Open Collections

UBC Graduate Research

The Rental Housing Index: Examining the State of Rental Housing in British Columbia McDonald, Hannah Marie Mar 10, 2015

Your browser doesn't seem to have a PDF viewer, please download the PDF to view this item.

Item Metadata

Download

Media
42591-McDonald_Hannah_PLAN547C_Rental_Housing_Index_2015.pdf [ 2.66MB ]
Metadata
JSON: 42591-1.0075843.json
JSON-LD: 42591-1.0075843-ld.json
RDF/XML (Pretty): 42591-1.0075843-rdf.xml
RDF/JSON: 42591-1.0075843-rdf.json
Turtle: 42591-1.0075843-turtle.txt
N-Triples: 42591-1.0075843-rdf-ntriples.txt
Original Record: 42591-1.0075843-source.json
Full Text
42591-1.0075843-fulltext.txt
Citation
42591-1.0075843.ris

Full Text

  THE RENTAL HOUSING INDEX:  EXAMINING THE RENTAL HOUSING MARKET IN BRITISH COLUMBIA  by  HANNAH MARIE MCDONALD  B.Sc.(Arch.), McGill University, 2009  A PROJECT SUBMITTED IN PARTIAL FULFILMENT OF  THE REQUIREMENTS FOR THE DEGREE OF  MASTER OF SCIENCE (PLANNING)  in  THE FACULTY OF GRADUATE STUDIES  School of Community and Regional Planning  We accept this project as conforming  to the required standard  …………………………………………….  …………………………………………….  …………………………………………….            THE UNIVERSITY OF BRITISH COLUMBIA March 2015 © Hannah McDonald, 2015  i Acknowledgements  This project is a small contribution to the larger and ongoing body of research undertaken by the BC Non-Profit Housing Association and was made possible through the effort and ideas of Jill Atkey and Tony Roy. The project was generously funded and supported in other ways by Kira Gerwing and Vancity Credit Union. Thank-you to Adam Gogo, Justin Harvey, Dean Pogas, Hugh Stimson and all members of the RHI Advisory Committee for providing input and assistance along the way.  A particular thanks to Jill for providing guidance throughout the development of this research and the writing of the report.  I would also like to thank my BCNPHA colleagues James Roy and Brian Clifford with whom I worked closely collecting the data, developing the methodology and uncovering the trends in BC’s rental housing market. I am grateful for your advice, hard work and laughter – working alongside you was a pleasure. A special thank-you to Matt for the love, encouragement and wisdom - without your support I would not have made it to this point.  Finally, thank-you to Dr. Penny Gurstein for supervising my project and sharing her insight, knowledge and expertise on this topic.   ii Executive Summary  This report was undertaken as part of a larger research project initiated by the BC Non-Profit Housing Association (BCNPHA). The motivation behind the larger project was to provide better and more nuanced data on the rental housing market in British Columbia. The purpose of this report is to give context to this data and demonstrate how the methodology may be applicable outside of BC.   The report begins by providing a historical analysis of the factors that have influenced the state of rental housing in Canada. These include the restructuring of federal income tax policies in 1972, rent control, effects of condominiums, direct government programs, and Canada’s ‘dual housing policy’. This history shows that the majority of today’s purpose-built residential rental stock was constructed prior to 1972 and will need significant maintenance in coming years. The current market incentivizes the provision of new rental housing delivered as smaller buildings by non-corporate landlords such as rented condos, rented houses, secondary suites and accessory dwellings such as laneway or carriage homes. For a variety of reasons, the data collected and reported on rental housing fails to document accurately this secondary rental market. The RHI research project was conceived to address the absence of information on the rental housing market.  The second section gives an explanation of the methodology and its development followed by a discussion of the results of this research. Three main trends in BC’s rental housing market are identified. Firstly, unaffordable rental housing is not a problem that exists only in large urban centres. The statistical analysis undertaken through this research examined the rental housing markets in Canada, British Columbia, and nearly all BC Regional Districts and municipalities showing that communities of all sizes across BC have unaffordable rental housing iii markets. Secondly, issues with rental housing affordability appear to stem primarily from a mismatch between high rents and low incomes rather than households living in overcrowded or otherwise inadequate conditions. Lastly, because the unique methodology allows examination of rental housing trends for households with different incomes, it is shown that problems of rental housing affordability are disproportionately affecting those with lower incomes.  The report concludes with recommendations as to how the results of this research may be applied in practice. The results of this project and the RHI as a tool are potentially useful to affordable housing advocates, researchers, planners and developers. Suggestions of how this work might be used by these types of practitioners are addressed in turn.Acknowledgements ………………………………………………………………..……… i Executive Summary ………………………………………………………………………. ii      1.0 Introduction ……………………………………………………………………….. 1  2.0  Background Information ………………………………………………………….. 3   2.1 The BC Non-Profit Housing Association (BCNPHA) ……………………. 3   2.2  Factors affecting the state of rental housing in Canada …………….…….. 4    2.2.1 The federal tax system …………………………………..….…….. 4   2.2.2 Rent control …………….………………………………..….……. 6   2.2.3  Effects of condominiums …………………………………..….….. 8   2.2.4 Direct government programs…………………………………..….. 9   2.2.5 Canada’s dual housing policy …………………………………..… 12   2.3 Available data on Canada’s rental market ………………………………… 13   2.4 Purpose of the Rental Housing Index …………………………………..…. 14  3.0  Methodology …………………………….……………………………..….………. 16   3.1 Data sources …………………………………..….……………………….. 17   3.2 Indicator development …………………………………..….…………….. 19   3.2.1 Affordability …………………………………..….………………. 21   3.2.2 Overspending …………………………………..….……………… 22   3.2.3  Income Gap …………………………………..….……………….. 24   3.2.4  Overcrowding …………………………………..….……………… 27   3.2.5 Bedroom Shortfall …………………………………..….…………. 29   3.3 Index calculation …………………………………..….…………………... 31  4.0 Findings …………………………………..….…………………………………… 35   4.1 Overall state of rental housing in British Columbia ……………………… 35   4.1.1 Opportunity for comparison, RHI and Indicator Scores …………. 35   4.1.2 Prevalence of cost burdened households …………………………. 40   4.1.3 Rental unit supply is a less critical problem ……………………… 42   4.2  Data Anomalies …………………………………………………………… 43   4.2.1 Households spending more than 100% of income on shelter …….. 43   4.2.2 Inconsistent numbers in many data tables ……………………….... 44   4.2.3 Not all BC communities could be included in this analysis ………. 45  5  4.3  Discussion of online map interface ……………………………………….. 49 5.0 Planning Implications ………………………………………………………..……. 50    5.1 Researchers ……………………………………………………………….. 50   5.2  Planners and Policy-makers ………………………………………………. 50   5.3 Developers ……………………………………………………………....... 51   5.4 Affordable housing advocates …………………………………………….. 52  Bibliography ………………………………………………………………………………. 53   1 1.0 Introduction  The private market is the predominant means of providing housing in Canada. Data from the 2011 National Household Survey (NHS) illustrates this: housing for 87% of Canadians is provided through the private market. Over two thirds of Canadian households own their homes and 31% rent. Of these renter households, nearly one in seven live in some form of subsidized housing. British Columbia has similar proportions to the nation at large (Statistics Canada, 2011).   Over the past thirty years it has become apparent that the private rental market has failed to sufficiently accommodate the demand for affordable rental housing in both Canada and British Columbia. Economist Lawrence Smith identified this problem in 1983 and warned of a “growing crisis in rental housing” (Smith, 1983). In 2011, 40% of Canada’s renter households paid more than 30% of their income to shelter; nearly half of these households paid more than 50% of their income. The situation in British Columbia is slightly worse: 45% of renters pay more than 30% and slightly more than half of these housholds pay more than 50%  (Statistics Canada, 2011).   There are two standard measures of housing affordability: households spending 30% to 50% of their income on shelter are considered moderately cost-burdened and households spending more than 50% are labelled severely cost burdened (Luffman, 2006; Pomeroy, 2001). Depending on the paucity of their incomes, these households may be forgoing other necessities in order to pay rent.   If the private residential rental market operated efficiently and equitably under laissez faire economic conditions, there would be little rationale for any government intervention. However, the relevant housing data shows that since the mid 1970s there has been a decline in the construction of new purpose-built rental units to the point where supply is no longer able to 2 adequately meet demand. If provincial and particularly federal levels of government continue to devolve their responsibilities for housing to municipal authorities, a significant reversal of this trend is not foreseeable (Seto, 1985).  To adequately address the issue of affordable housing, it is important to have a clear picture of the current state of affordable rental housing. The Rental Housing Index research project provides a method for empirically assessing the state of a rental housing market in a community. In doing so, rental-housing trends, often anecdotal, are quantified. Affordable housing advocates, planners and policy-makers can use the resulting information as evidence to demonstrate the need for improved affordable housing options in a community. Around the world, communities are experiencing crises with respect to affordable housing. With some precautions this methodology may be applicable outside of the provincial context within which it was developed by providing a preliminary framework for systematically examining the state of any rental housing market.  This report consists of four parts. The first reviews government policies and other factors that have had an effect on Canada’s rental housing market. The second outlines the methodology for statistically analyzing the rental housing market in a particular community. The third section applies this methodology to assess the quality of the rental housing market in British Columbia and the final section provides suggestions as to how this research may be utilized by practitioners.     3 2.0 Background Information 2.1 The BC Non-Profit Housing Association  This report was undertaken as part of a larger research project initiated by the BC Non-Profit Housing Association (BCNPHA). The project was conceived in November 2013 by Jill Atkey, BCNPHA Director of Research & Education, and Tony Roy, BCNPHA’s Executive Director and generously supported by Vancity Credit Union.   Execution of the research including development of the methodology, statistical analysis and creation of the final online interface used to present the findings was undertaken in the summer of 2014 by a three person team comprised of myself and two other BCNPHA Research Analysts. Jill Atkey and Tony Roy supervised this work with input from an Advisory Committee made up of knowledgeable housing professionals from across BC.  