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Federal housing policies and the developing urban structure : conflicts and resolution Barrow, Malcolm McDonald 1967

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FEDERAL HOUSING POLIC IES AND THE DEVELOPING URBAN STRUCTURE: CONFLICTS AND RESOLUTION by MALCOLM MCDONALD BARROW B . A . , U n i v e r s i t y o f B r i t i s h C o l u m b i a , 19&5 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS in t h e D e p a r t m e n t o f Community and R e g i o n a l P l a n n i n g We a c c e p t t h i s t h e s i s a s c o n f o r m i n g t o t h e r e q u i r e d s t a n d a r d THE UNIVERSITY OF BRITISH COLUMBIA M a y , 1967 In p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f the r e q u i r e m e n t s f o r an a d v a n c e d d e g r e e a t the U n i v e r s i t y o f B r i t i s h C o l u m b i a , I a g r e e t h a t t h a L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e and s t u d y . I f u r t h e r a g r e e t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s t h e s i s f o r s c h o l a r l y p u r p o s e s may be g r a n t e d by the Head o f my D e p a r t m e n t o r by h i s r e p r e s e n t a t i v e s . I t i s u n d e r s t o o d t h a t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l n o t be a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n . D e p a r t m e n t The U n i v e r s i t y o f B r i t i s h C o l u m b i a V a n c o u v e r 8, Canada ABSTRACT In t h i s t h e s i s , an a t t e m p t i s made t o r e l a t e the h o u s i n g p o l i c i e s o f the F e d e r a l Government to t h e income s t r u c t u r e o f f a m i l i e s i n C a n a d a . It i s f e l t t h a t t h i s i s a f r u i t f u l a r e a o f s t u d y f o r s t u d e n t s o f p l a n n i n g s i n c e t h e q u e s t i o n s o f s lum a r e a s , urban renewal p r o g r a m s , and t h e g e n e r a l p r o -m o t i o n o f s a f e t y and w e l f a r e a r e i n v o l v e d . M o r e o v e r , i n t h e u r b a n i z i n g c o n t e x t i n w h i c h we l i v e t o d a y , c o g n i z a n c e w i l l have to be t a k e n o f p r o b l e m s w h i c h c i t i e s f a c e when l o w - i n c o m e f a m i l i e s s e t t l e w i t h i n t h e i r b o u n d a r i e s . The h y p o t h e s i s w i t h w h i c h the t h e s i s was m a i n l y c o n c e r n e d was t h i s : G i v e n t h e s t r u c t u r e o f income d i s t r i b u t i o n i n C a n a d a , the h o u s i n g p o l i c i e s o f t h e F e d e r a l G o v e r n m e n t , w i t h t h e i r major r e l i a n c e on h o m e - o w n e r s h i p f i n a n c i n g , i n e v i t a b l y p r o d u c e a h o u s i n g s h o r t a g e w i t h i n the u r b a n c e n t r e s o f t h e c o u n t r y . To t e s t t h e main h y p o t h e s i s , f e d e r a l p o l i c i e s as c o d i f i e d i n t h e N a t i o n a l H o u s i n g A c t , as w e l l as t h e s p e e c h e s o f Members o f P a r l i a m e n t — e s p e c i a l l y t h o s e r e s p o n s i b l e f o r a d m i n i s t e r i n g t h e h o u s i n g A c t s o v e r t h e y e a r s — w e r e e x a m i n e d . The f i n d i n g s c l e a r l y s u p p o r t e d t h e c o n t e n t i o n , t h a t not o n l y does f e d e r a l p o l i c i e s e m p h a s i z e h o u s i n g f o r home-owners , but i n -s i s t e n c e on p r i v a t e p r o d u c t i o n o f h o u s i n g t o meet a l l demands was t h e k e y -s t o n e o f f e d e r a l h o u s i n g p o l i c i e s . T h e s e a s p e c t s o f h o u s i n g p o l i c y d e v e l o p e d d u r i n g t h e Second W o r l d War and c o n t i n u e d i n t o t h e 1950 1 s and e a r l y 1960 1 s . Q_uite r e c e n t l y , however , t h e r e has been a n o t i c e a b l e s h i f t i n the emphasis g i v e n to p u b l i c h o u s i n g . H a v i n g a f f i r m e d t h a t Government p o l i c i e s d i d i n f a c t e m p h a s i z e market i v p r o v i s i o n o f h o u s i n g s e e m i n g l y w i t h o u t r e g a r d t o t h e f u l l i m p l i c a t i o n s , t h e q u e s t i o n o f n e e d s , and t h e b a s i c components o f need were i n v e s t i g a t e d . N e e d s , i t was p o i n t e d o u t , a r e not i d e n t i c a l w i t h demand. For whereas demand i s e x p r e s s e d i n t e r m s o f t h e a b i l i t y and w i l l i n g n e s s t o pay i n t h e m a r k e t , needs must be sought o u t , by f i r s t e s t a b l i s h i n g t h e income l e v e l w h i c h a l l o w s t h e i n d i v i d u a l t o buy h i s own home. F o r t h o s e who c a n n o t meet m a r k e t r e q u i r e -m e n t s , p u b l i c h o u s i n g , l i m i t e d - d i v i d e n d h o u s i n g and o t h e r f o r m s o f s u b s i d i z e d h o u s i n g a r e n e c e s s a r y . H o m e - o w n e r s h i p as a v a l u e i s p e r h a p s s t i l l v e r y s t r o n g i n C a n a d a . I f s a t i s f a c t o r y h o u s i n g i s p r o v i d e d f o r l o w - i n c o m e f a m i l i e s a p o l i c y o f e d u c a -t i n g t h e p u b l i c as t o t h e b e n e f i t s t o t h e community a s a w h o l e i s n e c e s s a r y . Such a n e d u c a t i o n p rogram s h o u l d p o i n t o u t t h a t h o m e - o w n e r s h i p u n d e r t h e N a t i o n a l H o u s i n g A c t i s i t s e l f s u b s i d i z e d . F u r t h e r m o r e , h o m e - o w n e r s h i p o f t e n means m a s s i v e a s s i s t a n c e . The m o r t g a g o r may be s a i d t o own heavy d e b t s , j u s t as e a s i l y a s he i s s a i d t o " o w n " h i s home. The m a r k e t f o r h o u s i n g p r o d u c t i o n was examined i n d e t a i l . Four s i g n i f i -c a n t p o i n t s e m e r g e d : 1. F a m i l i e s r e c e i v i n g l e s s t h a n $4,000 c a n n o t a f f o r d t o own a home even under NHA a r r a n g e m e n t s and t h e r e f o r e a r e e x c l u d e d f r o m t h e h o m e - o w n e r s h i p m a r k e t . 2. For t h o s e f a m i l i e s u n a b l e t o b e n e f i t f r o m t h e h o m e - o w n e r s h i p p r o v i s i o n s o f t h e A c t , l o w - r e n t a l h o u s i n g i s n e c e s s a r y . But so f a r o n l y a n e g l i g i b l e s u p p l y o f h o u s i n g has been p r o d u c e d u n d e r . t h e NHA i n s p i t e o f a w i d e range o f p r o v i s i o n s . 3. S t u d y o f f i n a n c i n g c o n d i t i o n s i n V a n c o u v e r w o u l d i n d i c a t e t h a t t h e r e a r e s i g n i f i c a n t s h i f t s away f r o m t h e use o f NHA. On t h e o t h e r h a n d , NHA l o a n s c o n t i n u e t o p l a y a n o t i c e a b l e r o l e i n s u b u r b a n a r e a s o f G r e a t e r V a n c o u v e r where s u i t a b l e l o t s i z e s and l a n d c o s t s c a n be f o u n d . k.. E v i d e n c e s u g g e s t s t h a t o f l a t e , more s e r i o u s c o n s i d e r a t i o n i s b e i n g a c c o r d e d t h e p r o b l e m o f l o w - r e n t a l h o u s i n g and p u b l i c h o u s -i n g . The M i n i s t e r a s s i g n e d t h e t a s k o f o v e r s e e i n g t h e a d m i n i s t r a -t i o n o f t h e N a t i o n a l H o u s i n g A c t , has r e c e n t l y c a l l e d a t t e n t i o n to t h e p l i g h t o f t h e many t h o u s a n d s o f f a m i l i e s who c a n n o t o b t a i n even m i n i m a l s t a n d a r d h o u s i n g a c c o m m o d a t i o n w i t h p u b l i c s u b s i d y . In s h o r t , g r e a t e r r e c o g n i t i o n i s b e i n g g i v e n t o t h e c r u c i a l r o l e t h a t t h e incomes o f f a m i l i e s p l a y . But such a p o l i c y w o u l d have t o show a w a r e n e s s o f t h e f a c t t h a t , s i n c e t h e f e d e r a l r e s o u r c e s a v a i l -a b l e f o r h o u s i n g a r e l i m i t e d , a l l o c a t i o n o f f e d e r a l f u n d s s h o u l d be i n t h a t a r e a o f h o u s i n g i n w h i c h g r e a t e s t n a t i o n a l w e l f a r e wou ld r e s u l t . However , t h e b a s i c p r o b l e m o f e f f e c t i v e l y p r o v i d i n g h o u s i n g f o r l o w -income g r o u p s r e m a i n s . I t s s o l u t i o n w i l l r e q u i r e more w h o l e h e a r t e d e f f o r t on t h e p a r t o f t h e p r o v i n c i a l government a l o n g t h e l i n e s o f t h e government o f t h e P r o v i n c e o f O n t a r i o . But i t i s f e l t t h a t t h e F e d e r a l Government can a l s o show much more i n i t i a t i v e . ACKNOWLEDGMENT I am I n d e b t e d t o a number o f p e r s o n s who have g i v e n me encouragement and a s s i s t a n c e d u r i n g t h e c o m p l e t i o n o f t h i s t h e s i s . I w i s h t o t h a n k P r o f e s s o r R o b e r t W. C o l l i e r who d i r e c t e d t h e s t u d y and D r . H. P . O b e r l a n d e r Head o f t h e Depar tment o f Community and R e g i o n a l P l a n n i n g . From e a c h , I r e c e i v e d h e l p f u l c r i t i c i s m and s u g g e s t i o n s w h i c h have been u s e f u l i n i m p r o v i n g my u n d e r s t a n d i n g o f t h e p r o b l e m s i n v o l v e d . P a r t i c u l a r t h a n k s a r e due t o P r o f e s s o r L e o n a r d C. Marsh o f t h e F a c u l t y o f E d u c a t i o n . H i s i n v a l u a b l e c r i t i c i s m s and h i s c o n t r i b u t i o n to my i n s i g h t i n t o t h e p r o b l e m s o f h o u s i n g have been o f l a s t i n g b e n e f i t . I owe d e e p e s t a p p r e c i a t i o n t o t h e V a n c o u v e r B r a n c h o f C e n t r a l M o r t g a g e and H o u s i n g C o r p o r a t i o n , t o many r e p r e s e n t a t i v e s and o f f i c i a l s o f m o r t g a g e c o m p a n i e s , and r e a l e s t a t e f i r m s , t o t h e Vancouve' r H o u s f n g A u t h o r i t y and t h e U n i t e d Community S e r v i c e s o f G r e a t e r V a n c o u v e r a l l o f whom gave u n s t i n t i n g l y o f t h e i r t i m e , e x p e r i e n c e and k n o w l e d g e . L i m i t a t i o n s o f s p a c e , r a t h e r t h a n o v e r s i g h t , p r e v e n t s me f r o m e x p r e s s i my g r a t i t u d e t o s e v e r a l o t h e r i n d i v i d u a l s who have been q u i t e h e l p f u l . TABLE OF CONTENTS Page ABSTRACT i i LIST OF TABLES i x LIST OF DIAGRAMS, XI C h a p t e r INTRODUCTION S t a t e m e n t o f P r o b l e m H o u s i n g i n a R a p i d l y U r b a n i z i n g W o r l d H o u s i n g and U r b a n i z a t i o n i n Canada The S i g n i f i c a n c e o f H o u s i n g f o r P l a n n i n g The H y p o t h e s i s C o n c e p t s and D e f i n i t i o n s o f Terms Scope o f t h e S t u d y A s s u m p t i o n s Methods and T e c h n i q u e s I I . ORIGIN AND EVOLUTION OF FEDERAL GOVERNMENT HOUSING POLIC IES 25 O r i g i n s o f F e d e r a l Government H o u s i n g Leg i s l a t i o n The D o m i n i o n H o u s i n g A c t 1935 S i g n i f i c a n c e o f t h e D o m i n i o n H o u s i n g A c t 1935 The N a t i o n a l H o u s i n g A c t 1 9 3 8 H o u s i n g D u r i n g t h e Second W o r l d War The N a t i o n a l H o u s i n g A c t 1 9 4 4 C e n t r a l M o r t g a g e and H o u s i n g C o r p o r a t i o n O t h e r P o s t - W o r l d War I I D e v e l o p m e n t s The N a t i o n a l H o u s i n g A c t 1 9 5 4 Amendments t o t h e N a t i o n a l H o u s i n g A c t 1 9 5 4 Summa ry v i i C h a p t e r Page I I I . IMPACT OF FEDERAL GOVERNMENT LEGISLATION 52 The S t o c k o f H o u s i n g i n Canada O w n e r s h i p o f H o u s i n g S t o c k H o u s i n g O c c u p i e d Under t h e NHA 1954-64 M o r t g a g e F i n a n c i n g : E f f e c t on S u p p l y o f Hous i ng The S u p p l y o f M o d e r a t e - and Low- Income !'