CMI Financial president outlines the benefits of the approach to tackle rising housing costs
CMI Financial Group president Kevin Fettig believes Canada could tackle its low-income housing challenges by adopting a model similar to the United States’ housing voucher program.
In a recent analysis, Fettig said the program could provide a more direct and effective solution than the current policies focusing on affordable unit mandates in new developments.
“Federal housing policy has two critical issues to tackle: addressing high housing costs facing middle-income Canadians and ensuring adequate housing for lower-income individuals and families,” he wrote. “These are two distinct problems that require different solutions, as lower-income and middle-class Canadians face different affordability hurdles.”
Instead of trying to reshape the market by mandating affordable units in every new development, a more efficient approach would be to give people direct financial assistance to cover their housing costs, Fettig explained. He said the US Section 8 program is a model worth considering for Canada.
The Section 8 program in the US helps low-income families, seniors, and people with disabilities by providing them with financial support for private-market rentals.
Families can choose their own housing, whether it’s a house, townhouse, or apartment, as long as the landlord agrees to participate in the program. The subsidy is paid directly to the landlord, and the tenant covers the remaining rent.
“Under certain circumstances, families can use their vouchers toward purchasing a home. Eligibility is determined locally, based on total annual gross income and family size,” Fettig noted.
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The US Department of Housing and Urban Development (HUD) is currently exploring ways to streamline this process, including a proposal to pay renters directly, aiming to get people housed more quickly.
However, Fettig pointed out that a “significant challenge lies in carrying out inspections without slowing down the leasing process. Another concern is whether tenants might use their monthly cash assistance on non-rent expenses.”
“Observing the US approach closely could provide valuable insights into structuring an effective housing voucher system in Canada,” he added.
While low-income housing is one side of the affordability problem, Fettig stressed that middle-income Canadians are also struggling with high housing costs, particularly in expensive markets like Toronto and Vancouver. He believes the solution for middle-income earners lies in increasing the housing supply by reducing barriers to construction.
“We’ve taken a cookie-cutter approach to our housing problems, rather than focusing on areas where the housing market is truly broken,” Fettig said. “The federal government needs to push back against the local tendency to restrict new construction by incentivizing communities to embrace development.”
The CMI executive pointed out that restrictive land zoning regulations, often imposed at the local level, are driving up costs and limiting supply. This is where federal and provincial governments can step in, Fettig suggested, echoing ideas from economists like Harvard’s Edward Glaeser, who has proposed using infrastructure funding to push regions to remove these “zoning straitjacket” restrictions.
The Canadian federal government should also use its influence to encourage more housing construction by working with provinces and municipalities to reduce red tape.
Fettig concluded by urging federal policymakers to take a fresh look at how they approach housing.
“Federal housing policy should ensure lower-income individuals and families have access to adequate housing, while also addressing the high costs many middle-income individuals and families face. These are two distinct problems that require two different solutions. It’s time for federal policymakers to recognize this and respond accordingly,” he said in his blog post.
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