BCNPHA revealed the first iteration of the Rental Housing Index project at their annual Non-Profit Housing Conference in November 2014. The project will be updated each year with additional layers of data. Future research will include additional information on the supply and quality of non-profit housing in British Columbia, qualitative research such as videos that highlight compelling narrative arcs within the data, and a more nuanced analysis of the rental housing realities for specific populations such as students, seniors, people with disabilities and aboriginals.  The overall purpose of the larger project itself was to provide better and more nuanced data on the rental housing market in British Columbia. The BCNPHA’s mandate is to provide leadership and support to non-profit housing providers and advocates across BC. The intention of Rental Housing Index project was to provide a solid technical foundation for policy making and development decisions. 4  The purpose of this report is to give context to this data and demonstrate how the results may be applicable outside of British Columbia. The report begins by providing a historical analysis of the factors that have influenced the state of rental housing in Canada followed by an explanation of the methodology and its development. The report concludes with recommendations as to how the results of this research may be applied in practice.  2.2  Factors affecting the state of rental housing in Canada  Because the majority of Canadians obtain housing through the private market, most of the housing literature shares this focus. Much has been written on the subject of social housing in Canada (Bourne, 2007; Colderley, 1999; Vakil-Zad, 1996) and the state of social housing certainly affects the private rental market, however this consideration is beyond the scope of this analysis. This chapter is limited to providing an overview of the main factors, identified in Canadian housing policy literature, as having a significant effect on the affordability of private rental housing in Canada. These factors are: • the federal tax system; • rent control; • effects of condominiums; • direct government programs; and • Canada’s dual housing policy.   2.2.1 The federal tax system  The 1972 restructuring of the federal tax system has generally been considered to have had a significant effect on both the demand for rental accommodation and the supply of rental stock 5 (Crook, 1998; Smith, 1983). While these tax reforms were not specifically implemented to affect housing policy, their effect on the rental housing market has been profound. In the decade before these tax amendments Canada saw a boom in the construction of apartment buildings, due in part to the favourability of the tax system and the anticipation of sustained inflation. In fact, the majority of Canada’s current multi-unit rental housing stock was constructed prior to 1972.   Prior to that, rental housing investors benefited substantially from a number of long standing provisions contained in the Income Tax Act. However, most of these were eliminated in the 1972 reforms. From a housing perspective, the tax revisions believed to have had the greatest effect were the introduction of a capital gains tax and the elimination of investment real estate as a tax shelter for other income (Smith, 1983).   The tax amendments introduced a capital gains tax for all realized gains from financial and real assets, with the exception of a principle residence. This revision encouraged a shift in tenure towards ownership; compared to renting, the relative desirability of ownership increased as homeownership became the only vehicle through which a non-taxable capital gain could be realized. The capital gains tax reduced the desirability of residential rental investment only slightly as all major equity investments (other than a principal residence) were treated similarly.  Prior to 1972, rental investors enjoyed the right to pool multiple rental buildings for tax purposes. Rollover provisions allowed these investors to defer the tax on recaptured depreciation upon sale of a single building as long as there were others in the pool with unallocated Capital Cost Allowances (CCAs). As well, rental investors were permitted to use paper losses in real estate as deductions against non real estate income. In combination with CCA provisions that defined allowable depreciation for the purposes of income taxation as much higher than actual economic depreciation, these two factors made residential rental buildings an attractive 6 investment. However, the federal tax reforms terminated these rollover provisions and the opportunity to use rental building losses as deductions against other incomes. These two changes ended the use of rental real estate investments as a form of tax sheltering.  This restructuring served to disincentivize the construction of new multi-unit rental housing by decreasing after-tax profits, reducing the liquidity of real estate investments and encouraging a market shift towards home ownership (Smith, 1998). As a result, we have seen very little new construction of purpose-built rental buildings since 1972 and the remaining rental stock built prior to the reforms is deteriorating. These buildings will eventually need to be replaced and there are serious concerns as to how to ensure enough rental units to meet projected demand into the future.   2.2.2 Rent control  Most provinces adopted landlord/tenant legislation during the early 1970s and some form of rent regulations during the mid-1970s (Hulchanski, 1988). Rent control was intended to be only a temporary response to inflation, though it has been retained on a permanent basis in several provinces including British Columbia.   The topic of rent control in Canada was a contentious issue in the 1970s through to the early 1990s and most of the academic literature on the topic was published during this period. The debate attracted much public and academic scrutiny and was particularly polarizing because it pitted landlords and developers against tenants, leaving decision makers in the middle with the option of choosing one side or the other (Lazzarin, 1990). The inability of opposite sides to agree stems from the fact that advocates and opponents have very different issues and concerns. Advocates are generally concerned with issues pertaining to social justice and opponents base 7 their arguments on economic concepts of market efficiency.  Advocates who argue for rent control (Gilderbloom and Appelbaum, 1988; Hulchanski, 1988; Makuch and Weinrib, 1985; Hulchanski, 1984; Gilderbloom, 1981; Marcuse, 1978) believe that the private housing market has inherent structural problems that prevent it from fostering perfect competition. For these advocates the rental housing market simply fails to provide affordable housing for everyone who needs it and significant government intervention is required. As well, advocates generally focus on the outcomes of rent control policies such as rents paid, vacancy rates and the prevalence of homelessness. Proponents of rental control argue that the policy has the following outcomes: • ensures security of tenure; • maintains affordability of the current rental stock; • prevents regressive income distribution from tenants to landlords; and • provides a formal system of mediation to settle disputes between tenants and landlords.  Opponents of rent control (Lewis and Muller, 1992; Smith, 1991; Miron, 1990; Arnott, 1988; Smith, 1988; Fallis, 1987; Fallis and Smith, 1985; Clayton Research Associates, 1984; Arnott and Johnston, 1981; Block and Olsen, 1981; Smith and Tomlinson, 1981; Walker, 1975) argue that the private rental market has the ability to reach a state of equilibrium without state intervention and that any perceived market failures are temporary in nature, which will self correct through the market. Rent control critics argue rent control policies will result in a shortage of rental stock in general and have the following effects: • reduction in new rental construction; • discouraging landlords from maintaining their buildings to offset losses of rental income; • incentivizing the conversion of rental units to ownership; 8 • the eventual demolition of the rental stock; • increasing demand for rental housing caused by rents that are below the market rate; and • a decrease in the market value of rental buildings, which will decrease the government’s tax base.   2.2.3 Effects of condominiums   The condominium was introduced to the Canadian housing market in 1966 and began to rise in popularity in the early 1970s. Prior to condominiums, renting was the only tenure option available to those who were unable, for financial or other reasons, to enter the home ownership market. There is some disagreement in the literature as to whether condominiums have had a positive or detrimental effect on the rental housing market in Canada.  When the condominium form of tenure was initially introduced it was generally agreed that the conversion of rental units to condominiums could have negative repercussions for the rental market. Although the conversion of rental apartments to condominiums is a major aspect of the housing market in other countries (Crone, 1988; Eilbott, 1985), some authors saw this to be of lesser significance in Canada because of various provincial laws that allow municipalities to implement conversion controls (Smith, 1981).   The effect of condominiums on the rental housing sector is complex and it is difficult to say if it has been positive or negative. More recently, the condominium sector has been seen as a major contributor to the financing and supply of new rental units, particularly in light of the fact that very few new apartment buildings have been constructed in the past forty years. As the market for condominiums has two streams, potential homeowners and real estate investors, a 9 significant portion of the condo stock in Canada is rented out and actually contributes to the supply of rental units (Miron, 1994; Steele, 1993).   Others assert the increased access to home ownership offered by condominiums allows renters who formerly did not have an income sufficient to gain entry into home ownership. The condominium enhanced access to home ownership and many of the early condominium projects were marketed specifically as a low cost alternative to renting (Miron, 1994). This leaves the rental sector as the most likely option for lower-income households, those least able to afford housing appropriate to their needs (Roistacher, 1980). The limited rent-paying capacity of these tenants, rising operating costs, the 1972 restructuring of the federal tax system and the implementation of rent control legislation put landlords in a rent-cost squeeze. The majority of the largest development corporations have left the residential rental sector altogether in favour of more profitable commercial and industrial development.  Condo development in inner city neighbourhoods, often seen as an important part of neighbourhood gentrification, certainly has an effect on the affordability of rental housing. In order to get a complete understanding of the factors affecting the affordability of rental housing this topic must be considered. However the body of literature exploring the theories and effects of gentrification is vast and to delve in would go beyond the scope of this project.    2.2.4 Direct government programs  Although direct government support for private rental housing historically has been rare in Canada, since the passage of the of the National Housing Act in 1944 there have been a limited number of incentive programs to stimulate the construction of rental buildings. There is debate as to whether these programs were initiated due to concerns about supply and demand of 10 rental housing or because of the impact such programs would have on the creation of jobs in construction (Sewell, 1994). It was likely a hybrid of both motives.   