.: H o u s i n g under NHA: L i m i t e d - D i v i d e n d P r o v i s i ons C o - o p e r a t i v e H o u s i n g P u b l i c Hous i ng O t h e r F a c t o r s A f f e c t i n g H o u s i n g S u p p l y Summary IV . HOUSING DEMANDS AND NEEDS: BASIS FOR POLICIES 79 B a s i c C o n c e p t s : Needs and Demands The E l e m e n t s o f H o u s i n g Demand Measurement o f H o u s i n g Needs i n Canada The R e p o r t o f t h e A d v i s o r y C o m m i t t e e on R e c o n s t r u c t i on H o u s i n g Needs i n Canada F u t u r e Urban Needs M o d e r a t e - and Low- Income H o u s i n g Demands Summa ry V . SOCIO-ECONOMIC FACTORS IN HOUSING: VANCOUVER AS A CASE STUDY 94 Growth o f t h e C i t y a n d / M e t r o p o l i t a n A r e a s S o c i o - E c o n o m i c C h a r a c t e r i s t i c s H o u s i n g C h a r a c t e r i s t i c s : C i t y o f V a n c o u v e r The S t r u c t u r e o f t h e M o r t g a g e M a r k e t i n V a n c o u v e r Use o f N a t i o n a l H o u s i n g A c t i n V a n c o u v e r by I n s t i t u t i o n a l M o r t g a g e L e n d e r s An Example o f M o r t g a g e C a l c u l a t i o n Demand F a c t o r s V a c a n c y R a t e M o d e r a t e - and L o w - R e n t a l H o u s i n g i n V a n c o u v e r C o s t s o f Schemes L i m i t e d - D i v i d e n d H o u s i n g The R o l e ' o f t h e P r o v i n c i a l Government I n d i c a t i o n s o f Needs Summary and C o n c l u s i o n s v i i i C h a p t e r Page V I . SUMMARY AND CONCLUSIONS 119 M o r t g a g e F i n a n c i n g M o d e r a t e - and Low- Income H o u s i n g F e d e r a l - P r o v i n c i a 1 R e l a t i o n s BIBLIOGRAPHY 125 APPENDICES 130 L l ST OF TABLES T a b l e Page 1 . G rowth o f Urban P o p u l a t i o n i n C a n a d a , 1 8 7 1 - 1 9 6 1 8 2 . Growth i n S i z e and Numbers o f C i t i e s i n C a n a d a , 1 8 9 1 - 1 9 6 1 8 3 . P o p u l a t i o n Growth i n Census M e t r o p o l i t a n A r e a s , 1 9 4 1 - 6 1 11 4 . O c c u p i e d D w e l l i n g U n i t s by T e n u r e i n Canada and i n Urban A r e a s 53 5 . E x p e n d i t u r e s on New H o u s i n g by S o u r c e o f F u n d s , 1 9 5 4 - 6 5 5 9 6 . P e r Cent o f A l l N o n - F a r m F a m i l i e s i n D i f f e r e n t Income Groups and P e r Cent o f t h e s e B o r r o w i n g NHA Loans f o r New H o u s i n g f o r S e l e c t e d Y e a r s 65 7 . Consumer P r i c e Indexes (Canada) f o r S e l e c t e d Y e a r s 65 8 . E s t i m a t e d H o u s i n g C o n s t r u c t i o n R e q u i r e m e n t s , 1956-80 8 9 9 . D i s t r i b u t i o n o f New Changes i n D w e l l i n g s 1 9 6 1 - 8 0 Between M e t r o p o l i t a n , U rban and O t h e r A r e a s 90 1 0 . Low- Income H o u s i n g R e q u i r e m e n t 9 2 1 1 . C o m p a r i s o n o f P o p u l a t i o n Growth i n t h e C i t y o f V a n c o u v e r w i t h Growth i n V a n c o u v e r M e t r o p o l i t a n A r e a 1 9 5 1 - 6 1 9 6 1 2 . D i s t r i b u t i o n o f FamiJy Incomes : V a n c o u v e r ( 1 9 6 1 ) 97 1 3 . Changes i n t h e P a t t e r n o f Home-Ownersh ip i n t h e Census M e t r o p o l i t a n A r e a s o f Canada ( 1 9 4 1 , 1951 , 1961) 9 9 X T a b l e Page D w e l l i n g S t a r t s : C i t y o f V a n c o u v e r , 1 9 6 1 - 6 6 101 1 5 . Income D i s t r i b u t i o n o f F a m i l i e s L i v i n g i n P u b l i c H o u s i n g A r e a s 116 1 6 . A v e r a g e Food E x p e n d i t u r e s 117 x i L IST OF DIAGRAMS D i a g r a m Page 1. U rban P o p u l a t i o n Growth i n Canada 9 2. A d m i n i s t r a t i v e S t r u c t u r e o f t h e N a t i o n a l H o u s i n g A c t i n C a n a d a , 1966 40 3. T o t a l New D w e l l i n g S t a r t s i n Canada and i n t h o s e Urban C e n t r e s w i t h P o p u l a t i o n o f 5,000 and o v e r (1954-1966) 54 4. S t a r t s i n New H o u s i n g , By T y p e , i n Canada (1954-64) 55 5. Funds f o r New H o u s i n g by S o u r c e and T r e n d s i n t h e G r o s s N a t i o n a l E x p e n d i t u r e 58 6. An Example o f t h e S t r u c t u r e o f M o r t g a g e M a r k e t O p e r a t i o n s . . . . 107 Maps 1. New D w e l l i n g S t a r t s i n.'iMet r o p o l i t a n V a n c o u v e r 1965-66 104 CHAPTER I INTRODUCTION T h e r e i s a c r i s i s i n h o u s i n g — a h a r s h , p e r s i s t e n t c r i s i s t h a t c o n t i n u e s t o h o l d a t bay any e a s y s o l u t i o n . I t i s a c r i s i s t h a t e x i s t s i n i t s most v i r u l e n t f o r m i n s lums and b l i g h t e d a r e a s . I t a f f e c t s t h e c i t y , e s p e c i a l l y t h e l a r g e u r b a n m e t r o p o l i s . I t a f f e c t s a l l c o u n t r i e s , r i c h and p o o r , t o a g r e a t e r o r l e s s e r d e g r e e , and i n one f o r m o r a n o t h e r . The s t r e n g t h o f t h e f o r c e s w h i c h have c r e a t e d t h i s c r i s i s show l i t t l e e v i d e n c e o f a b a t e m e n t . P e r h a p s s l u m s have been i n e x i s t e n c e s i n c e t h e dawn o f c i v i l i z a t i o n . We know t h a t r e f o r m l e g i s l a t i o n i n B r i t a i n d u r i n g t h e n i n e -t e e n t h c e n t u r y was d i r e c t l y r e l a t e d t o t h e p r o b l e m s o f h o u s i n g , w e l f a r e and s a n i t a r y c o n d i t i o n s . But t h e i n t e n s i t y o f s o c i a l and e c o n o m i c p r e s s u r e s a t t h i s p o i n t o f momentous changes i n human i n t e r - r e l a t i o n s h i p s , i n i n t e r p e r s o n a l c o n d u c t and l i f e s t y l e s , has f o c u s e d a t t e n t i o n on i n a d e q u a t e h o u s i n g as one o f t h e g r e a t i m p e d i m e n t s t o m a n k i n d ' s p r o g r e s s . Among t h e many i m p o r t a n t f o r c e s r e f e r r e d to above a r e t h e s o - c a l l e d " p o p u l a t i o n e x p l o s i o n " , and r a p i d u r b a n i z a t i o n . I t w i l l be shown t h a t b o t h o f t h e s e f o r c e s have been g e n e r a t e d by t h e i n d u s t r i a 1 - t e c h n o l o g i c a 1 - s c i e n t i f i c r e v o l u t i o n o f modern t i m e s . But u n d e r l y i n g a l l t h e s e a r e s o c i o - c u l t u r a ] changes o f v a s t d i m e n s i o n s . And t h e s e l a s t a r e r o o t e d i n t h e p s y c h o l o g i c a l n e e d s , d e s i r e s and m o t i v e s o f m a n . ' T h u s , w h i l e t h e s e e v e n t s p r o p e l us ' E . Gordon E r i c k s e n , Urban B e h a v i o r , (New Y o r k : The M a c M i l l a n C o . , 1 9 5 4 ) , C h a p t e r M l . 1 2 forward, the need for food, for soc ia l contact, for love, and for shelter grows. The importance of shelter is seen in the fact that i t is in the home that the enjoyment of these basic needs attains greatest f u l f i l l m e n t and express i on. Statement of the Problem 2 Serious housing shortages have arisen in several urban areas in Canada. These shortages continue in spi te of continued e f for t s on the part of the Federal Government, espec ia l ly since World War l l , to deal e f f e c t i v e l y with the problems of housing. The housing deficiency may be the result of the fact that (a) the actual number of units being b u i l t is i n s u f f i c i e n t ; or (b) the cost of the production of housing is too great for a s i g n i f i c a n t portion of the nation to afford on the strength of their incomes. This paper w i l l argue that , given the ex i s t ing family income structure , and the acknowledged d i f f i c u l t i e s of Dominion-Provincial j u r i s d i c t i o n , the major cause of the shortages in housing is to be found in the Federal social policy—such as over-emphasis on home-ownersh i p—and the connected l imi ta t ions on federal housing l e g i s l a t i o n . For the Federal Government f a i l s to integrate i t s program e f f e c t i v e l y with such fundamental and dynamic events as i n d u s t r i -a l i z a t i o n and urbanization and the problems a r i s i n g therefrom.3 zThe federal Minis ter responsible for housing, The Honourable J . R. Nicholson, recently declared: "congestion in the c i t i e s , and in the urban areas, is great" , and notes that often the lack of amenities is shocking". See: Canada, House of Commons: Debates, Ottawa, May 28, 1964. See also sur-vey carr ied out by Moira Farrow, "Housing Scarce as a Pot of G o l d " , reported in the Vancouver Sun, February 9, 1967, p. 1, for some aspects of the local Vancouver s i t u a t i o n . ^Seebelow, Chapter II, pp. 5 0 - 5 1 where i t i s pointed out that a highly i n d u s t r i a l , urbanizing society produces a number of human discards . More-over, housing the indust r ia l workers themselves creates problems, not the least of which is forcing the lower income groups to double up in slums. 3 Urbanization is not pecul iar to Canada. Many countries are forced to face the tremendous problems that a rapid rate of urbanization creates. Analysis of th is process, understanding of those people most af fected, and awareness of the pressures i t exerts on housing, municipal services and urban land use and land values should a l l be ref lected in the national hous-ing p o l i c i e s . This would lead to greater benefits in return for expenditures made by the Federal Government. Housing in a Rapidly Urbanizing World I'n discussing the social phenomenon which we c a l l the c i t y , Louis Wirth began with these s i g n i f i c a n t remarks: Just as the beginning of Western C i v i l i z a t i o n i s marked by the permanent settlement of formerly nomadic peoples in the Mediterranean basin, so the beginning of what i s d i s t i n c t l y modern in our c i v i 1 iza t ion is best s ignal ized by the growth of great c i t i e s . The process of urbanization has been remarked upon by many a u t h o r i t i e s - -quite often with alarm. Catherine Bauer Wurster, for example, points to Calcutta as an extreme case which dramatizes the excessive soc ia l costs of Consider for instance these remarks by W. E. Lent, assistant manager of Can-ada Manpower Centre in Kitchener, speaking before the Employment Advisory Committee: "There is an extremely c r i t i c a l shortage of housing. . .and even where employers are successful in recrui t ing workers from other areas, the end result is frequently that the worker returns home af ter f r u i t l e s s e f for ts to f i n d accommodation". Note, however, that W. L . But ler , mayor of Kitchener and other c i v i l leaders disagreed. According to the la t te r observers: " t a l k about a Jack of housing has been exaggerated". No doubt, there are many other responsible c i t i z e n s who view the matter s i m i l a r l y . Reported in the Toronto Globe and Mail by Roger Newman under the t i t l e : " I n Kitchener They Talk of Shortages of Workers, Housing, Industrial Land", October 18, 1966, p. B 5 . ^Louis Wir th , "Urbanizat ion as a Way of L i f e " , in Paul K. Hatt and Albert J . Reiss, J r . , Ci t i es and Society, (The Free-Press of Glencoe, Inc . , 1957) , P . 4 9 . 4 rap id u r b a n i z a t i o n .5 She argues that one of the c e n t r a l problems of u r b a n -i z a t i o n i s the pressure i t c rea tes on the housing s t o c k . I t should be noted at t h i s p o i n t , that u r b a n i z a t i o n r e f e r s s p e c i f i c a l l y to the process of c o n c e n t r a t i o n of peoples w i t h i n an urban envi ronment . Th is d e f i n i t i o n i s based on the conceptual a n a l y s i s and d e f i n i t i o n of u r b a n -i z a t i o n by Hope T. E l r i d g e . Acco rd ing to E l r i d g e , u r b a n i z a t i o n cannot p r o -ceed wi thout advances in techno logy , al though the reverse i s not t r u e . He a s s e r t s t h a t : U r b a n i z a t i o n i s a process of p o p u l a t i o n c o n c e n t r a t i o n . It proceeds in two ways: the m u l t i p l i c a t i o n of p o i n t s of c o n c e n t r a t i o n and the inc rease in s i z e of i n d i v i d u a l c o n -c e n t r a t i o n s . And he f u r t h e r no tes : Two c o n d i t i o n s appear to be necessary f o r u r b a n i z a t i o n . One i s the people and the o ther i s the techno logy .^ K i n g s l e y Davis in the S c i e n t i f i c American (September 1965, V o l . 213, #3) has used as an index of u r b a n i z a t i o n the p r o p o r t i o n of p o p u l a t i o n l i v i n g in c i t i e s of 100,000 and more. He a l s o d e f i n e s u r b a n i z a t i o n a s " t h e p r o -p o r t i o n of the t o t a l p o p u l a t i o n concentrated in urban s e t t l e m e n t s , or e l s e to a r i s e in t h i s p r o p o r t i o n . " He p o i n t s out i t i s not s imply the growth of 5catherine Bauer Wurs te r , "Hous ing A i d f o r Under-developed Count r ies " in The Study of I n t e r n a t i o n a l Hous ing , by the Sub-committee on Housing , Committee on Banking and Currency , Uni ted S ta tes Senate , (Government P r i n t -ing O f f i c e , March 1963), p. 52. ^Hope T. E l r i d g e , "The Process of U r b a n i z a t i o n " in Joseph J . Spengler and O t i s D. Duncan, Demographic A n a l y s i s , ( I l l i n o i s : The Free Press of G lencoe , 1958), pp . 338-422. E l r i d g e i s not a lone in t h i s v iew. The N a t -ional Resources Committee whose a r t i c l e , "The Process of U r b a n i z a t i o n : Under l y ing Forces and Emerging Trends" i d e n t i f i e s the f o l l o w i n g p r e - c o n d i -t i o n s of u r b a n i z a t i o n : (a) a g r i c u l t u r a l s u r p l u s ; (b) c e n t r i p e t a l i n f l u e n c e of steampower; (c) e l e c t r i c i t y and the automobi le ; (d) the t e c h n o l o g i c a l r e v o l u t i o n ; and (e) s a n i t a t i o n . Obv ious ly t h i s theory has been evolved aga ins t a background of Western development. See a l s o Hatt and R e i s s , J r . , op . c i t . , pp. 64-67. 5 c i t i e s . To Davis urban population is a function of both total and rural populati on .7 Thus, urbanization is a process expressed in terms of the concentration of people and i t is characterized by an increase in the number of urban areas and in s ize of the individual urban areas. It f inds i t s economic and socia l basis in technological advancement. The effect of th is process on housing is said to cause pronounced l i m i -tat ions on the minimal space required for family ' l i f e , on privacy and comfort. It contributes to problems of sani tat ion and disease, of broken homes, crimes, p o l i t i c a l i n s t a b i l i t y and unrest .