the three per cent considered to be a healthy rate.

The high vacancy rate is largely the result of an increase in high-cost purpose-built rental apartments that far exceeds the demand. Units new to the market have average rents upwards of $1541 per month.

CMHC reports a 30 per cent year-over-year increase in the number of apartment units under construction in the Winnipeg market; few, if any, will be affordable for low-income households. The vacancies in high-end units and the shortage of low-cost units tells us there is a disconnect between the kinds of rental units being provided (supply) and what is needed (demand).

A major cause of this disconnect was outlined in a 2018 report by the United Nations Special Rapporteur on Housing, Leilani Farha, who described the growing inequities caused by the financialization of rental housing – the unprecedented dominance of financial markets and corporations in the housing sector.

The treatment of housing as a means of accumulating wealth has superseded the foundational importance of housing as a basic human right. In a nutshell, investors don’t care about housing at all; they are simply looking to maximize a return on their investments.

The ascendancy of real estate investment trusts (REIT) and the financialization of rental housing is a serious problem in big cities, but smaller markets such as Winnipeg are beginning to see this, too. According to CBC’s The Fifth Estate, the four largest REITs in Canada disbursed more than $2 billion in profits to their investors between 2015 and 2020.

Since the 1980s, governments have relied almost entirely on the private sector to meet housing needs. The problems caused by this approach have become abundantly clear, yet governments have yet to take the problem seriously.

In the 2022 budget speech, Finance Minister Chrystia Freeland spoke about Canada’s housing problem, but she emphasized a problem of supply— "we need more homes, fast." For low-income renters in Winnipeg, it isn’t so much that there aren’t enough rental units; it’s simply that they cost too much.

There is a nod to non-market housing in the 2022 federal budget, but the primary focus is still on incentives to build market housing, as well as a bit of help for first-time homebuyers. The commitments are said to build on the 2017 National Housing Strategy and the National Housing Strategy Act, which became law in 2019. Neither has had much impact, despite claiming to "focus on improving housing outcomes for persons in greatest need."

The National Housing Research Working Group estimates a mere three per cent of the Rental Construction Financing Initiative (RCF) has created units that are "suitable to and affordable to low-income tenants."

The province of Manitoba has also failed miserably. In order to access funding through the National Housing Strategy, Manitoba released a three-year action plan in 2019, but it steered clear of any commitments to what we know is needed most: social housing.

The recently released Manitoba budget does not invest in new social housing, and scales back its commitment to maintaining the existing supply. It continues to defer to the private sector to meet all housing need.

Ironically, the CEO of REALPAC, the association that represents many of Canada’s largest real estate companies, made clear in a recent interview that "…deeply affordable housing is a public good, and the private sector is not primarily in the business of providing a public good."

The market has clearly failed to respond to the demand for low-cost rental housing. Replenishing the supply of housing for the public good will require governments at all levels to use the tools each has available to stop the bleeding caused by the financialization of housing.

This will include a full range of taxation and regulatory measures, an end to subsidies to private-sector rental housing developers, and large-scale investment in the development and maintenance of publicly owned rental housing.

Shauna MacKinnon is a professor and chair of the department of urban and inner-city studies at the University of Winnipeg, a longtime member of the Manitoba Right to Housing Coalition and a Canadian Centre for Policy Alternatives - Manitoba research associate.