In addition to the federal tax restructuring, it is generally understood that there have been four main federal government programs directly targeted to private rental housing supply:  • Limited Dividend program (LD); • Assisted Rental Programme (ARP) and the Multiple Unit Rent Building scheme (MURB); and • Canada Rental Supply Programme (CRSP).  The LD program (1946 to 1974) was used by the federal government to stimulate new rental constructions by the private sector for low and moderate-income households. The program offered private landlords favourable loans in return for limiting their profits by charging below market rents and limiting tenants to those in specific income groups. In effect LD used private landlords to provide social housing, similar to the Rental Assistance Program (RAP) and Shelter Aid for Elderly Renters (SAFER) program in British Columbia (Crook, 1998).   By the mid-1970s, federal tax reforms had decreased the profitability of building and operating rental housing. In addition, rent controls, the condominium tenure option and other homeownership incentives conspired to reduce rents below the minimum rate necessary for viable returns on rental housing. These factors prompted the federal government to introduce the ARP programme (1975 to 1978) and the MURB scheme (1976 to 1979 and again for one year in 1981) (Crook, 1998).   ARP placed restrictions on landlords to keep rents at a level that tenants could afford in return for tax-free grants or later, interest free-loans with repayments related to rent increases and levels of return on equity (Lithwick, 1977).  11  MURB returned many of the tax advantages of investing in private rental housing that were lost in the 1972 reforms and essentially restored the tax shelter for investments in rental housing. The result was a substantial increase in construction starts of residential rental buildings, only moderate increases in rents and significant increases in vacancies. Because of this improvement in market conditions, both ARP and MURB were eventually eliminated (Crook, 1998).  The federal government enacted the CRSP (1982) to both increase construction jobs during the early 1980s recession and respond to a drop in private rental construction. Similar to the ARP, the program offered interest free loans in return for reserving a portion of the units for disabled and low-income tenants (Crook, 1998).   Increasingly, the responsibility for housing is being devolved from the federal and provincial governments to local governments. There are disagreements as to whether this is the most optimal order of government to assume this responsibility.   Some claim local governments may be better equipped to deal with housing problems as solutions must be context specific and municipalities are better able to respond to the unique local needs of their housing markets. Metropolitan centers such as Toronto, Vancouver, Winnipeg and Montreal have the ability to define their needs and the property tax base to implement their programs (Carroll, 1989).   Others take a more politically pragmatic approach, recognizing that while housing should not solely be a municipal responsibility, in light of senior governments abdicating their responsibility, cities should take action where possible. The City of Vancouver has implemented a number of policies intended to increase the number of market rental units throughout the city (although the affordability of the units created through these programs is debatable) including the 12 Rental 100 program, the Short Term Incentives for Rental Housing (STIR) program, rate of change regulations, laneway housing, and legalizing secondary suites (City of Vancouver, 2014).   Others note how local governments, particularly smaller centers, have neither the financial nor political capabilities to undertake major social programs such as housing. Municipal governments are least able to resist private pressures from developers, afford the costs of subsidizing housing, and withstand local resistance to the building of social housing in particular locations (NIMBY-ism). Proponents of federal and provincial investments claim that if reasonable compromises between short-term demands and longer-term societal benefits can be achieved, it is more likely to happen through federal and provincial governments, which have longer political mandates and a broader range of policy instruments to choose from (Carroll, 1989).   2.2.5 Canada’s dual housing policy  In addition to Income Tax Act changes and the introduction of the condominium tenure option, commencing in the 1960s a litany of federal and provincial government programs were introduced to encourage home ownership among lower income households. These programs have been discussed at length in the literature (Bourne, 2007; Smith, 1983; Smith, 1981; Smith and Tomlinson, 1981) and include: the 1970 Assisted Home-Ownership Program (AHOP); the 1974-85 Registered Home-Ownership Saving Plan (RHOSP); the 1982 Canada Home Ownership Stimulation Plan (CHOSP); the 1982 Canada Mortgage Renewal Plan; and the 1984 Mortgage Rate Protection Plan (MRPP). This list of programs begins to give an indication as to the scope of government subsidies available to the home ownership sector.  13  Prominent Canadian housing policy scholar David Hulchanski asserts that there are two separate parts to Canada’s housing system, a primary and a secondary one, each with its own distinct and unequal range of government activities and subsidies. These two mirror the dualism in Canada’s welfare state, which consists of the primary social security welfare state and the secondary social assistance welfare state. The primary part of the housing system represents the majority of Canadian households including most owners and those tenants who live in the higher end of the private rental market. The secondary part consists tenants in the lower portion of the rental market and rural and impoverished owners. The separation is based largely on tenure (owning versus renting). Hulchanski defines Canada’s dual housing policy as one where all three levels of government assist owners and neglect renters.  Canada has never had a policy of tenure neutrality, ie: assisting homeowners and renters equally, and as a result housing policy has subsidized home ownership, by design and incidentally, for the past 45 years (Hulchanski, 2007).  2.3 Available data on Canada’s rental market  Today homeowners in Canada have, on average, about double the income of renter households. Not only does it seem counter-intuitive for the majority of government support to flow to wealthier homeowners rather than poorer tenants, but the figures that illustrate this imbalance are rarely released by the government (Hulchanski, 2007). Often both government and the media publish housing market information that includes statistics on ownership only or combines owners and renters together, obscuring important differences.   Statistics Canada collects data on the rental housing market through the census, however this information is difficult to access and does not include data on vacancy rates or supply, both important aspects when assessing rental affordability. The information can be separated by 14 tenure, however the organization of publicly available census data extremely limits the ways in which this can be applied. ‘Custom data requests’ are available only for a fee.   Rental housing data available through the Canada Mortgage and Housing Corporation (CMHC) does include vacancy rates but it only collects information on purpose-built rental structures with three or more units. This fails to document other forms of rental housing such as smaller purpose-built rental structures, rented houses, rented condominiums, secondary suites or accessory dwellings.   Another outcome of this lack of tenure neutrality can be seen in the type of data collected on the housing market by the private sector. Comprehensive information on the affordability of home ownership has been compiled by the private sector (RBC’s Housing Affordability Report, UDI/Fortis BC’s Housing Affordability Index). However, because of the smaller potential profit there is less incentive for the private market to develop accurate measures of the supply and demand of renters and the affordability of rental housing, particularly outside of a few major urban centers.  This dearth of available information on the rental housing market in Canada is symbolic of historic and current neglect by governments and, as a result the private sector, of the rental housing sector.   2.4 Purpose of the Rental Housing Index  Together these are the main factors that have resulted in a Canadian rental housing market that is severely limited in its ability to meet the demand for affordable rental housing. This demonstrates the acute need for data on the rental housing market if we are to advocate for or make decisions that will have an effect on the rental housing sector. 15  The current market is more favourable to rental housing that is delivered as smaller buildings offered by non-corporate landlords such as rented condos, rented houses, secondary suites and accessory dwellings. This shows the increasing insufficiency of the data on renter households collected by the CMHC, the federal government’s main housing agency.   There is a critical gap in easily accessible rental housing information and if we are to successfully take action to alleviate Canada’s rental housing crisis, we need better and more nuanced data on the rental housing sector. This is the problem this the Rental Housing Index project attempts to address. A similar project has recently been undertaken and published through Harvard’s Joint Centre for Housing Studies (Joint Center for Housing Studies of Harvard University, 2013), demonstrating the increasing awareness of this issue in other North American contexts. However, a comprehensive overview of the state of rental housing for a Canadian jurisdiction of any significant size has yet to be done.   16 3.0 Methodology  The Rental Housing Index (RHI) is a tool for examining the state of the rental housing market in a community. The index was developed by utilizing data from the National Household Survey (NHS) of the 2011 Census. While this project uses an index to examine the health of the rental housing market in British Columbia, the methodology can be applied to other jurisdictions for which comparable data is available. The index will be most useful in assessing the quality of the rental housing market for communities within Canada, as the data would be in the same format as in BC. It may be possible to apply the same methodology to communities outside of Canada as long as equivalent data can be found. However, due to differences in the nature of rental housing in different international contexts some caution is advised in doing so.  The primary goal of the RHI is to develop an index to measure the health of the rental housing market in a community. This overall index (referred to as the Community Index Score) is calculated using the following five sub-measures (referred to as Indicators): • Affordability; • Overspending; • Income Gap; • Overcrowding; and • Bedroom Shortfall.  The Indicators examine different aspects of household income, family size, gross rent (rent plus the cost of utilities) and housing quality. In combination these five Indicators are used to calculate the overall Community Index Score, a single value that can be used to assess the state of rental housing in a community and compare it with other communities. The Indicator measures that make up the Community Index Score can provide more nuanced information on 17 the individual factors affecting rental housing affordability that are of concern in a particular community.  