^ It is well to note that these problems are fostered wherever the lack of income, education and a sat i s fac tory job force the c i t y dweller into slum areas. On thecother hand, urbanization hardly ever poses these severe problems for the wealthy c i t y dweller , nor in most cases for the wel l - to-do suburban dwel ler . Their problems are more l i k e l y to be those produced by poor design of housing, lack of community f a c i l i t i e s and by the need to commute to a job in the c i t y . Charles Abrams in Man's Struggle for Shelter^ has dramatized the con-f l i c t s and tensions induced by rapid urbanization on a world scale ; for the ingsley Davis, "The Urbanization of the Human Populat ion" , S c i e n t i f i c American, (New York: V o l . 213, No. 3, September 1965), p. 41. In th is a r t i c l e Davis also makes the point that in under-developed countries the rate of urbanization is most importantly influenced by the rate of population growth which has been faster than that of any i n d u s t r i a l i z e d country even at the peak of the i r expansion. 8$ee Catherine Bauer Wurster, op. c i t . , p . 52. 9charl es Abrams, Man's Struggle for Shelter in an Urbanizing World, (Cambridge, Mass.: M. I .T . Press, 1964). 6 process of urbanization has now assumed world-wide propor t ions . ' ^ Abrams makes i t quite c lear that the 11 strugg1e" is one which involves the hordes of in-migrants who f lock to the c i t y in search of jobs. As might be expected, the most c r i t i c a l housing shortages exist in developing countr ies . Abrams1 book c l e a r l y makes this point . Nevertheless, advanced indust r ia l countries have no cause for compla-cency. The United Nations p u b l i c a t i o n , Report on the World Social S i tuat ion (1961) made the fol lowing comments on housing conditions in the i n d u s t r i a l -ized countries of Europe andiN&rjth America: During the period under review, the rate of construction of new housing in most countries of Europe and North America was high enough to reduce but not to overcome the housing short-ages that date from the decades of depression and war. To varying degrees these countries have been able to turn more of the i r at tent ion from the general quant i ta t ive shortage to the housing needs of special groups and to the needs for replace-ment of sub-standard d w e l l i n g s . ' ' The " p e r i o d under review11 referred to here is very recent--from 1957 to 1961. C e r t a i n l y , there have been no dramatic improvements in the s i t u -ation since that Report was published. At least in Canada, i t was shown that the housing shortage is s t i l l acute. (See Footnote 2 of th is chapter.) Housing and Urbanization in Canada In a speech delivered in Vancouver recently by the Minister responsible for administering the National Housing A c t , attention was drawn to the urgency of the housing problem. The Minister s tated: '°Note that Ericksen, op. c i t . , p . 59-60, that the world's population is not yet a c i t y population, and not even an urban populat ion. The pro-portionyof the world's population dwelling in c i t i e s of 5,000 and over is s t i l l only about 30 per cent. ' ' U n i t e d Nations, Report on the World Social S i t u a t i o n , Department of Economics and Social A f f a i r s , ST/S0AA2, (New York: I96I) , p . 6-7. 7 This v i s i t , however, is of a very special and very serious nature because we come together at a time, when Canada's housing performance generally has suffered a severe setback. A s i tua t ion has been created that demands our urgen a t tent ion , demands i t as a p r i o r i t y item. That i s why we are meeting today, and that is the purpose of s imi lar housing conferences, being convened from coast to coast by my provinc ia l colleagues and mysel f . '2 Although the Minister is referr ing to the current housing s i tua t ion which has part of i t s roots in short-run socio-economic condit ions , his remarks re f lec t a s ingular charac ter i s t i c of the urban s i t u a t i o n . That char-a c t e r i s t i c is that any let-up in the production of housing in the face of continuous urbanization soon results in a c r i s i s s i t u a t i o n . Evidence of the accelerat ing rate of urbanization is seen in the growth of Canada's urban populat ion. (See Table 1.) Not only is there massive concentration of population in urban areas but there is also a p r o l i f e r a t i o n of the number of urban centres. (See Table 2.) The pressures on urban housing in Canada are largely due to the demands engendered by the urban population growth. See the data presented in Table 1. There are also other s i g n i f i c a n t factors which have influenced the demand for housing over the past few decades, for example, the Depression of the 1930's and World War I I . The f u l l impact of these components of de-mand w i l l be considered in a later chapter. Urban growth as compared with to ta l population growth in the Dominion is graphical ly i l l u s t r a t e d in Diagram 1 u t i l i z i n g the data in Table 1. Here, semi-logarithmic scale is used to portray the rate of growth of each parameter. It is immediately noticeable that urban rate of growth is increasing at a much faster rate than the growth of the total populat ion. The graphs aee '^The Honourable J . R. Nicholson, address to the Housing Conference convened in Vancouver, Hotel Vancouver, February 3, 1967. 8 TABLE 1 GROWTH OF URBAN POPULATION IN CANADA 1871 - 1961 Annua 1 Total Urban Popu-Total Per cent Urban la t ion as a Year Popu1 at ion 1ncrease Populat ion 3 % of Total 1871 3,689,257 722 , 3 4 3 19.6 1881 4 , 2 2 4 , 8 1 0 17.2 1 ,109,507 25-7 1891 4,833,239 11 .8 1 ,537,098 31.8 1901 5,371,315 11.1 2 ,014,222 37.5 1911 7,206 ,643 34.2 3,272,947 45.1 1921 8,787,949 21.9 4,352,122 49.5 1931 10,376,786 18.0 5,572,058 53.7 1941 11,506,655 10.9 6,252,416 54.3 1951 14,009,429 21 .8 8,628,253 61.6 1961 1 8,238 , 2 4 7 30.2 12,700,390 69.6 aThe d e f i n i t i o n of what i s urban and what rural has been modified for census purposes over the years. In 1941, for example, areas incorporated under a charter were c 1 ass i f red::as urban without regard to the fact that the s ize of many un-incorporated centres was greater than a number of corporated towns. In 1961 a l l centres of 1,000 or more are c l a s s i f i e d as urban. Source: Dominion Bureau of S t a t i s t i c s , Census of Canada, Ottawa. (Popula-t ion includes the Yukon and North West T e r r i t o r i e s . TABLE 2 GROWTH IN SIZE AND NUMBERS OF CITIES IN CANADA 1891 - 1961 Year Number of c i t i e s of given sizes 30,000 - 99,000 100,000 and over 1891 5 2 1901 7 2 191 1 9 4 1921 9 6 1931 13 7 1941 19 8 1951 23 10 1961 42 17 Source: Dominion Bureau of S t a t i s t i c s , Census of Canada, Ottawa, 1961. 9 Popu1 a t i on 1871 1881 1891 1901 1911 1921 1931 1941 1951 1961 1971 Yea r s D i a g r a m 1. URBAN POPULATION GROWTH IN CANADA ( 1 8 7 1 - 1 9 7 1 ) . T o t a l P o p u l a t i o n i n C a n a d a . T o t a l U rban P o p u l a t i o n . 10 based on the data presented in Table 1 . The 1971 f igures are those estimated by the Economic Council of Canada. The growth in the population of census metropolitan areas further attests to the rapid increase in urban population (see Table 3 ) . ' ^ It is worthy of note, however, that although centr i fugal forces are drawing people towards the "urban areas", defined in the sense used in the census, strong centr ipetal forces are also dr iv ing many urban dwellers into the suburban sections of the crowded metropolises. The Dominion Bureau of S t a t i s t i c s found that between 1941 and 1 9 5 1 j there was a 27 per cent increase in the population of metro-po l i tan areas-?-from 4 , 0 3 2 , 4 5 5 to 5 , 1 2 2 , 0 2 6 people. However, growth in the suburban fr inges within metropolitan areas, but outside the c i t y l i m i t s 14 proper, amounted to 6 8 . 2 per cent for a l l metropolitan c i t i e s combined. The Federal Government's housing program has played a s i g n i f i c a n t role in th is centr i fugal movement to the suburbs. Its p o l i c i e s with respect to housing, which emphasize s ing le - fami ly home-ownership, require the existence of s u f f i c i e n t urban space to accommodate large bui lding l o t s . ' ^ But there ' 3 c ensus Metropolitan Areas (CMA's) are defined by the Dominion Bureau of S t a t i s t i c s for census purposes. The d e f i n i t i o n included groups of urban communities in Canada, which have close economic, geographic and social re-la t ionships . (See Census of Canada, 1 9 6 1 , V o l . 1 , Part 1 , Introduction, pp. x - x i . ) For example, although the City of Regina has over 1 0 0 , 0 0 0 inhabi-tants i t i s considered not to have the charac ter i s t i cs of a CMA, since i t has no suburban m u n i c i p a l i t i e s . (See Footnote 2 of Table 1 2 , Census of Canada, 1 9 6 1 , V o l . I l l , Part 1 . ) Note also that for census purposes, a l l centres with 1 , 0 0 0 people or more are c l a s s i f i e d as urban. '^Dominion Bureau of S t a t i s t i c s , Census of Canada, 1 9 5 1 . V o l . X, Table V, p. 3 8 . w i l l be shown in Chapter V that in the City of Vancouver, where 33 foot lots are prevalent, there is l i t t l e bui ld ing a c t i v i t y under NHA whereas in the suburban area where sui table lot sizes are avai lable a great deal of a c t i v i t y goes on. (Required lot s izes of houses b u i l t under NHA are found in "Adminis t ra t ive and S i te Planning Requirements: The National Housing A c t — 1 9 5 4 " published by Central Mortgage and Housing Corporation, p. 4 . ) TABLE 3 POPULATION GROWTH IN CENSUS METROPOLITAN AREAS, 1941 - 61 C. N. Areas Population % Increase 1941 1951 1961 1941-51 1951-61 1941-61 Ca1ga ry Edmonton Ha I i fax 93,021 97,842 98,636 142,315 176,782 133,931 279,062 337,568 183,946 52.9 80.7 35.8 96.1 91.0 37.3 200.0 245.0 86.4 Hami1 ton Ki tchener London 197,732 n. a . 91,024 280,293 107,474 128,977 395,189 154,864 181,283 41.8 n . a . 41.7 41 .0 44.1 40.6 99.9 n . a . 99.2 Mont rea1 Ottawa Quebec Ci ty 1 ,145,282 226,290 247,756 1,471,851 292,476 276,242 2,109,509 429,750 357,568 28.5 29.2 22.9 43.3 46.9 29.4 84.2 90.0 59.1 Sa i nt John St . John's Sudbury 70,927 n . a . n . a . 78,337 68,620 73,826 95,563 90,838 110,694 10.4 n . a . n . a . 22.0 32.4 49.9 34.7 n . a . n. a. Toronto Vancouver V i c t o r i a 909,928 377,447 75,560 1 ,210,353 561,960 113,207 1,824,481 790,165 154,152 33.0 48.9 49.8 50.7 40.6 36.2 101 .0 109.3 104.0 Wi ndsor Wi nn i peg 123,973 299,937 163,618 356,813 193,365 475,989 32.0 19.0 18.2 33.4 56.0 58.7 n . a . = not avai1ab1e Source: Dominion Bureau of S t a t i s t i c s , Census of Canada, 1941, 195' and 1961 . 12 are also other factors which are important in determining the e x i s t i n g urban spat ia l arrangement. Transportation and the increase in family incomes, to mention but two other fac tors , are also powerful forces . In a d d i t i o n , the key function of individual motivation and cul tura l values in influencing certa in developments in the urbanizing process should not be ignored. The ultimate extent of future urban population growth cannot be pro-jected with any degree of c e r t a i n t y . But i t i s generally accepted that such 16 growth w i l l continue in the foreseeable future . A study conducted by the Royal Commission on Canada's Economic Prospects (often referred to as the Gordon Commission) estimated that by 1980, the tota l population of the Dominion would be 26,650,000. Of this population, 75 per cent w i l l l i v e in urban centres. '7 A more recent study prepared by Wolfgang 11 l ing for the Economic Counci1 of Canada estimates that by 1970, of a population of 1 Pi 21,729,000 over 74 per cent w i l l dwell in urban centres. It w i l l have been observed from Table 1 that the proportion of the population l i v i n g in urban centres in 1961 was 69.6 per cent. Urban growth of these proportions w i l l tend to increase the pressures on urban housing. Already there is a persistent housing problem which, i t is generally acknowledged, af fects most acutely famil ies and individuals of moderate- and low-income. One of the questions which w i l l be examined in this study is how I D Kings ley Davis, op. c i t . , notes that urbanization is a f i n i t e process. '7Yves Dube, J . E . Howes and D. L. McQueen, Housing and Social C a p i t a l , a study prepared for the Royal Commission on Canada's Economic Prospects, Study No. 20, (Ottawa: Queen's P r i n t e r , 1957), p. 3'. The study assumes immigration of 75,000 per year in i t s c a l c u l a t i o n s . Ifgang M. II l i n g , Housing Demand to 1970, a study prepared for the Economic Council of Canada, (Ottawa: Queen's P r i nter , 1964), p. kk. 13 the private market meets the housing requirements of these income groups. The Federal Government has recently shown greater awareness of the problems of urban growth and provision of housing for moderate- and low-income groups. The Minis ter responsible for administering the National Housing A c t , The Honourable J . R. Nicholson, has stated that while he regarded the aver-age standard of housing in Canada to be "unusually h i g h " , he estimated that there were "wel1 over 100 ,000 fami1ies who were unable to go to the pri vate  market to obtain accommodation p_r to-go _to the market and get houses under  the ex i s t ing provisions of the National Housing A c t . " ' 9 The Minis ter pointed out that the brunt of the population growth w i l l be f e l t by the c i t y , where the shortage of housing as well as the lack of amenities can, in many cases, be considered deplorable. As he puts i t : Fifteen per cent of our housing units or dwellings in Canada lack t o i l e t f a c i l i t i e s . The lack of amenities, as you might expect, is more pronounced in rural than in urban areas, but con-gestion in the c i t i e s , in the urban areas, is great, and even there the lack of amenities is shocking.20 It is not conceivable that the Minis ter would use such strong language l i g h t l y or without very compelling j u s t i f i c a t i o n . The Signif icance of Housing for Planning Both in the regional and local context, the course of res ident ia l development is of great s igni f i cance to the planner. In Canada, national housing p o l i c i e s reach far down into local and regional levels of government. Furthermore, Part V of the National Housing Act shows that the Federal Govern-ment intends to play an e f fec t ive role in housing and community planning. Yet how much planning,, in terms of a comprehensive surveys of metropolitan '^House of Commons: Debates, op. c i t . , May 2k, \96k. Words underlined by wri t e r . 