Research examines how to turn existing homes into affordable housing options for the future
Canada faces a significant challenge in ensuring affordable housing for all, but a new strategy called "filtering" might be the key to improving housing affordability, according to the Canada Mortgage and Housing Corporation (CMHC).
According to the CMHC study, rents for buildings typically drop by nearly 20% after 20 years compared to new constructions. As higher-income households move into newly built homes, their previous residences become available to lower-income families, creating a ripple effect of affordability across the housing market.
“The new housing of today will, over time, become the affordable housing option of tomorrow," CMHC wrote in the report.
Filtering occurs when higher-income households move into newly built homes, leaving their previous residences available for lower-income households. This process gradually increases the availability of affordable housing across the market spectrum.
The CMHC study emphasizes that building a diverse mix of housing units at various price points, particularly mid-priced options, can enhance overall affordability and well-being. This approach not only increases housing supply but also helps avoid negative consequences such as the displacement of low-income families.
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The research also revealed that housing costs change over time relative to new buildings. Inflation-adjusted rents often decrease in the years following the construction of new housing, making these units more accessible to lower-income households as they age.
CMHC's findings are supported by international studies from the United States and Finland, which demonstrate the wide-ranging effects of filtering on housing affordability.
To maximize the benefits of filtering, a consistent and diverse housing supply is crucial.
CMHC said that while filtering can contribute significantly to improving housing affordability, it is part of a broader strategy that includes ongoing construction and the promotion of a diverse housing supply.
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