This section of the report outlines the methodology for calculation of the Indicator and Community Index Scores. However, it is important to note that the dataset behind these calculations is extremely significant. Obtained from Statistics Canada through a custom data request, it contains previously unreported information on rents paid and income quartiles of renter households in every BC community with a population greater than 5000 people, more than 500 renter households and a GNR of less than 50%. The reasons for choosing this minimum population are discussed later. The dataset itself and the wealth of information revealed through each step of the calculation of the Indicator and Community Index Scores are informative resources that can be used by affordable housing advocates, academics, researchers, planners and policy-makers to demonstrate existing problems in the rental housing market.  3.1  Data sources  The Rental Housing Index was developed using data from the voluntary 2011 NHS (formerly the mandatory long-form census) obtained from Statistics Canada custom data request. Although the quality of the NHS is questionable, it has the most comprehensive information on rents paid and household incomes earned for jurisdictions throughout the country.   Quantitative information on Canadian renter households is available through two main sources, Statistics Canada and CMHC, though the data from both fails to completely capture Canada’s rental universe.   Due to the door-to-door method of the survey, Statistics Canada’s census does not include information on rental unit vacancies, a key aspect of the rental housing market. Another 18 major concern with using data from the NHS is the difficulty in comparing the voluntary 2011 census to data from earlier censuses. There are significant differences in methodology between the former mandatory long-form census and the revised optional NHS. As well, the response rate in 2011 was significantly lower than in previous years. Together these two factors make it difficult and potentially inaccurate to draw comparisons over time. The significant differences in methodology between the former mandatory long-form census and the revised optional NHS and the significantly lower response rate in 2011 undermines the utility of the most recent and previous censuses by making it difficult to draw comparisons over time. A voluntary census also has the potential to mask economic and social inequalities, as there is reason to suspect that certain groups such as visible minorities, low-income households and first nations tend to be less likely to respond to voluntary surveys (Statistics Canada, 2013). Although academics, researchers and policy-makers are currently lobbying the federal government to restore the mandatory long form census in 2016, this devastating change to our source of consistent nation-wide data will have lasting effects.   In contrast, data on renter households available through CMHC includes vacancy rates but only collects information on purpose-built rental structures with three or more units. This fails to document other forms of rental housing such as smaller purpose-built rental structures, rented houses, rented condominiums, secondary suites or accessory dwellings which, for reasons discussed earlier, comprise an increasingly significant portion of the rental universe.   The NHS is the most comprehensive source of data on Canadian renter households that is currently available and was therefore used as the basis for this project. However it is important to note these large gaps in available information on renter households. The fact that appropriate 19 Statistics Canada data was only available through an expensive and lengthy custom data request speaks further to the tendency of Canadian housing policy to neglect the rental market.   3.2  Indicator development  This section provides a detailed description of each Indicator, its development, and the methods used to calculate it. The Community Index Score is comprised of three income Indicators (displayed in the diagram below as red) and two supply Indicators (lime green). The Community Index Score (dark green) is thus weighted slightly more by Indicators that measure income.   Figure 1: Components of the overall Community Index Score     The RHI is unique in that it breaks down data on renter households by unit size and income quartile. Most data on rents is reported as a single number: the average rent for a community. The situation is actually much more nuanced. In order to assess rental housing affordability it critical to know how average rents differ for different sized dwellings and for households with varying incomes. This begins to highlight more subtle trends such as 20 affordability issues that disproportionately affect specific income groups. As such, trends that often go undetected are documented and incorporated into the overall Community Index Score.   Income quartiles are determined by measuring average incomes of renter households in a community, ranking them from poorest to wealthiest, and grouping them into 4 income quartiles (1 being poorest and 4 being wealthiest). Each quartile represents approximately 25% of a community’s renter households. For Victoria, BC, shown below, there are 25,415 renter households and each income quartile represents approximately 6,350. Household incomes for the poorest (1st) income quartile are between $0 and $18,146 with an average household income of $10,284. Table 1: Number of renter households by income quartile, Victoria, BC Income Quartile Number of Households 1st Income Quartile $0 to $18,146 Average: $10,284 6,320 2nd Income Quartile $18,147 to $35,647 Average: $26,855 6,385 3rd Income Quartile $35,648 to $57,771 Average: $45,260 6,350 4th Income Quartile $57,772 + Average: $88,945 6,370 All Quartiles 25,415   Income quartiles were an important part of the Statistics Canada custom dataset as it highlighted trends that affect some income groups more than others.  Each Indicator is first calculated as a raw score that is then converted into a range between zero and 10. Zero represents perfect rental health and 10 is the community that ranks poorest on that particular Indicator. The Community Index Score is simply a sum of all converted Indicator scores, leading to an overall score between zero and 50.  21  3.2.1 Affordability  The Affordability Indicator measures the percent of household income spent on rent plus the cost of utilities (known as gross rent in Statistics Canada terminology). Affordability is calculated by dividing the average gross annual rent by the average household annual income for each income quartile and unit size. The example below is taken from the municipality of Victoria, using the bolded numbers from the tables. Table 2: Average income by income quartile and unit size, Victoria  Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 $10,460 $10,078 $10,513 $11,256 $14,316 $10,284 2nd Income Quartile $18,147 to $35,647 Average: $26,855 $25,254 $26,711 $27,353 $27,706 $29,617 $26,855 3rd Income Quartile $35,648 to $57,771 Average: $45,260 $43,578 $45,048 $45,891 $45,394 $46,934 $45,260 4th Income Quartile $57,772 + Average: $88,945 $84,477 $82,255 $92,339 $93,863 $104,419 $88,945 All Quartiles $25,927 $37,067 $52,893 $57,427 $67,682 $42,884 	  Table	  3:	  Average	  gross	  rents	  per	  month	  by	  income	  quartile	  and	  unit	  size,	  Victoria	  Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 $631 $700 $986 $1,172 $810 $756 2nd Income Quartile $18,147 to $35,647 Average: $26,855 $756 $788 $993 $928 $738 $847 3rd Income Quartile $35,648 to $57,771 Average: $45,260 $793 $884 $1,076 $1,099 $1,432 $967 4th Income Quartile $57,772 + Average: $88,945 $899 $977 $1,216 $1,342 $1,795 $1,147 All Quartiles $711 $823 $1,094 $1,160 $1,437 $930    22 Calculation: 𝑌𝑒𝑎𝑟𝑙𝑦  𝑅𝑒𝑛𝑡   = $847  ×12 = $10,164 𝐴𝑓𝑓𝑜𝑟𝑑𝑎𝑏𝑖𝑙𝑖𝑡𝑦 = $10,164$26,855 = 38% Thus, on average in Victoria, renter households in the second income quartile spend 38% of their income on rent plus utilities.  This calculation is applied to every income quartile for every unit size. The following table shows the results for the entire community.  Table 4: Average percent of gross income spent on gross rent (‘Affordability’), by income quartile and unit size, Victoria  Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 72% 83% 113% 125% 68% 88% 2nd Income Quartile $18,147 to $35,647 Average: $26,855 36% 35% 44% 40% 30% 38% 3rd Income Quartile $35,648 to $57,771 Average: $45,260 22% 24% 28% 29% 37% 26% 4th Income Quartile $57,772 + Average: $88,945 13% 14% 16% 17% 21% 15% All Quartiles 33% 27% 25% 24% 25% 26%    3.2.2 Overspending  The Overspending Indicator details the share of renter households spending more than 50% of their before-tax household income on rent plus utilities. Households spending more than half of income on shelter are referred to as severely cost burdened. This measure is commonly recognized as a critical level of unaffordability that puts households at risk of significant hardships such as forgoing other necessities (for example, food) or homelessness. Overspending is calculated by dividing the number of renter households spending more than 50% of their 23 income on rent plus utilities by the total number of renter households. The example below is taken from the municipality of Victoria, using the bolded numbers from the tables. Table 5: Total number of renter households by income quartile and unit size, Victoria  Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 920 3,930 1,235 145 50 6,320 2nd Income Quartile $18,147 to $35,647 Average: $26,855 430 3,895 1,605 405 30 6,385 3rd Income Quartile $35,648 to $57,771 Average: $45,260 295 3,510 1,975 455 80 6,350 4th Income Quartile $57,772 + Average: $88,945 155 2,620 2,720 665 150 6,370 All Quartiles 1,805 14,005 7,545 1,670 315 25,415  Table 6: Number of renter households spending more than 50% of gross income on rent plus utilities by income quartile and unit size, Victoria Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 685 3,060 1,035 110 45 4,945 2nd Income Quartile $18,147 to $35,647 Average: $26,855 35 405 555 90 0 1,085 3rd Income Quartile $35,648 to $57,771 Average: $45,260 0 30 45 75 20 200 4th Income Quartile $57,772 + Average: $88,945 0 0 0 0 0 0 All Quartiles 720 3,500 1,640 270 75 6,250  Calculation:  𝑂𝑣𝑒𝑟𝑠𝑝𝑒𝑛𝑑𝑖𝑛𝑔 = 6,250  25,415 = 25%  Thus, 25% of all renter households in Victoria spend more than 50% of their before-tax household income on rent plus utilities.  24 This calculation is applied to every income quartile for every unit size. The following table shows the results for the entire community.  Table 7: Average percent of before-tax income spent on rent plus utilities by income quartile and unit size (‘Overspending’), Victoria  Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 74% 78% 84% 76% 90% 78% 2nd Income Quartile $18,147 to $35,647 Average: $26,855 8% 10% 35% 22% 0% 17% 3rd Income Quartile $35,648 to $57,771 Average: $45,260 0% 1% 2% 16% 25% 3% 4th Income Quartile $57,772 + Average: $88,945 0% 0% 0% 0% 0% 0% All Quartiles 40% 25% 22% 16% 24% 25%    3.2.3 Income Gap  The Income Gap Indicator looks at the average additional annual household income required by renter households to make current rents affordable (i.e.: 30% of before-tax income). A family paying more than 30% of before tax income for housing, referred to as a cost burdened household, is a commonly accepted definition of unaffordable rent. The Income Gap is calculated in two steps. First dividing the average current annual rent by 0.3 to determine the income required to make average current annual rent affordable. Second, subtracting the average household income from that required income to find the Income Gap. If the difference is zero or a negative number (i.e.: there is no gap) it is recorded as $0. This is because households with rents that are less than 30% of income are deemed affordable and not factored into the RHI. The example below is taken from the municipality of Victoria, using the bolded numbers from the tables.  