2 0 | b i d . 14 housing needs, has been done in Canada? Until the Toronto Metropolitan Plan-ning Board was i n s t i t u t e d in 1953, none existed. Since then, few have come into being although this is at a level of government administration which, supposedly, no c o n s t i t u t i o n a l problems of j u r i s d i c t i o n need e x i s t . There are several reasons why the planner cannot but be d i r e c t l y involved in government housing p o l i c i e s : 1. It i s often the planner who applies standards and regulations to r e s i d e n t i a l development in the form of zoning by-laws, subdivision regulations, etc. 2. The planner is v i t a l l y concerned with the pattern of land use which develops within the urban area or region and he plays a s i g n i f i c a n t part in this pattern of development. 3. Houses need to be serviced in urban areas. These s e r v i c e s — sewer, water, f i r e protection, s t r e e t s , sidewalks, e t c . — a r e pro-vided by and large, by m u n i c i p a l i t i e s . The planner is quite often involved in es t a b l i s h i n g p o l i c i e s regarding the a l l o c a t i o n and staging Of these services. 4. In his capacity as the o f f i c i a l responsible for preparing and presenting a l t e r n a t i v e proposals to the government, the planner must be cognizant of the trends and developments in housing that f a l l within his purview. This is p a r t i c u l a r l y true when housing p o l i c i e s made at the national and prov i n c i a l levels a f f e c t his actions. But, to the planner, these aspects of his day-to-day a c t i v i t i e s r e a l l y f a l l within the larger scope of the aims and purposes of planning. They do not transcent planning goals. The planner is concerned with the growth of a wholesome, pleasant environment--an environment where "community s p i r i t " can emerge and grow. His goal is the achievement of the optimum physical use of 15 space so that the greatest soc ia l and economic benefits can be derived by the c i t i z e n . ln this regard, the plea of H. S. Per lof f for closer integration of "phys ica l planning and human resources programs", i s p a r t i c u l a r l y re le -vant. Some of the major objectives which Per lo f f f e l t were related to the kind of integrated functions which he contemplated were: 1. A "decent home and sui table environment" for every fami ly ; 2. Jobs for a l l and a minimum family income; 3. Adequacy and equal i ty in public services and f a c i l i t i e s . ^ ' Housing in general—and a welI-constructed national housing program, forged within the framework of f u l l co-operation wherever pract icable between a l l levels of government, in part icular—provides a most meaningful i n s t r u -ment through which planning can achieve i t s purpose. And this too, for the benefit of the i n d i v i d u a l , the community and the nat ion. Such a scheme would require federal f i n a n c i a l assistance to planning, to i n s t a l l a t i o n of community services , as well as to housing. The Advisory Committee set up by the Federal Government in 1944 established without q u a l i f i c a t i o n , the signal importance of planning to the community in terms of i t s p h y s i c a l , social and economic development.^ The t i t l e of the Final Report of the Committee—Housing and Community Plan-ning— is p a r t i c u l a r l y suggestive of the recognized i n t e r - r e l a t i o n s h i p of housing and planning. The Committee's f indings and i t s expressed philosophy were given greater currency, i f more were needed, by the o f f i c i a l adoption of i t s point of view. This is evident from the remarks made by the Honourable Louis St . Laurent, the Minis ter of J u s t i c e , speaking on behalf of the Federal ^'Harvey S. P e r l o f f , "Common Goals and the Linking of Physical and Social P lanning" , Pomeroy Memorial Lecture, i n P1ann i ng 1965, Selected Papers from the Joint Planning Conference of the American Society of Planning O f f i c i a l s and the Community Planning Associat ion of Canada, (Toronto: Apri 1 25-29, 1965), pp. 170,174. 22Final Report of the Sub-Committee on Housing and Community Planning, being V o l . IV of the Report of the Advisory Committee on Reconstruction, (Ottawa: Queen's P r i n t e r , V o l . IV, 1946). 16 Government before the Plenary Session of the Dominion-Provincial Conference on Reconstruction in 194-5. The Minister pointed out that not only did sound community planning result in a lower cost of providing housing, but also in " a continuing sat i s fac tory environment". Moreover, he asserted that approval of Federal Government insured loans under NHA would be predicated on the existence of an o f f i c i a l community plan. •>' This study w i l l focus on some of the c ruc ia l implicat ions of the Federal Government's housing p o l i c y . In p a r t i c u l a r , the effect of these p o l i c i e s , in t h e i r resu l t s , in meeting the needs of various income groups, bearing in mind that these ef fects have connotations for planning within the context of ever-increasing urbanizat ion. The Hypothesi s The hypothesis which w i l l be tested in this thesis i s that: GIVEN THE STRUCTURE OF INCOME DISTRIBUTION IN CANADA, THE HOUSING POLICIES OF THE FEDERAL GOVERNMENT, WITH THEIR MAJOR RELIANCE ON HOME-OWNERSHIP FINANCING, INEVITABLY PRODUCE A HOUSING SHORTAGE WITHIN THE URBAN CENTRES OF THE COUNTRY. Pre-occupation with home-ownership coupled with a f a i l u r e at the same time to pursue with equal energy and effectiveness the problem of dealing with assistance to low-rental and public housing for moderate- and low-income groups, unavoidably results in by-passing the needs of these groups. As matters stand, even the effectiveness of the home-ownership pol i cy i s l imited because of the r e s t r i c t i o n s within which the municipal-i t i e s are compelled to operate due to the present federa1-provincia 1 -municipal structure of government. Some of these-."restrictions on municipal 23Canada, Dominion-Provincial Conference on Reconstruction, 194-5, (Ottawa: Queen's P r i n t e r , 1 9 4 6 ) . 17 operations have been ar t i cu la ted by E. A. Levin, in a paper e n t i t l e d "The Cobweb Curtain" . 2 Z + Concepts and D e f i n i t i o n of Terms Federal Government Housing P o l i c i e s : As used here, the term " p o l i c i e s " refers pr imar i ly to l e g i s l a t i o n passed by the Federal Government including the Dominion Housing Act 1935, and the National Housing Acts (NHA) of 1938, 19^4 and 1954, with amendments and regulations under these ac ts . 2 - ' Admit-t e d l y , the Government's housing p o l i c i e s have been expressed and interpreted in various places and at various times—for example, in party platforms. But the main focus of th is study wi11 be the Acts referred to above and the i r e f f i cacy in meeting the housing problem of the country. In p a r t i c u l a r , the NHA 1954 w i l l command the greatest attention since i t is the l e g i s l a t i o n which is in operation at the present time. The Acts previous to th is are of s igni f i cance in so . far as they show how i t came about that emphasis has been concentrated on res t r i c ted areas of p o l i c i e s . It should be noted that p o l i c i e s are not by any means s t a t i c formula-t ions— least of a l l , housing p o l i c i e s . P o l i c i e s change as governments and personal i t ies within governments change; they change with times and conditions to keep pace with new pressures, both at home and abroad, notably as i n f l a t i o n a r y or def lat ionary forces produce dis locat ions in the various 24 E . A . Levin, "The Cobweb C u r t a i n " , in The Community Planning Review, V o l . 8, No. 3 5 September 1958, pp. 96-101. Other observers have seen the munic ipa l i t i es as the chief causes of the housing shortage. Consider the views expressed by R . A . J . P h i l l i p s , Director of the special planning secretar-iat of the Privy Counc i l , who blames "blockage:at the municipal level by p o l i t i c i a n s and real estate in te res t s " . (Reported in The Province, Tuesday, August 2, 1966, p . 6 under the t i t l e : " M u n i c i p a l i t i e s Blamed for Housing Defi c i ency".) 25 A more general d e f i n i t i o n of the term p o l i c i e s may be, for example, that of J . F. Garner in Administrat ive Law, (London: Butterworth and C o . , 1963), p. 3, in which pol icy is defined as: "formation of a general l i n e or course of action—the idea of leadership, and the taking of a major decision on a matter of d i s c r e t i o n . " 18 sectors of the economy. Canada's housing p o l i c i e s have changed over the years. The evolution of these p o l i c i e s w i l l be dealt with in Chapter I I . "Housing" refers generally to housing programs under various schemes and p o l i c i e s . Income: A decis ive element in whether a family can own a house or not, or what q u a l i t y of home i t can own or rent, i s the income received by the fami ly . As Professor Marsh pointed out as far back as 1949: The d i s t r i b u t i o n of income is the basic fact from which a l l housing plans must proceed. C l e a r l y , i t determines the capacity to pay rent, or the a b i l i t y to bui ld or buy a house . . . ° Technica l ly , def ining the concept of income presents a number of d i f f i -c u l t i e s . In some cases, i t is more pertinent to look at income in terms of money income arid real income; in other cases, taxable income and disposable income become more appropriate to the matter under considerat ion. For the purposes of th iss tudy, income refers to the sa lar ies and wages reported in the Census of Canada. Pensions, family allowances, and other transfer pay-ments of these kinds are normally excluded. A more relevant concept for our purposes is that of Fami1y Income, which refers to the gross earnings of the family as reported in the Census. It i s an important concept for assessing the a b i l i t y , of the family to buy or rent a house. Income Groups: The inequal i ty of income d i s t r i b u t i o n among famil ies and groups in society has long been noted. Economists usually express th is inequal-i ty (in wealth and income by means of what is ca l led the Lorenz Curve af ter ^"Leonard C. Marsh, "The Economics of Low-Rent Housing", The Canadian  Journal of Economics and P o l i t i c a l Science, (Toronto: Universi ty of Toronto Press, V o l . XV, No. 1, February, 1949), p . .14. 19 M. 0. Lorenz who pioneered in this f i e l d . 2 7 The universal existence of th is phenomenon has led social s c i e n t i s t s to adopt a system of c l a s s i f y i n g famil ies into income groups. Generally speaking, three groups are recog-nized: the upper th i rd who receive s u f f i c i e n t l y large incomes to purchase housing accommodation without any assistance; the middle t h i r d , most of whom need some assistance—some much more than others—to secure housing; and the lower th i rd who need subsidized housing through massive public a s s i s t -ance. But even within these groups, further c l a s s i f i c a t i o n is often essential in order to promote useful study. In Canada there are a number of sources that provide data on the great d i s p a r i t i e s in the d i s t r i b u t i o n of family incomes. The f i r s t and foremost, perhaps, is the Census of Canada, which provides basic data for es tabl i sh ing the extent of income inequal i ty . Recently, Professor John Porter , in the V e r t i c a l Mosaic, thrust on publ ic attention the rel atii onsh i p between social class and the power structure in Canada. One of the chief charac ter i s t i cs of his concept of social class is the structure and d i s t r i b u t i o n of income. 2^ Professor Porter ' s analysis of the inequal i ty of income d i s t r i b u t i o n reveals a number of other aspects that are quite pertinent to th is study. The minimum and maximum cut -of f points of an income range which may be used in c l a s s i f y i n g income recipients into high, middle or low income groups are not based on established standards or c r i t e r i a . Therefore in the ab-sence of any consensus, a f a i r l y a rb i t ra ry c l a s s i f i c a t i o n system w i l l be used. 0. Lorenz, "Methods of Measuring the Concentration of Wealth", publ icat ion of the American S t a t i s t i c a l Assoc ia t ion , New ser ies , #70, June ;1905; PP';. 209-219;. • " " 28j 0hn Porter , The V e r t i c a l Mosaic, (Toronto: The Univers i ty of Toronto Press, 1965) , pp. 118-125. 20 The main factors considered are: the year for which data important to the discussion are a v a i l a b l e , that i s , 1961, and the composition of the income structure as i t relates to a b i l i t y to obtain essential commodities. The following c l a s s i f i c a t i o n has been adopted: Low-income groups $ under 4,000 Middle-income groups 4,000- 7,999 High-income groups 8,000 and over These c l a s s i f i c a t i o n s refer pr imar i ly to f a m i l i e s , the individual householder receiving $4,000 in 1961 with no dependents, may well regard himself as being in r e l a t i v e l y comfortable economic circumstances v i s - a - v i s a family of four receiving $6,000 per year. It is real ized too, that some famil ies are larger than others and that therefore $4,000 in one family would mean much less than i t would mean in another. An a l ternat ive approach to th i s problem could be the use of tax-able income such as Professor Porter used in the study referred to above. But th is is also complex and has i t s own inherent d i f f i c u l t i e s . And for that matter, too, the use of disposable income presents problems. The point here is that not only the absolute income of the fami ly , but the number of persons which the family income must support is a matter for serious considerat ion. Wage-earners are c l a s s i f i e d into income groups for the purpose of deter-mining the share of income which each group can afford to spend on housing consumption. True, the consumer is faced, not with a s ingle market for hous-ing, but with various markets depending on the kind of housing accommodation he wants and can a f f o r d . There i s , for example, the market for owner-occupied residences, as against that for renting. There are also regional variat ions between markets and very s i g n i f i c a n t regional differences in the purchasing power of income in the market. 21 It is real ized too, that c l a s s i f i c a t i o n here implies a cer ta in degree of homogeneity which is not intended. As a r u l e , an inverse re lat ionship ex is ts between level of income of the family and the proportion of family income spent on housing consumption per unit time. This p r i n c i p l e is established by the Lorenz Curve referred to previously . So far as expenditure on hous-ing consumption is concerned, a number of studies have been done. Canozer and V a i l e , for instance, showed thataround 1950, housing in urban areas of the United States including household operations, furnishings and equipment, accounted for 3 0 . 0 per cent of the incomes of a l l f a m i l i e s . But whereas the proportion was 27.2 per cent for the upper half of a l l fami l ies in terms of income, expenditure on housing represented 39.0 per cent of the income of the lower h a l f . ^ 9 Marsh refers to a "wel l - es tab l i shed formula" that famil ies below a cer ta in level should not pay more than one=fifth of the i r monthly income for r e n t . ^ Under the present National Housing A c t , the maximum gross debt service ra t io for mortgage loans i s 27 per cent. Thus a borrower is not encouraged to spend more than what is considered a reasonable portion of his income on housing.31 Scope of the Study The study w i l l review Federal housing l e g i s l a t i o n since 1 9 3 8 and examine the impact of housing programs introduced under the A c t s , espec ia l ly the NHA, 1954. The area of concern w i l l be the supply of housing for various income 29Helen G. Canover and Roland S. V a i l e , Economics of Income and Con-sump t i on, (New York: The Ronald Press, 195 0 7 P- 146. 30Marsh, op. c i t . , p. 1 5 . 3 'Centra l Mortgage and Housing Corporation, Canadian Housing S t a t i s t i c s , (Ottawa: Economic Research Department, March 19650, Table 3 7 , p. 44. 22 groups within the Canadian urban context. Rural housing presents major problems in i t s own r i g h t . However, the c i t y has problems peculiar to i t s e l f , espec ia l ly within the present period of rapid urbanization and dynamic changes. In the f i e l d of housing, provinc ia l governments in Canada have constitu«» t iona l j u r i s d i c t i o n under Section 91 of the B r i t i s h North America A c t . However, th is study w i l l not enter into an exhaustive analysis of the c ruc ia l posi t ion which provinc ia l governments occupy with respect to housing matters. This is not to say that reference w i l l not be made to provinc ia l government a c t i v i t i e s , where these af fect federal p o l i c i e s and when i t i s deemed necessary to do so. On the other hand, the effect of federal housing p o l i c i e s on the City of Vancouver w i l l be explored. This examination of the Vancouver s i t u a t i o n w i l l be in the nature of a case study directed towards a survey of the soc io-economic impact of federal housing p o l i c i e s . Assumptions It wi11 be assumed: 1. that provinc ia l governments are not averse to al lowing the Federal Government to assume some of the i r r e s p o n s i b i l i t i e s in the f i e l d of housing. The fact that the Federal Government already exercises a considerable amount of influence i s , i t would seem, a s u f f i c i e n t j u s t i f i c a t i o n for th is p o s i t i o n ; 2. that l e g i s l a t i o n incorporated into the Dominion Housing Act 1935 and the National Housing Acts of 19^4 and 195^ re f lec ts the consid-ered decisions of government. That i t does express the goals and philosophy of the government and as far as the r e s t r i c t i o n s of the democratic process permits, the w i l l of the people; 3. that the Federal Government accepts housing as a national responsi-b i l i t y because of i t s importance for the national secur i ty , health 23 and welfare . It may not be true, however, that th is awareness had reached the stage of convict ion u n t i l the end of World War II approached; 4. that no dras t i c changes in the income structure w i l l emerge within the predictable future ; 5. that urbanization w i l l continue to be a s i g n i f i c a n t force in popu-la t ion settlement. And that no serious p o l i t i c a l r e s t r i c t i o n s w i l l be placed on movement by peoples from one area to another. Methods and Techniques The f i r s t step w i l l be to establ ish the nature and extent of government p o l i c i e s and programs as these have developed since World War 1 1 . This w i l l involve a survey of some of the main sources of information on the subject matter. The Federal Acts c i ted previously , and the debates in the House of Commons are the prime sources. Reference w i l l also be made to agencies con-cerned with housing in Canada such as Central Mortgage and Housing Corporation (CMHC) . The second step is the test ing of the main hypothesis, namely, that Federal Government housing p o l i c i e s have been weighted in favour of middle-and upper-income home-owner groups. And that th is pol icy inevi tably leads to a shortage of housing for moderate- and low-income groups. This is based on l i b r a r y research, census data and books wri t ten on the main topic of the t h e s i s . It w i l l also involve procuring information from CMHC. The f i n a l step is to examine l i m i t i n g factors and conditions that tend to c u r t a i l construction of a s u f f i c i e n t quantity of housing. This f i n a l step enta i l s research into market condit ions , soc ia l values and a t t i t u d e s . Questionnaires and interviews on current market conditions provide the basic information for this f i n a l portion of the a n a l y s i s . The questionnaires and 2k interviews relate s p e c i f i c a l l y to conditions in Vancouver, which becomes the locale for the study of s o c i a l and economic e f f e c t s of the p r a c t i c a l a p p l i c a -tion of the Act. CHAPTER I I We need, at the federal l e v e l , some national economic planning and some co-ordinat ion of provinc ia l p o l i c i e s ; in short , a d i rec t ion to our housing e f f o r t , beginning with a national inventory of our housing stock and including a rat ional and stable invest-ment framework. Norman Pearson, "Housing i s for Peop 1 e" , in Community Planning Review, Spring, 1965, p . 23. ORIGIN AND EVOLUTION OF FEDERAL GOVERNMENT HOUSING POLICIES The emergence and growth of the Federal Government's approach to national housing up to the present time is the central theme of th i s Chapter. It i s considered essential that there be a c lear understanding of the develop-ment and t r a n s i t i o n of the national housing p o l i c i e s , beginning from their e a r l i e s t formulation when national concern was at i t s minimum to the present stage in which Federal r e s p o n s i b i l i t y is an accepted f a c t . Origins of Federal Government Housing Legis la t ion In 1919, the Federal Government enacted i t s f i r s t housing l e g i s l a t i o n . The purpose of th is l e g i s l a t i o n was to create employment for returned ex-servicemen, who had taken part in World War I . The Federal Housing Project established under this l e g i s l a t i o n proved to be so successful that when unemployment began to create serious economic dis locat ions between 1919 and 1922, many advisors exhorted the Federal Government to put a housing program 25 26 into operation as part of i t s public works program. But the program as en-visaged, was to to be designed exclus ively for the purpose of constructing houses for ex-servicemen.' There are two points to note here. The f i r s t is that this piece of housing l e g i s l a t i o n was a measure to re l ieve unemployment. The second point Is that i t was directed towards a special group which, because of the emotional factors involved, would be the least l i k e l y to arouse arguments over federa l -provinc ia 1 j u r i s d i c t i o n . Even so, the Federal Government, did not at that time accept unemployment as part of i t s r e s p o n s i b i l i t i e s . The then Prime M i n i s t e r , Mr. Arthur Meighen, made t h i s point quite clear when he stated: The government adopted the course last winter of i n s i s t i n g on local r e s p o n s i b i l i t y as regards unemployment. We had been compelled during the war, and indeed, up to last winter , more or less to disregard that p r i n c i p l e , but we thought the time had come to restore i t ; and consequently, against very great, indeed, against what one might almost c a l l v io lent pressure, the govern-ment did i n s i s t upon that p r i n c i p l e once a g a i n . 2 Under these circumstances, i t i s f a i r to assume that the Federal Government saw i t s role as a temporary and even unpleasant one. The impression i s given that unemployment measures, and housing along with i t , would be abandoned as soon as the economic conditions improved. Any local problems in these f i e l d s could be dealt with by the local municipal i ty as a municipal matter. Indeed, the Rowel1-Sirois Commission, in referr ing to th is f i r s t step in housing by the Federal Government, noted that soon af ter World War I , " a br ie f interest 'Canada, House of Commons Debates, (Ottawa: May 28, 1921), p. kOkS. See speech by Mr. Cronyn. Mr. Cronyn as Chairman of the Committee on Pen-s ions , Insurance and Re-establishment, which was set-up in 1921, also reported that the Federal Housing Project for so ldiers had been very successful in B r i t i s h Columbia. 2Canada, House of Commons Debates, June 2, 1921. 27 in municipal h o u s i n g . . . developed ." 3 As the 1920 1s progressed, a period of prosperity set in only to be rudely interrupted by the Great Depression of the 1930's. The Dominion Housing Act 1935 The ravages of the Depression on the economy and i t s deleterious impact on employment and housing eventually forced the Federal Government to take some a c t i o n . A committee was set up to study the housing s i tua t ion and to make recommendations for " the inauguration of a national pol icy of house-bui lding to include the construct ion, reconstruction and repair of urban and rural dwell ing houses". That committee made a number of recommendations. For our purposes three are very s i g n i f i c a n t . k. The formulation, i n s t i t u t i o n and pursuit of a pol icy of adequate housi ng should be accepted as a socia 1 responsibi1 i t y . 5. There is no apparent prospect of the low-rental housing need being met through unaided private enterprise bui lding for prof i t . 