25 Table 8: Average income by income quartile and unit size, Victoria Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 $10,460 $10,078 $10,513 $11,256 $14,316 $10,284 2nd Income Quartile $18,147 to $35,647 Average: $26,855 $25,254 $26,711 $27,353 $27,706 $29,617 $26,855 3rd Income Quartile $35,648 to $57,771 Average: $45,260 $43,578 $45,048 $45,891 $45,394 $46,934 $45,260 4th Income Quartile $57,772 + Average: $88,945 $84,477 $82,255 $92,339 $93,863 $104,419 $88,945 All Quartiles $25,927 $37,067 $52,893 $57,427 $67,682 $42,884 	  Table 9: Average monthly gross rent, by income quartile and unit size, Victoria Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 $631 $700 $986 $1,172 $810 $756 2nd Income Quartile $18,147 to $35,647 Average: $26,855 $756 $788 $993 $928 $738 $847 3rd Income Quartile $35,648 to $57,771 Average: $45,260 $793 $884 $1,076 $1,099 $1,432 $967 4th Income Quartile $57,772 + Average: $88,945 $899 $977 $1,216 $1,342 $1,795 $1,147 All Quartiles $711 $823 $1,094 $1,160 $1,437 $930  Calculation:   𝑌𝑒𝑎𝑟𝑙𝑦  𝑅𝑒𝑛𝑡 =   $756  ×12 = $9,072 𝐼𝑛𝑐𝑜𝑚𝑒  𝐺𝑎𝑝 = $9,072÷   0.3 − $10,284 = $19,956  Thus, an average renter household in Victoria’s first quartile requires at least an additional $19,956 to afford their current rent of $756 per month.  This calculation is applied to every income quartile for every unit size. The following table shows the results for the entire community.  26 Table 10: Average income gap by income quartile and unit size, Victoria  Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 $14,780 $17,922 $28,927 $35,624 $18,084 $19,956 2nd Income Quartile $18,147 to $35,647 Average: $26,855 $4,986 $4,809 $12,367 $9,414 $0 $7,025 3rd Income Quartile $35,648 to $57,771 Average: $45,260 $0 $0 $0 $0 $10,346 $0 4th Income Quartile $57,772 + Average: $88,945 $0 $0 $0 $0 $0 $0 All Quartiles  $0 $0 $0 $0 $0  𝐼𝑛𝑐𝑜𝑚𝑒  𝐺𝑎𝑝  𝑎𝑠  %  𝑜𝑓  𝐻𝑜𝑢𝑠𝑒ℎ𝑜𝑙𝑑  𝐼𝑛𝑐𝑜𝑚𝑒 =    ™????    ™?™???☣    ™??? ? ™?    ™????   = $??, ™?$??, ™? = 194% An average household in Quartile One in Victoria would need a minimum increase in household income of 194% to make their current rent of $756 per month affordable.  This calculation is applied to every income quartile for every unit size. The following table shows the results for the entire community.  Table 11: Income gap as a percentage of average household income, by income quartile and unit size (‘Income Gap’), Victoria  Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 141% 178% 275% 316% 126% 194% 2nd Income Quartile $18,147 to $35,647 Average: $26,855 20% 18% 45% 34% 0% 26% 3rd Income Quartile $35,648 to $57,771 Average: $45,260 0% 0% 0% 0% 22% 0% 4th Income Quartile $57,772 + Average: $88,945 0% 0% 0% 0% 0% 0% All Quartiles 10% 0% 0% 0% 0% 0%   27  3.2.4 Overcrowding  The Overcrowding Indicator examines renter households residing in units that are unsuitable for their household size and composition, based on CMHC’s National Occupancy Standard (NOS). The NOS determines the number of bedrooms a household requires given its household size and composition. However, it should be noted that this definition of ‘overcrowded’ is culturally normative and what might be deemed unsuitable housing by the NOS may not be considered overcrowding to the people who live there. This is particularly true for households that choose to live intergenerationally.  Overcrowding is calculated by dividing the total number of unsuitable renter households by the total number of renter households in that income quartile. The example below is taken from the municipality of Victoria, using the bolded numbers from the tables. Table 12: Total number of renter households by income quartile and unit size, Victoria  Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 920 3,930 1,235 145 50 6,320 2nd Income Quartile $18,147 to $35,647 Average: $26,855 430 3,895 1,605 405 30 6,385 3rd Income Quartile $35,648 to $57,771 Average: $45,260 295 3,510 1,975 455 80 6,350 4th Income Quartile $57,772 + Average: $88,945 155 2,620 2,720 665 150 6,370 All Quartiles 1,805 13,950 7,535 1,670 315 25,415    28 Table 13: Total Number of Households living in overcrowded conditions, by income quartile and unit size, Victoria Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 95 210 0 0 0 335 2nd Income Quartile $18,147 to $35,647 Average: $26,855 75 315 45 0 0 450 3rd Income Quartile $35,648 to $57,771 Average: $45,260 55 425 90 0 0 585 4th Income Quartile $57,772 + Average: $88,945 95 435 260 0 0 795 All Quartiles 2,170 315 1,385 430 40 2,170  Calculation:  𝑂𝑣𝑒𝑟𝑐𝑟𝑜𝑤𝑑𝑖𝑛𝑔 = 2,17025,415 = 8.5%  Thus, 8.5 % of all renter households in Victoria live in overcrowded (unsuitable) conditions.  This calculation is applied to every income quartile for every unit size. The following table shows the results for the entire community.  Table 14: Percent of renter households living in overcrowded conditions by income quartile and unit size (‘Overcrowding’), Victoria  Income Quartiles Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 10% 5% 0% 0% 0% 5% 2nd Income Quartile $18,147 to $35,647 Average: $26,855 17% 8% 3% 0% 0% 7% 3rd Income Quartile $35,648 to $57,771 Average: $45,260 19% 12% 5% 0% 0% 9% 4th Income Quartile $57,772 + Average: $88,945 61% 17% 10% 0% 0% 12% All Quartiles 120% 2% 18% 26% 13% 9%   29  3.2.5 Bedroom Shortfall  The lack of data on rental unit vacancies in the 2011 Census data was addressed through the development of the Bedroom Shortfall Indicator, which gives an indication of the supply of rental stock in a community. However, the fact remains that it is practically impossible to find an accurate measure of rental vacancy in a community.  The Bedroom Shortfall Indicator measures the minimum number of additional bedrooms a community needs to house all renters suitably, based on the National Occupancy Standard. Bedroom Shortfall is calculated by dividing the number of additional bedrooms needed by the total number of bedrooms in a community. Note that Bedroom Shortfall is only calculated for income quartiles (and not unit sizes) because the data is more reliable at this level for this particular Indicator. The example below is taken from the municipality of Victoria, using the bolded numbers from the tables. Table 15: Total number of bedrooms by income quartile, Victoria  Income Quartiles All Units 1st Income Quartile $0 to $18,146 Average: $10,284 7,955 2nd Income Quartile $18,147 to $35,647 Average: $26,855 8,870 3rd Income Quartile $35,648 to $57,771 Average: $45,260 9,440 4th Income Quartile $57,772 + Average: $88,945 10,810 All Quartiles 37,795 	  	   	  30 Table	  16:	  Bedroom	  shortfall	  by	  income	  quartile,	  (‘Bedroom	  Shortfall’),	  Victoria	  	  Income Quartiles All Units 1st Income Quartile $0 to $18,146 Average: $10,284 375 2nd Income Quartile $18,147 to $35,647 Average: $26,855 520 3rd Income Quartile $35,648 to $57,771 Average: $45,260 640 4th Income Quartile $57,772 + Average: $88,945 985 All Quartiles 2,540  Calculation:  𝐵𝑒𝑑𝑟𝑜𝑜𝑚  𝑆ℎ𝑜𝑟𝑡𝑓𝑎𝑙𝑙   =   ??   #? ™?? ? ™??    ™?ℤ?????    ™   ?   ™?␥┦  ??  ?   #? ™?? ? ™??    ™?ℤ?????    ™   ?   ™?␥┦?  ?  ?   #? ™?? ? ™??    ™?ℤ?????    ™   ?   ™?␥┦   ™???    ™????    ™    ™ ⌤??    ™????? ?   𝐵𝑒𝑑𝑟𝑜𝑜𝑚  𝑆ℎ𝑜𝑟𝑡𝑓𝑎𝑙𝑙 =    2,540  37,795 = 6.7% Thus, Victoria needs a 6.7% increase in its total number of rental bedrooms in order to house all rental households suitably.  This calculation is applied to every income quartile for every unit size. The following table shows the results for the entire community.    31 Table 17: Bedroom Shortfall as a percentage of all bedrooms by income quartile, Victoria Income Quartiles All Units 1st Income Quartile $0 to $18,146 Average: $10,284 4.7% 2nd Income Quartile $18,147 to $35,647 Average: $26,855 5.9% 3rd Income Quartile $35,648 to $57,771 Average: $45,260 6.8% 4th Income Quartile $57,772 + Average: $88,945 9.1% All Quartiles 6.7%    3.3 Index calculation  Once all of the percentages are calculated for each income Indicator (Affordability, Income Gap and Overspending) these raw percentages are converted into an overall Indicator score by dividing the overall quartile percentages by ten and then summing them. Income Indicator scores are summed by quartiles (as opposed to taking the community’s overall average) to capture the problems that exist within each of the quartiles. This allows issues that disproportionately affect certain income groups to factor into the Index as a whole. Averaging the quartile values would have diluted the impact of these issues within the overall Community Index Score.   32 Here is an example for Overspending: Table 18: Average percent of before-tax income spent on rent plus utilities by income quartile and unit size (‘Overspending’), Victoria  Income Quartiles Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 74% 78% 84% 76% 90% 78% 2nd Income Quartile $18,147 to $35,647 Average: $26,855 8% 10% 35% 22% 0% 17% 3rd Income Quartile $35,648 to $57,771 Average: $45,260 0% 1% 2% 16% 25% 3% 4th Income Quartile $57,772 + Average: $88,945 0% 0% 0% 0% 0% 0% All Quartiles 40% 25% 22% 16% 24% 25%  Table 19: Overspending Indicator score calculation, Victoria	  	  Income Quartile All Units Calculation ÷ 10 1st Income Quartile $0 to $18,146 Average: $10,284 78% 7.8 2nd Income Quartile $18,147 to $35,647 Average: $26,855 17% 1.7 3rd Income Quartile $35,648 to $57,771 Average: $45,260 3% 0.3 4th Income Quartile $57,772 + Average: $88,945 0% 0  Sum 9.8  Therefore the overall Overspending Indicator score for the City of Victoria is 9.8.   For supply Indicators (Overcrowding and Bedroom Shortfall) we divide the community’s overall percentage by ten rather than summing by quartiles. If approximately 30% of all households in any community are renters (as opposed to owners), this automatically decreases the sample size significantly for any study looking at only renter households. Although breaking down data on renter households by income quartile and unit size is theoretically useful, it also 33 brings up practical issues of data suppression as these sub-categories represent even fewer households. This becomes a particular concern for smaller communities. To protect the privacy of respondents, Statistics Canada does not release information for populations below a certain size. When breaking down data on renter households by income quartile and unit size, at a certain point the number of households becomes too small and the data is unavailable. The rationale for using the community percentages as opposed to quartile percentages for supply Indicators is that there are fewer data suppression issues at the community (as opposed to quartile) level for these particular Indicators. Here is an example for Overcrowding: Table 20: Percent of renter households living in overcrowded conditions by income quartile and unit size (‘Overcrowding’), Victoria  Income Quartiles Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 10% 5% 0% 0% 0% 5% 2nd Income Quartile $18,147 to $35,647 Average: $26,855 17% 8% 3% 0% 0% 7% 3rd Income Quartile $35,648 to $57,771 Average: $45,260 19% 12% 5% 0% 0% 9% 4th Income Quartile $57,772 + Average: $88,945 61% 17% 10% 0% 0% 12% All Quartiles 120% 2% 18% 26% 13% 9%  Table 21: Overcrowding Indicator score calculation, Victoria	  	  Income Quartile All Units Calculation ÷ 10 All Quartiles 9% 0.9  Therefore the overall Overcrowding Indicator score for Victoria is 0.9.  