13. The slum areas which have been shown to cast very heavy ex-penses on many branches of public administration such as health, welfare, f i r e prevention, administrat ion of j u s t i c e , e t c . , may j u s t i f y publ ic assistance which is l i k e l y to prove , as sound f i n a n c i a l l y as i t is cer ta in ly desirable and soc iable . The s igni f i cance of these conclusions is that , a f ter t h i r t y years, they are s t i l l at the heart of the housing problems which beset the country.5' The facts out l ined above should be borne in mind when we turn to the 3The Royal Commission on Dominion-Provincial Relat ions, (also ca l led the Rowel1-Sirois Commission), 1938, Recommendations, Book 11, p . 16. Words underlined by wri ter for emphasis. Quoted in The Final Report of the Sub-Committee on Housing and Commun-ity Planning, op. ci t . , p. 26. Words underlined by wri ter for emphasis. ^See, for instance, the papers delivered by Professor Albert Rose en-t i t l e d , "Common Human Needs" and "People and Public Pol icy" before the Con-ference The Question of Housing, (Vancouver, Georgia Hote l : March 9 and 10, 1967). 28 provisions of what is r e a l l y the f i r s t extensive piece of federal housing l e g i s l a t i o n . More s p e c i f i c a l l y , the Dominion Housing Act 1935 provided for loans to be made to home-owners by those i n s t i t u t i o n a l lenders, defined in the Act as "approved lenders" by the Governor-in-Counci1 . The maximum loan-to-value rat io was to be 80 per cent, of which the pr ivate i n s t i t u t i o n would provide 60 per cent and the Federal Government 20 per cent.^ The interest rate was set at f i v e per cent, although the Federal Government's share of the loan was to bear interest at the rate of three per cent compounded over the l i f e of the loan.1 The Act provided that no loans would be avai lable where an approved i n s t i t u t i o n a l lender was not involved. The Economic Counci1-^of Canada was charged with thetask of carrying out the relevant research and study of housing matters, and to provide the Minis ter responsible for the Act with a l l needed information. S igni f icance of the Dominion Housing Act 1935 The 1935 Act i s s i g n i f i c a n t because i t was the f i r s t extensive piece of federd", housi ng l e g i s l a t i o n . It was a decis ive break with the past pos i t ion taken by the Federal Government as regards i t s r e s p o n s i b i l i t y for housing, although housing was s t i l l pr imar i ly related to the object ive of maintaining a high level of employment. Needless to say, th is change in a t t i tude did not happen to develop out of mere chance or in i s o l a t i o n from social and economic events. Rather evidence indicates that the severity of the Depres-^Apart from the maximum loan-to-value " r a t i o " of 80 per cent loans of 75 per cent and 70 per cent of value were avai lable although the shares of the jo in t lenders varied with the loan-to-value r a t i o . S i m i l a r l y , interest rates varied according to loan-to-value r a t i o . See H. Woodard, Canadian  Mortgages, (Toronto: printed by The Bryant Press L td . for Wil l iam C o l l i n s , Sons and Company, Canada L t d . , 1959), PP. 9 -10. 71 bi d . Woodard's book provides an excel lent analysis of developments in the f i e l d of mortgage lending in Canada. 29 s i o n , and the widespread foreclosures of res ident ia l property, were i n s t r u -mental in bringing about a market change in the values of soc ie ty . Before the Dominion Housing Act was i n s t i t u t e d , loans made by con-ventional lenders, such as l i f e insurance, loan and trust companies, were l imited by statute to 60 per cent of the value of the property.^ The federal l e g i s l a t i o n ins t i tu ted a system of j o i n t lending involving the t r a d i t i o n a l lenders on the one hand and the Crown on the other . To quote from Woodard's i n c i s i v e estimation of the ef fects of the Act : The Act was revolutionary in i t s ef fect on the t r a d i t i o n a l lending pat tern . It effected the fol lowing changes: (l) a higher ra t io loan; (2) subsidized interest rate by Crown p a r t i c i p a t i o n in the loan; (3) an i n i t i a l loan term of ten years; (4) a contract of renewal for a further ten years at terms to be agreed upon at the i n i t i a l maturity; (5) blended equal monthly repayments of p r i n c i p a l and interes t ; (6). the payment of taxes monthly in ad-vance so as to create a tax fund for future tax payments; and (7) the establishment of minimum standards of construct ion, subject to on-s i te inspections to ensure compliance. A l l of these were dras t ic changes in the mortgage realm and opened the gates of home-ownership to many to whom i t was previously denied . " On the other hand, c r i t i c i s m of the Act were expressed by Mr. C. G . MacNei I , M.P. in the House of Commons. Quoting from a Brief presented to the Royal Commission on Dominion-Provincial Relat ions, 1935. The Brief had noted: 1. A substantial proportion of the urban population l ived in substandard dwel l ings . 2. Pr ivate enterprise and local author i t ies had not come up with a way of providing decent accommodation for those with low incomes. What is more, r e l i a b l e spokesmen from the pr ivate market admit that i t i s beyond the i r a b i l i t y to meet the needs of low-income groups. 3. The Dominion Housing Act 1935 was unsuited and inadequate to f a c i l i t a t e a housing program for low-income groups. k. To provide adequate supply of houses of minimum standards to meet the needs of low-income groups ^Woodard, op. c i t . , pp. 9-10. 9 I b i d . , p. 10. 30 (a) a national pol icy should be adopted for rehousing of low-income groups (b) federal and provinc ia l assistance to munic ipa l i t i es should be based on comprehensive c i t y plans (c) f i n a n c i a l aid should be ei ther in the form of capi ta l grants, or long-term low interest loans or annual rent s u b s i d i e s . ' 0 The remarkable aspect of these arguments is the awareness, by p o l i c y -makers, of the stubborness of the problems, at th is early stafje, when the very foundations of housing l e g i s l a t i o n were being l a i d . The 1935 Act was not as e f fec t ive as i t had been hoped that i t would be. It is said to have "produced 4,900 housing u n i t s , aggregating in cost some $19.6 m i l l i o n s , the average loan being about $6,300".'' However, i t was perhaps as e f f e c t i v e as could be expected considering the effects of the Depression. An important point made above by Woodard should be noted. Through the Dominion Housing Act the interest rates were pegged at a lower rate than that obtaining on the market. This is important when subsidized housing is considered. Moreover, the>:term home-ownership does not rea l ly mean what i t impl ies , namely, that the home is'bwned" by the mortgagor. For the borrower does not r e a l l y own the property. He must make monthly payments or the mortgagee w i l l foreclose the property. The Dominion Housing Act was amended by the introduction of the Home  Improvement Loans Guarantee Act in 1937- The purpose of enacting this new provis ion was to al low the Federal Government to make guaranteed loans for the improvement of ex i s t ing homes. This provision is said to have been much '°Q,uoted in speech by Mr. MacNei 1 , M . P . , speaking before the House of Commons. See House of Commons Debates, Ottawa: February 10, 1938. ' 'Woodard, pp. c i t . , p . 11. 31 more instrumental in promoting house bui lding and repair than was the 1935 A c t . 1 2 Some of the main reasons for introducing the Home Improvement Loans  Guarantee Act 1 9 3 7 , can be seen in the t i t l e of the Motion introducing the A c t . It was a Motion for the "EI iminat ion of Slum Conditions and Provisions for Overcrowding due to Shortage of Dwell ings" . Mr. Denton Massey who moved discussion of the Resolution on behalf of the government remarked on the appal l ing scarc i ty of homes. He expressed the Government's concern over the fact that "slum conditions exist to a shocking degree in most of our urban centres" . More s i g n i f i c a n t l y , he stated that the Government accepted moral r e s p o n s i b i l i t y for the fact that "due to conditions beyond t h e i r contro l " many working men were unable to bui ld t h e i r own homes. He ca l led for a housing plan to el iminate slum condit ions , to overcome shortage, and to make i t possible for the working man who wanted to b u i l d , and who was at present unable to b u i l d , to construct his own home. Two other noteworthy points were made by Mr. Massey in his c r i t i c a l analysis of the national housing p o l i c y . These points had to do with slum clearance. Mr. Massey argued that : " f inanc ing of housing schemes and slum clearance plans is not the great bugaboo". He pointed to two greater d i f f i -c u l t i e s . F i r s t , the system of realty taxing e x i s t i n g in the country. The second d i f f i c u l t y with respect to slum clearance, as he saw i t , was the fact that the B r i t i s h North America Act l e f t i t up to the provinces and municipal-i t i e s to i n i t i a t e a c t i o n . ' 3 l z F i n a l Report of the Sub-Committee on Housing and Community Planning, op. c i t . , p . 27 . l3House of Commons Debates, Ottawa: February 1 0 , 1 9 3 7 , PP. 7 3 7 - 7 ^ 0 . 32 The National Housing Act 1938 Following upon the developments portrayed in the previous sect ion , the Federal Government passed the National Housing Act (NHA) 1938. The preamble to the Act states that the purpose was to ass is t in the construction of new houses (see Appendix A ) . In a d d i t i o n , the Act also contained measures for the provision of low-rental housing and assistance to m u n i c i p a l i t i e s . The NHA 1938 was divided into three par ts . Part 1 dealt with the q u a l i f i c a t i o n s of lending i n s t i t u t i o n s , conditions under which they should operate and terms a f fec t ing the making of loans. Part II made proposals for constructing low-rental housing units by means of l imited-dividend hous-ing corporations, and through local housing a u t h o r i t i e s . Part III made pro-vis ions for giving assistance to munic ipa l i t i es in respect to low-cost housi ng. Administrat ion of the NHA 1938 came under the j u r i s d i c t i o n of the National Housing Adminis t ra t ion , a s p e c i a l l y created agency operating within the framework of the Finance Department. During the period when the Act was in force , Part I was used extensively . Part II however, required provinc ia l co-operation to be successful and since i t was hardly used, i t would appear that the provinces on the whole were only mi ldly interested. Nor was Part III used to any s i g n i f i c a n t degree. By the end of 19^0 only Part I was in operation and even th i s port ion of the Act was l imited to s ingle - fami ly dwellings with a maximum loan of $ 4 , 0 0 0 . ' ^ From the fact that neg l ig ib le use was made of Parts II and I I I , i t would seem that provinc ia l and municipal governments were indi f ferent to the f a c i l i t i e s which the Act o f fered . Whatever the reasons, l i t t l e was done in inal Report of the Sub-Committee on Housing and Community Planning, op. c i t . , pp. 2 7 - 2 8 . 33 the way of bui lding low-rental accommodation under the 1938 A c t . On the other hand, Part I was quite successful , indica t ive of the fact that the private market used i t extensively . It may, in large measure, have been due to the success and co-operation i t received from approved lenders in the operation of Part I of the A c t , that the Federal Government came to rely heavily on the private market. Success with Part I is seen in the fact that the Federal Government expended some $76,000,000 for f i r s t mort-gage loans between 1938 and 1940 and incurred n e g l i g i b l e l o s s e s . ^ From data a v a i l a b l e , i t seems that between 1935 and 1 9 3 8 only 6,241 new housing s tar ts were made under the DHA 1935—an average of 1,560 per annum, whereas for the period 1939 to 1944 some 20,468 s tarts were under-taken, an average of 3,416 houses per a n n u m . T h i s perhaps re f lec ts an improvement in the economic conditions af ter the ruinous onslaught of the Depression. Housing During the Second World War When Canada decided, in 1939, to enter the Second World War, th is meant that men and materials had to be mobilized and re-directed towards production for the war e f f o r t . The output of houses, l i k e the output of many other commodities, was necessari ly r e s t r i c t e d . The effect of the War on housing was to aggravate the back-log s i tua t ion which had remained as a legacy of the Great Depression. More dec i s ive ly perhaps than anything e l se , events of the war presaged what the impact of urbanization would be. Because indust r ia l war plants were concentrated in and around the major c i t i e s , large scale inal Report of the Sub-Committee on Housing and Community Planning, op. c i t . , p . 27 . '^Estimated from figures appearing in Canadian Housing S t a t i s t i c s , (Ottawa: published by Central Mortgage and Housing Corporation,1965) , Table 1, p. 17. 34 migration of workers from rural areas to work in the fac tor ies became impera,-t i v e . Movement of peoples on the scale required imposed a great s t r a i n on the avai lab le urban housing stock. This , coupled with the back-log and the scarc i ty of manpower and mater ia ls , produced an intolerable shortage of housing in urban centres. (a) The Wartime Housing Ltd . As a result of the deficiency in housing noted above, an inventory of e x i s t i n g housing accommodation was made and a l l avai lable l i v i n g space was rationed among those who were employed in the war i n d u s t r i e s . '7 The Wartime Housing L t d . was created by the Federal Government in 1941 to determine needs and also to assign the new houses i t constructed according to these needs. It also control led and f ixed rentals for housing u n i t s . T h e housing units constructed were to be of a temporary character, but remained in use long af ter the purposes for which they had origina11y been b u i l t had been served. (b) Planning for Housing in the Period of Reconstruction By 1943, optimism about the outcome of the war increased. It became apparent that planning for the re-organization of the economy to meet post-war conditions was e s s e n t i a l . An Advisory Committee was set up in 1943. One of the main purposes of the Committee was to study the housing emergency throughout the country and make recommendations to the Government. To carry out th is portion of i t s dut ies , the Advisory Committee established the Sub-Committee on Housing and Town Planning under the fol lowing terms of reference 17Fi na1 Report of the Sub-Committee on Housing and Community Planning, op. c i t . , Appendix D, p . 262. , 8 l b i d . 35 To review the ex is t ing l e g i s l a t i o n and administrat ive organization re lat ing to housing and community planning, both urban and r u r a l , throughout Canada and to report such changes in l e g i s l a t i o n or organization and procedure as may be necessary to ensure the most e f fec t ive implementation of what the Sub-Committee considers to be an adequate housing program for Canada during the years immediately fol lowing the w a r . ' 9 The revampment of the 1 9 3 8 l e g i s l a t i o n had become a necessary step to the new objectives and purposes evidenced in the terms of reference c i ted above. And the fact that steps to review exis t ing 1 egis1 at ion as well as create a new administrat ive organization bespeaks the Government's intention to i n s t i t u t e radical changes in i t s housing program. The f indings and recommendations which the Sub-Committee prepared in i t s Final Report became the foundation for federal p o l i c i e s . This fact has been c l e a r l y ref lected in the National Housing Act 1 9 4 4 . Among the recommendations which the Sub-Committee made, four basic proposals are pe rt i nent: 1 . A three-pronged program of action involving l e g i s l a t i o n to induce a greater supply of housing to meet requirements o f : (a) the large metropolitan areas; (b) the smaller c i t i e s and towns; and (c) the farm areas. 2 . A housing p o l i c y geared to meet the needs of the three estab-lished income groups; lower t h i r d , middle t h i r d , and upper t h i r d . (The appropriate measures to achieve th i s aim were c a r e f u l l y out l ined in the Report.) 3 . Leg is la t ion to make e f fec t ive use of town planning, e f f i c i e n t administration by bringing diffused housing programs under one act ; and, what the Sub-Committee considered a c r i t i c a l element, the p a r t i c i p a t i o n of the provinc ia l governments. 4 . Recommendations as regard methods that could be used to reduce bui 1 di ng costs . 2 u " ning ; ee Final Report of the Sub-Committee on Housing and Community P lan-, op. c i t . , p. 4 . 2 0 i b i d . , pp. 9 - 2 2 for summary of f indings and recommendations. 36 The National Housing Act 1944 The National Housing Act 1944 was devised"to promote construction of new houses, repair and modernization of ex i s t ing houses, the improvement of housing and l i v i n g conditions and the expansion of employment in the post-war p e r i o d " . Important changes were made in the e a r l i e r methods of home-ownership f inanc ing . Instead of a ten-year iloan term, with permissible renewal r i g h t s , loans were amortizable over twenty years, and terms for as much as t h i r t y years were poss ib le . Loan-to-value ratios were also changed. The mortgagor could have 95 per cent of the f i r s t $2,000, 85 per cent of the next $2,000 and 70 per cent of the remainder . 2 2 T h e interest rate was established by the government and was t ied to the interest rate on long-term Government Bonds. Various measures respecting low-rental housing were re-enacted and ex-tended in some cases. Authority was given to the Minis ter in charge of the administration of the A c t , to enter into contractual arrangements with lend-ing i n s t i t u t i o n s in order to make loans for a s s i s t i n g in the construction of commercial renta1-housing pro jects . The Minis ter responsible for admini-s ter ing the Act was further authorized to make loans to l imited-dividend housing corporations for the purpose of ass i s t ing in the construction of a low-rental housing pro jec t . Loans could also be made for the purchase of an ex i s t ing bui ld ing together with the land thereon i f the bui ld ing was to be converted into a low-rental housing pro jec t . E a r l i e r programs having to do with> low-renta1 housing were continued but with revisions as to the terms of loans, and the opportunities for 2 'Preamble to the National Housing Act 1944. 2 2 H . Woodard, Canadian Mortgages, (Toronto: C o l l i n s and Co. , 1957) pp. 14-15. 37 federa1 -provincia 1 arrangements. Assistance was offered to provinces and munic ipa l i t i es to aid them in slum clearance projects (Sec t ion .12) . This marked the f i r s t time that l e g i s l a t i o n was passed by the Federal Government with respect to slum clearance, although deep concern over urban slums had been expressed in previous discussions.23 Also retained in the 1944 Act were clauses re la t ing to insuring home improvement and home extension loans. Part V established community planning and housing research as part of the tools which the Federal Government intended to u t i l i z e in implementing the new l e g i s l a t i o n . The Minister responsible for the Act was given authority to retain the necessary s ta f f to put the contents of the Act into prac t i ce . The 1944 Act was responsible for the construction of 271,350 houses between 1945 and 1954, an annual average of over 27,000 during the period referred to.24 In contrast , low-rental housing construction for 1945 to 1954 consisted of 6,602 units produced by private companies, 933 units by munic ipa l i t i es and 914 units by char i table ins t i tu t ions.25 Thus, the tota l number of low-rental housing over the ten-year period reached 8,449 or approximately 845 uni ts per year. Central Mortgage and Housing Corporation Central Mortgage and Housing Corporation (CHHC) was created as a Crown Corporation by Federal Government Statute: the Central Mortgage and Housing 23see the Preamble to the National Housing Act 1938, Appendix A . 24 C e nt ral Mortgage and Housing Corporation, Canadian Housing S t a t i s t i c s , (Ottawa: Queen's P r i n t e r , I965) , Table 33, p. 37. 25 I b i d . , Table 32. 38 A c t , 1945, C. 15. It replaced the National Housing Administrat ion which had come into existence as a result of the National Housing Act 1938. Under the Central Mortgage and Housing Corporation Act 1945, a Minister of the Crown, appointed by the government, has r e s p o n s i b i l i t y for the administration of the National Housing A c t . The actual administration of the Act is con-ducted by a Board of Directors comprised of the President and Vice-President of the Corporation, together with eight other members, three of whom would be selected at large from the C i v i l Service of Canada, and the remainder be-ing non-Civ i l Service appointees. The President and Vice-Pres ident , though subject to removal, hold o f f i c e for a seven-year per iod. They can be re-elected at the end of this term. Within the Board i t s e l f there is an Executive Committee consist ing of the President, Vice-President and two other directors selected by the Board. The powers ascribed to the Board under the CMHC A c t , 1945, are found in Section 18, which states that on behalf of Her Majesty and in Place of the Minis ter the Board may: have, exercise and perform a l l r i g h t s , powers, dut ies , l i a b i l -i t i e s and functions of the Minis ter under the Housing Acts or under any contract entered into under the said A c t s , except the authority of the Minis ter under the said Acts to pay moneys out of the Consolidated Revenue Fund, or under Section 2 2 of the National Housing A c t , to make grants for slum clearance. The main function of this specia 1-purpose agency was to administer the National Housing Act for and on behalf of the Federal Government under the general supervision of a Minis ter appointed by the Government. Addi t ional powers were given CMHC in 1947 when i t was given authority to make direct mortgage loans by an amendment to the NHA in 1947. This authority was given, according to Woodard, " t o ensure an adequate source of mortgage f inancing throughout the Dominion" . 2 ^ 'Woodard, op. c i t . , p. 16. 39 The re lat ionship between the Corporation and the various levels of government as well as i t s re lat ionship to the private market are worth studying (Diagram 2) . It i s noticeable that di f ferent income groups must take d i f ferent approaches in seeking Federal Government assistance to obtain she l ter . Other Post-World Var I I Developments In 19^9 amendments were made to the National Housing Act 1944 by repea1ing cer ta in sections and introducing new measures. The most s i g n i f i -cant addit ion was Section 35- Under th is Section, the Federal Government could enter into j o i n t agreement with the government of any province or i t s agency to organize projects for the acquis i t ion and development of land for housing purposes and for the construction of houses for sale or for rent. This new proposal also involved the sharing of cost of the pro jects , as well as any gains or losses on such projects—the proportion being 75 per cent by the Federal Government and 25 per cent by the provinces in each instance. The provinces had r e s p o n s i b i l i t y for acquiring the land and making arrange-ments for municipal services , for receiving requests from munic ipa l i t i es and other bodies for public assistance in housing and for dealing d i r e c t l y with m u n i c i p a l i t i e s . The Federal Government was to see to planning, design and construction of pro jec ts . The p o l i t i c a l philosophy guiding the Government's housing p o l i c i e s dur-ing the immediate post-war years i s evident in the views expressed by Mr. Winters, the Minis ter in charge of the NHA 1944. The Minis ter declared in September 1949 that: It is now four years since the War ended. Some problems which were emphasized and aggravated by wartime conditions have continued into the post-war per iod. Housing is one of them, and i t gives promise of being a long-term peacetime problem. . . Although c o n s t i t u t i o n a l l y housing is pr imar i ly a matter for the PROVINCIAL GOVERNMENT FEDERAL GOVERNMENT DEPARTMENT.OF MUNICI PAL AFFAI RS FEDERAL MINISTER Responsible for Adminis-t ra t ion of NHA MUNICIPALITIES HOUSING AUTHORITIES Etc . ORGANIZATION OF THE CROWN CORPORATION CMHC BOARD OF D I RECTORS EXECUTIVE COMMITTEE PRESI DENT VICE-PRE SI DENT OFFICIALS £• STAFF of CMHC Headquarters REGIONAL OFFICE REGIONAL OFFICE BRANCH OFFICES APPROVED LENDERS estab1 i shed as prime mortgage lenders under NHA LOW-INCOME Fami 1 i es Seeki ng Rental Accommo-dation HOME-BUYERS Seeking Direct Mortgage Loans from CMHC HOME-BUYERS Seeking NHA insured mortgages DIAGRAM 2 : ADMINISTRATIVE STRUCTURE OF THE NATIONAL HOUSING ACT IN CANADA, 1966-41 provinces and munic ipa l i t i es the federal government believes that any e f f e c t i v e solut ion must involve the f u l l e s t cooperation among a l l levels of government as well as indust But the method through which the solut ion was sought and which, i t must be emphasized, governed Federal Government approach to the problem is c l e a r l y expressed in what Mr. Winters went on to say. He informed the House that the Federal Government had made contact with the provinces about housing, and continued: I bel i eve a 11 provi nces agreed with us tha t i t i s the desi re of the average Canad i an to own hi s own home and that the p ri mary and most economical source of new housing had been and would l i e from private endeavour. Therefore, any arrangements between the  two senior governments shou1d be di rected toward the encouragement  of more home ownershi p and a 1 so of renta1 hous i ng by individual  ef fort .2% It seems that i t was for th i s reason that in 1949 the major amendment Section 3 5 , made to the NHA 1944, that i s , assembly of land through a c q u i s i -t ion and eventual development of services was " t o enable an increased volume of housing by private b u i l d e r s " . 