After the raw scores for each of the five Indicators have been calculated for all communities, another calculation is used to recalibrate each Indicator score so that it falls on a 34 scale between zero and 10. This process is known as cardinal ranking. Zero is assigned to a perfect state of rental health (e.g.: 0 households spending more than 50% of income on rent in the case of overspending). The community that ranks poorest for that Indicator is given a score of 10. The scores of all other communities are dispersed proportionately between zero and 10.  After cardinal ranking has been applied to each community, all Indicator scores have been recalibrated so that they fall somewhere between zero and 10. The overall Community Index Score is calculated by summing the recalibrated values for each of that community’s five Indicator scores.   See www.rentalhousingindex.ca for a complete list of Indicator and RHI tables for all Regional Districts and Municipalities in British Columbia.    35 4.0 Findings 4.1 Overall State of Rental Housing in British Columbia  The discussion of findings begins by describing the rental housing trends in Canada, the province of British Columbia as a whole, and all BC Regional Districts and Municipalities.   The factors that are understood to broadly affect the Canadian rental housing market have been discussed earlier. However, variations in economy, immigration, and demographics also have an effect on the rental housing market at the community level. It is important to keep this in mind when applying the RHI methodology elsewhere. Socio-economic conditions vary widely across the province of British Columbia but the overall findings on the rental housing market in BC indicate that renter households are experiencing difficulty across the province. It is often assumed that rental housing is less affordable in urban centers (such as Vancouver) and more affordable in rural areas. Prior to the RHI there was little data on the rental housing market making it difficult to verify or refute such claims. However, these results demonstrate that there is a need for the development of more affordable housing across the entire province.   4.1.1 Opportunity for comparison, RHI and Indicator Scores  An important quality of the RHI methodology is the opportunity it presents for comparison and ranking between different communities by overall index score or any of the five indicators. This case study applied the methodology to Canada, British Columbia, and all qualifying BC Regional Districts and Municipalities. The three requirements a community must meet for inclusion in the RHI were a population greater than 5000 people, more than 500 renter households and a global non-response rate on the 2011 census of less than 50%. This list includes 98 communities, broken down into 27 regional districts and 71 municipalities. 36  The overall RHI score for British Columbia as a whole is 32.9 (out of a possible 50), which is higher than the Canadian average of 26.0 indicating that the health of the rental housing market in BC is worse than the national average. British Columbia scored higher (i.e.: was less affordable) than the Canadian average on each of the 5 Indicators. Both Canada and British Columbia scored high on the Affordability and Overspending Indicators and low for the Overcrowding and Bedroom Shortfall Indicators. This illustrates that in both British Columbia and Canada, the difficulties faced by renters appear to stem primarily from a mismatch between high rents and low incomes as opposed to households living in overcrowded or otherwise inadequate conditions. However, British Columbia had a significantly higher score than Canada for the Income Gap Indicator suggesting that the average amount by which a household’s income must increase in order to make rent affordable is higher for British Columbians than for Canadians on average.  Table 22: Indicator Scores, Canada vs. British Columbia Indicators Canada British Columbia Difference Affordability 5.8 7.0 + 1.2 Overspending 6.2 7.6 + 1.4 Income Gap 4.5 6.7 + 2.2 Overcrowding 4.9 5.8 + 0.9 Bedroom Shortfall 4.6 5.8 +1 .2 Community Index Score 26.0 32.9 + 6.9   The least affordable regional districts in BC (i.e.: those with the highest overall Community Index Score) were Metro Vancouver, Squamish-Lillooet and the Capital Region. These regions are also those that contain the largest urban centers such as Vancouver and Victoria. Metro Vancouver scored significantly higher than other regional districts in BC, with a Community Index Score of 38.2, eight points higher than the 2nd highest region (Squamish Lillooet). However, the Community Index Score of Squamish-Lillooet (the 2nd least affordable 37 region in BC) and the Northern Rockies (the most affordable region in BC) differ by only 13.9 points. As well, all regional districts in British Columbia have an overall Community Index Score of greater than 15. This indicates that rental households in all regions of the province are experiencing difficulty.  The least affordable municipalities in BC (i.e.: highest Community Index Score) were Burnaby, Coquitlam, Richmond, Vancouver and New Westminster. The most affordable municipalities (i.e.: lowest overall Community Index Score) were Comox, Kimberley, Smithers, Colwood and Ladysmith.  The eight lowest scoring rental housing markets are all located within the Metro Vancouver region. However, 96% of municipalities in BC have a Community Index Score that is greater than 15 and all have a Community Index Score that is greater than 5, indicating that renters in municipalities throughout the province are faced with housing affordability issues.  It is important to note that according to the RHI methodology, a community that is experiencing a perfectly healthy rental market has a score of zero. A score of zero is achieved when every household in the community is spending 30% or less of income on rent and there is no overcrowding. Although the most unaffordable municipal rental markets are found in the lower mainland, every municipality and regional district in BC has a score that is well above zero, even the ‘most affordable communities’, indicating that the ability to afford rent is a problem across the entire province. In British Columbia, rental housing affordability is not just a big city problem.  Please see www.rentalhousingindex.ca for a full list of tables.   38 Table 23: Ranking of British Columbia’s Regional Districts by Community Index Score Rank Regional District Community  Index Score 1 Metro Vancouver 38.0 2 Squamish Lillooet  30.1 3 Capital 28.6 4 Nanaimo  28.2 5 Fraser Valley  28.2 6 Kootenay Boundary  28.1 7 Central Okanagan  28.0 8 Sunshine Coast  27.1 9 Cowichan Valley  26.1 10 Alberni Clayoquot  25.8 11 North Okanagan  24.0 12 Thompson Nicola  23.6 13 Okanagan Similkameen  23.6 14 Comox Valley  23.3 15 Strathcona  23.1 16 Powell River  23.0 17 Cariboo  22.6 18 Central Kootenay  22.3 19 Kitimat Stikine  21.8 20 Fraser Fort George  21.2 21 Peace River  21.0 22 Bulkley Nechako  20.4 23 Skeena Queen Charlotte  20.1 24 East Kootenay  19.1 25 Columbia Shuswap  19.1 26 Northern Rockies 16.4 27 Mount Waddington 14.9    39 Table 24: Ranking of British Columbia’s Municipalities by Community Index Score Rank Municipality Community  Index Score 1 Burnaby 44.9  40 Delta 25.1 2 Coquitlam 41.9  41 West Kelowna 24.8 3 Richmond 40.1  42 Creston 24.5 4 Vancouver 39.3  43 Cranbrook 24.2 5 New Westminster 38.4  44 Nelson 24.2 6 Surrey 36.6  45 Campbell River 24.0 7 West Vancouver 36.4  46 Esquimalt 23.9 8 North Vancouver (City) 36.3  47 Quesnel 23.6 9 Duncan 34.9  48 Williams Lake 23.5 10 Whistler 33.1  49 View Royal 23.2 11 Langley (City) 31.5  50 Powell River 22.9 12 Sooke 31.3  51 Sechelt 22.4 13 Abbotsford 31.2  52 Prince George 22.1 14 Saanich 30.3  53 Mission 21.7 15 Gibsons 30.3  54 Prince Rupert 21.3 16 Langford 29.9  55 Terrace 21.1 17 Lake Country 29.7  56 Hope 20.3 18 Victoria 29.6  57 Fort St John 20.2 19 Oak Bay 29.2  58 Sidney 19.3 20 Nanaimo 28.8  59 Parksville 19.2 21 Dawson Creek 28.6  60 Revelstoke 18.7 22 North Cowichan 28.5  61 Summerland 18.5 23 North Vancouver (District) 28.5  62 Kitimat 18.1 24 Kelowna 27.9  63 Castlegar 17.8 25 Port Coquitlam 27.6  64 Salmon Arm 17.6 26 Langley (District) 27.3  65 Pitt Meadows 16.2 27 Port Moody 27.1  66 Fernie 15.8 28 Merritt 26.9  67 Comox 15.6 29 Penticton 26.8  68 Kimberley 15.1 30 Squamish 26.8  69 Smithers 14.8 31 Vernon 26.8  70 Colwood 10.5 32 Maple Ridge 26.6  71 Ladysmith 8.0 33 Courtenay 26.2 34 White Rock 25.6 35 Trail 25.4 36 Kamloops 25.3 37 Port Alberni 25.2 38 Chilliwack 25.1 39 Central Saanich 25.1 40  4.1.2 Prevalence of cost burdened renter households  The average household rent in British Columbia, at $988/month, is higher than the Canadian average of $848/month. However, a notable benefit of the Rental Housing Index’s methodology is that it allows a more nuanced illustration of the rental universe by breaking information down by income quartile.   In BC, average rent for the lowest income quartile is $800/month and for the highest quartile, $1,239/month. It seems intuitive that households in the lowest income quartile would pay lower rents. However, the average annual renter household income for BC’s lowest income quartile is $10,676 and for the highest quartile, $110,355. BC’s wealthiest renter households earn, on average, $99,679 more than the poorest but pay, on average, only $5,268 more per year in rent.   A family paying more than 30% of before tax income for housing, referred to as a cost burdened household, is a commonly accepted definition of unaffordable rent. However this measure should be interpreted differently for higher and lower income households. The housing affordability issues faced by lower income households are related to the fact that after paying rent, there is less money left over to purchase food and other necessities. After paying rent, British Columbia’s highest income quartile has an average of $95,487/year or $7,957/month left over for non-housing related expenditures. In stark contrast, 1st income quartile households are left with an average of $1,076/year or $90/month.   41 Table 25: Average monthly and yearly gross rent, average annual income, average monthly and yearly income (after paying rent) by income quartile, British Columbia Income Quartiles Average  Monthly  Rent Average  Yearly  Rent Average  Annual  Income Average Monthly  Income (after paying rent) Average Yearly Income (after paying rent) 1st Income Quartile $0 to $19,271 $800 $9,600 $10,676 $90 $1,076 2nd Income Quartile $19,272 to $38,665 $892 $10,704 $28,635 $1,494 $17,931 3rd Income Quartile $38,666 to $66,949 $1,018 $12,216 $51,295 $3,257 $39,079 4th Income Quartile $66,950 + $1,239 $14,868 $110,355 $7,957 $95,487 Difference between 1st  and 4th Income Quartiles + $439 + $5,268 + $99,679 + $7,867 + $94,411   A more coarse-grained statistical method might indicate that renter households in British Columbia spend an average of 24% of their income on rent. However, when broken down by income quartile we see that renter households in the lowest income quartile spend on average 90% of their household income on rent compared to the highest income quartile spending on average 13%.   In BC, 72% of households in the lowest income quartile and 20% in the 2nd quartile spend more than half their income on rent compared to 3% and 0% in the 3rd and 4th quartiles respectively. Households spending more than half of income on shelter are referred to as severely cost burdened. This measure is commonly recognized as a critical level of unaffordability that puts households at risk of significant hardships such as forgoing other necessities (for example, food) or homelessness.   Additionally, the lowest two income quartiles in BC would need annual household income raises of $21,324 and $7,045 in order to make their rents affordable. This represents 200% and 25% increases in income, respectively. The top two income quartiles in British Columbia are not experiencing an income gap which means all renters in these two quartiles pay rents that are 30% or less of their income.  42  It is important to notice that for All Quartiles, there is a 0% increase in income required to make rent affordable, a measure that effectively masks the true inequalities at play. When this coarse-grained statistic is broken down by income quartile we see that lower earning households are disproportionately affected by cost burdens related to housing. Table 26: Average % of income spent on rent, % of households spending more than ½, additional income to make rent affordable, % increase in income to make rent affordable by income quartile, British Columbia Income Quartiles % of Income  Spent on Rent % of Households  Spending > ½ of  Income on Rent Additional Income to Make Rent Affordable % Increase in Income to Make Rent Affordable 1st Income Quartile $0 to $19,271 Average Income: $10,676 90% 72% $21,324 200% 2nd Income Quartile $19,272 to $38,665 Average Income: $28,635 37% 20% $7,045 25% 3rd Income Quartile $38,666 to $66,949 Average Income: $51,295 24% 3% $0 0% 4th Income Quartile $66,950 + Average Income: $110,355 13% 0% $0 0% All Quartiles 24% 23% $0 0%    4.1.3 Rental unit supply is a less critical problem  Measures of overcrowding in British Columbia are more hopeful. Overcrowding does not appear to be a significant problem and probably contributes less to issues of rental affordability in BC than other indicators of housing need. The number of households living in overcrowded conditions is spread relatively evenly across all income quartiles.    43 Table 27: % of households living in overcrowded conditions and % more bedrooms need to house all renters suitably by income quartile, British Columbia Income Quartiles % of Households Living in  Overcrowded Conditions % More Bedrooms Needed to  House all Renters Suitably 1st Income Quartile $0 to $19,271 Average Income: $10,676 8% 7% 2nd Income Quartile $19,272 to $38,665 Average Income: $28,635 11% 8% 3rd Income Quartile $38,666 to $66,949 Average Income: $51,295 13% 9% 4th Income Quartile $66,950 + Average Income: $110,355 17% 13% All Quartiles 12% 9%    Overall, these statistics demonstrate that problems of rental housing affordability are disproportionately affecting lower income households. The analysis also highlights the tendency of current methods of assessing a rental housing market to disguise serious social and economic inequalities.   4.2 Data Anomalies  In developing the RHI methodology and conducting this statistical analysis a number of data anomalies became apparent that are worthy of discussion.    4.2.1 Households spending more than 100% of income on shelter  For the Affordability Indicator, the percent of income spent on housing for certain groups sometimes exceeds 100%. This occurs particularly often in the lower earning income quartiles. How is it possible for a household to spend more than their entire income on rent? The primary reason for this is that the NHS asks households to report their 2010 income and their 2011 monthly rent. The year long time lag between the recording of these two measures explains why 44 we see such high rent-to-income ratios in the first income quartile. For example, a student in 2010 had a very low income but graduated at the end of that year. In 2011 she finds full-time employment and moves into a new apartment. Her reported income in 2010 would be very low but her reported rent for 2011 is high, creating a high rent-to-income ratio.   4.2.2 Inconsistent numbers in many data tables  In many data tables the number of households by income quartile and unit size do not add up to equal the total number of renter households in that community. For example, the table below shows the number of households spending more than 50% of income on rent in Victoria. When the number of households for all unit sizes are manually added for the First Quartile, the sum is 4,935 – ten households lower than the 4,945 households reported in the Statistics Canada dataset.  Table 28: Number of renter households spending more than 50% of gross income on rent plus utilities by income quartile and unit size, Victoria Income Quartile Unit Size Studio 1bdrm 2bdrm 3bdrm 4bdrm All Units 1st Income Quartile $0 to $18,146 Average: $10,284 685 3,060 1,035 110 45 4,945 2nd Income Quartile $18,147 to $35,647 Average: $26,855 35 405 555 90 0 1,085 3rd Income Quartile $35,648 to $57,771 Average: $45,260 0 30 45 75 20 200 4th Income Quartile $57,772 + Average: $88,945 0 0 0 0 0 0 All Quartiles 720 3,500 1,640 270 75 6,250  Similar inconsistencies in numbers, of varying magnitudes, occur throughout the Statistics Canada dataset. There are three potential reasons why the numbers do not add up: 45 • Rounding: Statistics Canada uses “random rounding” to protect the confidentiality of respondents. This means they randomly round all figures, including totals, either up or down to a multiple of five. The numbers may not always add up but they are very close. • Data Suppression: Statistics Canada deletes information for communities with populations below a certain size. This means that some cells in a table might report a ‘--’ but the suppressed numbers are still expressed in the total. Again, the numbers may not always add up but they are very close. • Exclusion of 5+ bedrooms: the tables include breakdown data for studio, 1, 2, 3 and 4-bedroom units. The total column shows data for all units in a community including 5 or more bedroom units. Therefore, the total column might be slightly higher because it includes units that do not appear in the table. On a related note, the ‘total number of renter households’ in official Statistics Canada documents and the numbers presented in the RHI do not match precisely. This is because roughly two thousand renter households in BC have negative incomes.  According to Statistics Canada, the negative income designation “generally applies to net-self employment income, net rental income and net limited partnership income. Negative income would indicate that expenses exceeded gross income.” Although this represents less than 0.5% of all renter households in the province, we factored out these households because they would artificially inflate the affordability and income gap indicators.   4.2.3 Not all BC communities could be included in this analysis  One of the primary drivers for developing the RHI project was the need for rental data in small and mid-sized communities. The original goal was to include in the analysis all 46 communities with a population greater than 5,000. However, the decision was made to exclude communities with less than 500 renter households and/or a Global Non-Response (GNR) rate of more than 50% due to issues of data quality.   GNR refers to the share of households in a community that received a National Household Survey and either did not return it or returned an incomplete survey. Statistics Canada uses the GNR as an indication of data quality, higher GNRs indicate poorer quality data. This decision to exclude some communities speaks to the shortcomings discussed earlier of a non-mandatory long form census.   Data quality must be kept in mind when determining the applicability of the RHI to other communities. There are trade-offs to be aware of when working with poor quality (but available) data. At a certain point data quality becomes so low that the conclusions drawn from an analysis of this type are misleading. Each situation is different and the appropriateness of these methods must be given considered carefully.    47 Table 29: GNR in Regional Districts, British Columbia Rank Regional District GNR 1 Alberni Clayoquot 28.7% 2 Bulkley Nechako 30.4% 3 Capital 23.1% 4 Cariboo 28.1% 5 Central Kootenay 37.3% 6 Central Okanagan 27.8% 7 Columbia Shushwap 35.7% 8 Comox Valley 22.0% 9 Cowichan Valley 24.9% 10 East Kootenay 35.5% 11 Fraser Fort George 25.0% 12 Fraser Valley 28.9% 13 Greater Vancouver 24.4% 14 Kitimat Stikine 26.5% 15 Kootenay Boundary 38.0% 16 Mount Waddington 33.7% 17 Nanaimo 22.2% 18 North Okanagan 28.8% 19 Northern Rockies 36.7% 20 Okanagan Similkameen 35.6% 21 Peace River 26.3% 22 Powell River 27.9% 23 Skeena Queen Charlotte 34.7% 24 Squamish Lillooet 35.1% 25 Strathcona 23.7% 26 Sunshine Coast 36.1% 27 Thompson Nicola 30.4%    48 Table 30: GNR in Municipalities, British Columbia Rank Municipality GNR 1 Abbotsford 32.3%  40 Parksville 20.3% 2 Burnaby 23.6%  41 Penticton 27.7% 3 Campbell River 22.0%  42 Pitt Meadows 24.4% 4 Castlegar 24.1%  43 Port Alberni 24.6% 5 Central Saanich 18.7%  44 Port Coquitlam 21.8% 6 Chilliwack 22.2%  45 Port Moody 24.6% 7 Colwood 16.9%  46 Powell River 23.2% 8 Comox 19.5%  47 Prince George 22.0% 9 Coquitlam 22.5%  48 Prince Rupert 27.7% 10 Courtenay 20.5%  49 Quesnel 20.4% 11 Cranbrook 29.1%  50 Revelstoke 43.0% 12 Creston 32.4%  51 Richmond 20.5% 13 Langley (City) 24.1%  52 Saanich 21.4% 14 North Vanoucver (City) 25.8%  53 Salmon Arm 22.8% 15 Dawson Creek 25.9%  54 Sechelt 41.4% 16 Delta 22.2%  55 Sidney 21.4% 17 Langley (District) 25.4%  56 Smithers 26.6% 18 North Vancouver (District) 20.9%  57 Sooke 30.5% 19 Duncan 29.5%  58 Squamish 29.2% 20 Esquimalt 27.8%  59 Summerland 28.2% 21 Fernie 46.0%  60 Surrey 26.5% 22 Fort St John 16.8%  61 Terrace 20.9% 23 Gibsons 26.3%  62 Trail 28.2% 24 Hope 39.7%  63 Vancouver 24.5% 25 Kamloops 26.8%  64 Vernon 26.9% 26 Kelowna 28.1%  65 Victoria 24.6% 27 Kimberley 36.6%  66 View Royal 18.4% 28 Kitimat 17.6%  67 West Kelowna 24.7% 29 Ladysmith 26.9%  68 West Vancouver 27.9% 30 Lake Country 24.0%  69 Whistler 46.3% 31 Langford 24.0%  70 White Rock 25.0% 32 Maple Ridge 26.7%  71 Williams Lake 22.9% 33 Merritt 45.0% 34 Mission 28.8% 35 Nanaimo 20.5% 36 Nelson 28.3% 37 New Westminster 26.5% 38 North Cowichan 22.6% 39 Oak Bay 18.9% 49 4.3 Discussion of map interface  The results of this research were presented in the form of an online map, which can be found at the following website: www.rentalhousingindex.com. The interactive map displays the overall Community Index Score and each of the five Indicator scores for Canada, British Columbia and each qualifying Regional District and municipality in BC. The map is color coded according to how serious the rental housing problems are in that area and shows the spatial patterns of rental housing affordability in the province.  Users are also able to click on any regional district or municipality in British Columbia to find more detailed data, broken down by income quartile and unit size, on that specific community.    50 Section 5.0 Planning Implications  The goal of this project was to provide an informative resource with solid, fact-based evidence on the rental housing market in BC to affordable housing researchers, planners, developers and advocates. In particular this project is useful to smaller communities who may not have the capacity to undertake this type of research on their own. This section outlines recommendations as to how these practitioners could make use of the methodology developed and analysis undertaken.  5.1 Researchers  The extensive custom Statistics Canada dataset underpinning this project will be most useful to the research and academic community. In addition to researchers studying topics related to affordable housing, this dataset could be used to study poverty, social justice, inequality, and economic trends in BC. The methodology developed and analysis undertaken as part of this project have only scratched the surface of the stories that remain to be told with this data and it is hoped that the dataset can contribute to further research related to affordable rental housing. This dataset is available through the BC Non-Profit Housing Association.  5.2 Planners and Policy-makers  The analysis undertaken through this project will begin to give an idea of which income quartiles are experiencing the most severe problems with respect to affordable rental housing. For example, knowing which income quartiles are spending higher percentages of their income on rent will make prioritization of scarce government resources better targeted to actual needs in a community. It can also provide policy-makers with a tool for evaluating housing policy leading 51 up to the time period covered by the RHI, which would further inform future policy.  The information on household income earned in different quartiles will give planners a better understanding of what units should be renting for in order for them to be affordable (ie: 30% of income) for particular tenants. This will help in designing incentive policies that encourage the construction of new rental housing projects.  Lastly, the RHI will help existing non-profit and co-op housing providers in determining rents. Most of these buildings determine a tenant’s rent in one of three ways. For ‘Rent Geared to Income’ (RGI) units, tenants pay a specific portion of their income as rent each month, typically 30%. If this person’s income changes for any reason, the rent is adjusted accordingly. ‘Subsidized’ means that the amount paid by a tenant is considerably lower than what the unit would rent for in the private market and this amount is supplemented by a government contribution. In ‘Low End of Market’ units the rent paid by a tenant is only marginally lower than what the unit would rent for in the private market. Many non-profit and co-op housing projects are a mix of RGI and Low End of Market units. The rents paid by Low End of Market units help to subsidize the RGI units. With the imminent expiry of governmental operating agreements held by most social housing providers, the proportions of this mix will likely need to be re-evaluated. With limited capacity to do detailed and regular market analyses, the RHI will provide critical information on typical private market rents that will assist these housing providers with setting accurate Low End of Market rents.   5.3 Developers  For similar reasons, the RHI will be useful to developers by demonstrating where supply gaps exist in a community’s rental housing market. In particular, the Bedroom Shortfall Indicator 52 provides a rough estimate of how many more bedrooms a community needs in order to house everyone suitably. The RHI will certainly not take the place of a thorough market analysis but may provide the spark required to indicate to a development community that there is a need they may be able to fill.   It must be mentioned that, for reasons discussed earlie, there is very little incentive for developers to construct new residential rental buildings and it is even more difficult for them to develop rental units that are affordable to lower income quartiles. Policies such as the City of Vancouver’s Rental 100 program attempt to encourage the construction of rental housing, however the units that are a result of policies such as these are typically affordable only to the top wage earning renter households. In order for this tool to be useful to developers in a way that results in an increase in the supply of required rental stock in a community, there must also be the development of policies and programs at all three levels of government that incentivize the construction of more rental housing that meets the local demand.  5.4  Affordable housing advocates  The RHI will provide affordable housing advocates with concrete evidence to reinforce lobbying efforts for increased governmental support for more affordable rental housing. Prior to the RHI, the majority of data available on the rental housing market was anecdotal, too broad, or available only through informal avenues such as craigslist or a local newspaper. For this reason it was difficult to quantify or prove the existence of a rental housing crisis and these problems were easily ignored or dismissed. This project supports the work of affordable housing advocates by providing them with the facts necessary for evidence based arguments demonstrating the need for increased support for the rental housing market.  53 Bibliography Arnott, R. 1988. “Rent Control: The International Experience.” Journal of Real Estate Finance and Economics 1 (3): 203-215.  Arnott, R. and Johnston, N. 1981. “Rent control and options for decontrol in Ontario.” Toronto: Ontario Economic Council.  Block, W. and Olsen, E. 1981. “Rent Control: Myths and Realities.” Vancouver: The Fraser Institute.  Bourne, L.S. 2007. “Recent housing policy issues in Canada: A Retreat from Social Housing?” Housing Studies 1 (2): 122-128.  Carroll, B.W. 1989. “Post-War Trends in Canadian Housing Policy.” Urban History Review 18 (1): 64-74.  City of Vancouver. 2014. “Creating and Preserving Market Rental Housing.” http://vancouver.ca/people-programs/creating-new-market-rental-housing.aspx Accessed on: November 9, 2014.  Clayton Research Associates Limited. 1984. “Rent Regulation and Rental Market Problems.” Toronto: Ontario Commission of Inquiry into Residential Tenancies.  Colderley, C.A. 1999. “Welfare State Retrenchment and the Nonprofit Sector: The Problems, Policies, and Politics of Canadian Housing.” Journal of Policy History 11 (3): 283-312.  Crone, T.M. 1988. “Changing Rates of Return on Rental Property and Condominium Conversions.” Urban Studies 25 (1): 34-42.   Crook, T. 1998. “The Supply of Private Rented Housing in Canada”. Netherlands journal of housing and the built environment 13 (3): 327-352.  Eilbott, P. 1985. “Condominium Rentals and the Supply of Rental Housing.” Urban Affairs Quarterly 20 (3): 389-399.  Fallis, G. 1987. “Rent Control: The Citizen, The Market, and The State.” Journal of Real Estate Finance and Economics 1 (3): 309-320.  Fallis, G. and Smith, L.B. 1985. “Price Effects of Rent Control on Controlled and Uncontrolled Rental Housing in Toronto: A Hedonic Index Approach.” The Canadian Journal of Economics 18 (3): 652-659.  Fallis, G. and Smith, L.B. 1985. “Rent Control in Toronto: Tenant Rationing and Tenant Benefits.” Canadian Public Policy 11 (3): 543-550. 54 Gilderbloom, J.I. and Appelbaum R.P. 1988. “Rethinking rental housing.” Philadelphia: Temple University Press.  Gilderbloom, J.I. et al. 1981. “Rent Control: A Sourcebook.” Santa Barbara: Foundation For National Progress.  Hulchanski, J.D. 2007. “Canada’s Dual Housing Policy: Assisting Owners, Neglecting Renters.” Centre for Urban and Community Studies.  Hulchanski, D. 1988. “The Evolution of Property Rights and Housing Tenure in Postwar Canada: Implications for Housing Policy.” Urban Law and Policy 9 (2): 135-156.  Hulchanski, J.D. 1984. “Market imperfections and the role of rent regulations in the residential rental market.” Toronto: Commission of Inquiry into Residential Tenancies.  Joint Center for Housing Studies of Harvard University. 2013. “America’s Rental Housing: Evolving Markets and Needs.” Boston: Harvard Graduate School of Design, Harvard Kennedy School.  Lazzarin, C. 1987. “Rent Control and Rent Decontrol in British Columbia: A Case Study of the Vancouver Rental Market, 1974 to 1989.” University of British Columbia Masters Thesis.  Lewis, T. J. and Muller, R.A. 1992. “Contracting out of Rent Control.” Canadian Journal of Political Science 25 (3): 557-572.  Lithwick, I. 1977. “An Evaluation of the Assisted Rental Program.” Ottawa: Canada Mortgage and Housing Corporation.  Luffman, J. 2006. “Measuring housing affordability.” Ottawa: Statistics Canada.  Makuch, S.M. and Weinrib, A. 1985. “Security of tenure.” Toronto: Commission of Inquiry into Residential Tenancies.  Marcuse, P. 1978. “The political economy of rent control: theory and strategy.” New York: Columbia University, Graduate School of Architecture and Planning.  Miron, J.R. 1994. “Private Rental Housing: The Canadian Experience.” Urban Studies 32 (3): 579-604.  Miron, J.R. 1990. “Security of Tenure, Costly Tenants and Rent Regulation.” Urban Studies 27 (2): 167-184.  Pomeroy, S. 2001. “Toward a comprehensive affordable housing strategy for Canada.” Ottawa: Caledon Insitute of Social Policy.  55 Roistacher, E. A. et al. 1980. “Rental Housing: Is There a Crisis?” Washington: The Urban Institute Press.  Rostum, H. 1978. “An Evaluation of RRAP for Landlords in Seven Municipal Areas.” Ottawa: CMHC Programme Evaluation Division.  Seto, D. 1985. “Condominium Conversion Regulations in British Columbia.” University of British Columbia Masters Thesis.  Sewell, J. 1994. “Houses and Homes. Housing For Canadians.” Toronto: James Lorimer & Co.  Skaburskis, V. 1982. “Determinants of Rental Rehabilitation: A Study of Factors Considered by RRAP Applicants.” Ottawa: Canada Mortgage and Housing Corporation.  Smith, L.B.  1991. “Rent Control and a Program for Decontrol in Ontario.” in Breaking the Shackles: Deregulating Canadian Industry Vancouver: The Fraser Institute 305-344.  Smith, L.B. 1988. “An economic assessment of rent controls: The Ontario experience.” The Journal of Real Estate, Finance, and Economics 1 (3): 217-231.  Smith, L.B. 1981. “Canadian Housing Policy in the Seventies.” Land Economics 57 (3):338-352.  Smith, L.B. and Tomlinson, P. 1981. “Rent Controls in Ontario: Roofs or Ceilings?” AREUEA Journal 9 (2): 93-114.  Statistics Canada, 2013. “NHS: Data Quality.” http://www12.statcan.gc.ca/NHS-ENM/2011/ref/about-apropos/nhs-enm_r005-eng.cfm Accessed on: March 7, 2015.  Statistics Canada. 2011. “2011 National Household Survey.” Ottawa: Supply and Services Canada, Catalogue: 99-014-X2011028.  Steele, M. 1993. “Conversions, Condominiums and Capital Gains: The Transformation of the Ontario Rental Housing Market.” Urban Studies 30 (1): 103-126.  Vakili-Zad, C. 1996. “Privatizing Public Housing in Canada, A Public Policy Agenda.” Netherlands Journal of Housing and the Built Environment 11 (1): 47-68.  Walker, M. 1975. “Rent Control: A Popular Paradox.” Vancouver: The Fraser Institute.  

Cite

Citation Scheme:

        

Citations by CSL (citeproc-js)

Usage Statistics

Share

Embed

Customize your widget with the following options, then copy and paste the code below into the HTML of your page to embed this item in your website.
                        
                            <div id="ubcOpenCollectionsWidgetDisplay">
                            <script id="ubcOpenCollectionsWidget"
                            src="{[{embed.src}]}"
                            data-item="{[{embed.item}]}"
                            data-collection="{[{embed.collection}]}"
                            data-metadata="{[{embed.showMetadata}]}"
                            data-width="{[{embed.width}]}"
                            async >
                            </script>
                            </div>
                        
                    
IIIF logo Our image viewer uses the IIIF 2.0 standard. To load this item in other compatible viewers, use this url:
http://iiif.library.ubc.ca/presentation/dsp.42591.1-0075843/manifest

Comment

Related Items