2 9 | n any case, i t is quite evident that the emphasis of federal housing pol i cy was now f i rmly resting on the private market. It is well to round out the philosophical basis of federal housing p o l i c i e s by considering i t s views with regard to low-rent housing. As early as 1944, Mr. I l s l e y , the Minis ter of Reconstruction and Supply rejected the idea that munic ipa l i t i es should engage either d i r e c t l y or through local hous-ing author i t ies " i n a vast programme of state housing financed largely by dominion government funds" . 3 ° The Minis ter gave several reasons for the 27House of Commons Debates, op. c i t . , September 9 , 1949, p. 118 . ^^House of Commons Debates, op. c i t . , p. 119. Words underlined by wri ter for emphasis. 29The words quoted are those used by the M i n i s t e r . 30House of Commons Debates, op. c i t . , August 5 , 1944. kl Government's p o s i t i o n . He f e l t that under Canadian conditions such a pro-gram would e i ther be sound or necessary. He argued that several provinces would object and, in any case, the Federal Government was not prepared to pour vast sums of money into municipal housing projects which would enta i l a great deal of adminis trat ion. F i n a l l y , he suggested that subsidizing "municipal housing" through low interest rates or rent subsidies would mean that munic ipa l i t i es would have to keep an account of incomes of tenants and f i x rental rates . These approaches, he f e l t , would be unpallatable to both. the government and the Canadian people. Whatever may have been the preva i l ing philosophy at that time (and the strong ideological currents of that period cannot be discounted), i t is a f a c t , which is convenient to note at th is point , that most of these measures, which were then repudiated, are now well entrenched within the ex i s t ing NHA. From the evidence presented so f a r , i t can be seen that Federal Govern-ment housing p o l i c i e s towards the end of the 1940's form a pattern whose underlying foundations were based on these p r i n c i p l e s : 1. Every Canadian family desires home-ownership and therefore provis ion of th is form of housing accommodation was to be a major ob jec t ive . 2. The private market i s the best way of supplying the housing needs of the nat ion. 3. The Government's r e s p o n s i b i l i t y would be discharged i f i t made i t a t t r a c t i v e for private i n s t i t u t i o n a l lenders to enter the housing market. But some direct government involvement would be necessary to even out the regional d i s p a r i t i e s . k. Subsidizing low-rental housing should be re jected. If the market is considered the best way of supplying housing for the nation, one cannot very well accept subsidized housing as part of p o l i c y . 43 5. Federal-provincia 1 re lat ions should be c a r e f u l l y considered. Unless the provinces are prepared to co-operate with the Federal Government and j indeed i n i t i a t e the necessary projects , nothing should be done. E s s e n t i a l l y , ( 1 ) , (2) and (3) form the over - r id ing p o l i c y . This is concisely stated in Mr. Winters' speech before the House of Commons, Sept-ember 21, 1949. "Care would be exercised to see that the operations of the senior levels of governments in th is f i e l d supplement rather than replace the a c t i v i t y of private endeavou r upon whi ch we p1 ace the greatest r e l i ance fo r a large volume of house building."31 Qn the other hand, i t should be noted that the Federal Government had c l e a r l y established i t s e l f as an important source of supply of funds to achieve i t s object ive of foster ing home-owner-ship . The Federal Government showed, too, that i t intended to influence community planning and consequently local government. It seems, too, that most provinc ia l governments were of the same mind as the Federal Government as far as i t s method of providing housing was concerned. The p r i n c i p l e s deduced above are not designed to f a c i l i t a t e housing construction for moderate- and low-income f a m i l i e s . Indeed they conf l i c ted with the provisions of the A c t , even though care had been taken to assign to l imited-dividend companies the task of providing low-rental housing. By the very nature of the arrangements which interposed three levels of government between the low-income family and the securing of accommodation which the family sought, provision of low-rental housing becomes a bewildering, complex process. The provinces do not intrude where those who can afford to become home-owners are concerned, but they are in a posi t ion to become a d i f f i c u l t barr ier to hurdle, where moderate- and low-income housing is concerned. The result of th is arrangement is apparent in the very small number of housing 3'words underlined by wri ter for emphasis. 44 units—933—constructed by municipal author i t ies during the period under consideration.32 However, i t was not many years later when the Minis ter of Reconstruction and Supply, Mr. R. H. Winters noted the Government's readiness " t o introduce l e g i s l a t i o n to enable the dominion to enter into agreements •3-3 with the provinces for p u b l i c l y sponsored housing pro jec ts " . J The National Housing Act 1954 In spi te of concentrated e f for ts to make i t a t t r a c t i v e for approved lenders to invest in s i n g l e - f a m i l y , owner-occupied dwellings under NHA, private funds in s u f f i c i e n t quant i t ies did not gravitate towards the r e s i -dential mortgage market. The early 1950 's arr ived to f ind that the back-log of housing had not been overcome and new demands were making i t s t i l l more d i f f i c u l t to cope with housing requirements. To quote from Woodard: While some inroads had been made in the back-log of hous-ing resul t ing from the wartime hiatus in res ident ia l construct ion, Canada's population was growing apace owing to an increased rate of family formation and immigration. The approved lenders, the majority of which were l i f e insurance companies, had responded well to the challenges of each successive change in the Housing A c t s . Nevertheless, i t was becoming increasingly apparent that i t was not within the i r f i n a n c i a l capacity to provide the mort-gage funds required to meet Canada's growing housing needs. New sources of mortgage funds had to be (found and towards this end a new National Housing Act was passed in 1954.34 Among the many measures enacted by the 1954 A c t , the fol lowing provis ions ; most of which had existed in the NHA 1944, stand out prominently: 1.. CMHC was authorized to underwrite loans made by approved lenders 3 2Note that of the 933 u n i t s , Regent Park North contained 761 units , See Dr. Albert Rose, Regent Park: A Study in Slum Clearance, (Toronto: Univers i ty of Toronto Press, 1958), p. 196, Table X I I I . 33 H ouse of Commons Debates, op. c i t . , September 21, 1949. 34woodard, op. c i t . , pp. 20-28. 45 under the NHA and make direct loans where i t was found necessary, so as to achheve the purposes of the A c t . 2. CMHC was empowered to enter into contracts with bui lders to guarantee an annual return of rentals from rental-housing pro-j e c t s . Loans were also made avai lab le to companies engaged in mining, logging, f i s h i n g and other resource developments. 3. The home improvement and home extension loan provisions of the 1944 Act were re-enacted with the addit ional feature that now they could be insured. 4. The part dealing with research, invest igat ion and community p lan-ning was re-enacted. 5. Provisions for federa1-provincial land assembly and housing develop-ments, which were adopted into the NHA 1944, were retained. The NHA 1954 resulted in a series of major changes.35 |t brought chartered banks into the mortgage lending f i e l d . It terminated the system of jo in t lending. To replace that system, i t made provisions to insure mortgage loans supplied by approved lenders to ass i s t in f inancing new hous-ing . The new Act provided that a l l mortgage loans were to extend over twenty-five years with a possible maximum of t h i r t y years. Before th is time the maturity term was a matter decided on by the lender and the borrower, the l a t t e r being often: in the more unfavourable p o s i t i o n . Mr. Winters had th is to say in describing the purpose of the l e g i s l a t i o n : Although, our supply of new houses in 1953 is greater than ever before, our population and number of famil ies keep growing. This growth requires expansion of housing...We feel the present sources of mortgage money are not l i k e l y to be s u f f i c i e n t to 35woodard, op. c i t . , pp. 20T27. 46 support a housing program equal to or greater than 1953 volume. The main object of th i s l e g i s l a t i o n is to broaden the supply of mortgage money by making that form of investment more a t t r a c t i v e , increasing the number of lenders and making more funds a v a i l -able for mortgage lending.36 The motives and philosophy underlying the new Act are d i s t i n c t l y mani-fested here. The theory behind the revised l e g i s l a t i o n is unchanged from that worked out with respect to the NHA 1944: emphasis on s ingle - fami ly owner-occupied housing and the provis ion of these through the private market. Amemdments to the National Housing Act 1954 Several amendments were made to the National Housing Act 1954 to accommodate the p o l i c i e s of the Prog ressive Conservatives between 1957 to 1962. The Conservatives had i n s t i t u t e d the f i r s t federal housing l e g i s l a t i o n tn 1935- But the major changes had been introduced by : t h e ' L i bera I s between 1938 when the Liberals were returned to o f f i c e , and 1957 when the Conserva-t ives unseated the Liberal Government. S igni f i cant changes were introduced into the Act by the Progressive Conservatives during their recent tenure of o f f i c e . These changes revolved around increasing the loan-to-value ra t io of insured mortgage loans, making federal loans avai lable for municipal sewage projects and provis ion of loans to u n i v e r s i t i e s wishing to undertake univer-s i t y housing projects.37 The philosophy of the Conservative Government, l i k e that of the Liberal Government, was also based on a system of s ingle - fami ly home-ownership. 36House of Commons Debates, op. c i t . , V o l . 1, 1954, pp. 998-999. 37The Conservatives had long been pressing for these amendments. In fac t , a Conservative Member of Parliament, Mr. Donald Fleming, had argued strongly for these amendments during the 1954 discussion of the housing l e g i s -l a t i o n . See House of Commons Debates, op. c i t . , January 21, 1954, pp. 1321-23. 47 There was, however, a noticeable difference in the views of the two p o l i t i c a l p a r t i e s . The Liberals stressed housing supply through market forces . The posi t ion of the Conservatives can be extracted from the speech of Mr. Walker, Minis ter of Public Works in I960, who had control over the operations of the National Housing A c t . In the course of his address on a resolution to ex-tend the loan repayment period and to increase the amount for urban renewal, the Minis ter stated: In December of 1957 we amended the act to provide a loan of 90 per cent of the f i r s t $12,000 of lending value and 70 per cent of the remainder. This change had the effect of per-mit t ing large numbers of lower income famil ies to enter the market. I may say that the guidi ng rule of th i s government has  been to assi st the l i t t l e man to own his own home. Thi s govern-ment has always considered i t desirable to do i t s utmost to ass i s t borrowers at the lower end of the e l i g i b l e income range.38 It was, however, between 1964 and 1966 that a series of new amending l e g i s l a t i o n to the NHA 1954 were passed. The most important is the urban renewal l e g i s l a t i o n which became Part IV (Sections 23 to 23F) of the NHA 1954. In a d d i t i o n , the scope for federa l -provinc ia l j o i n t projects for pub-l i c housing was greatly extended. The Labour M i n i s t e r , Mr. Nicholson, in dealing with the urban renewal l e g i s l a t i o n , declared that the time had come for the government to tackle the problems of urban slums. In his words: I think we can a l l get pleasure and s a t i s f a c t i o n out of the very high—unusually high—average standard of housing in Canada, and we cer ta in ly can rejoice in the improvements to which I have r e f e r r e d . . . But, Mr. Chairman, while we are in a mood of se l f -congratula t ion let us not f a i l to accept some re-s p o n s i b i l i t y for the misery that pers is ts in the slum and near-slum areas of at least some Canadian c i t ies .39 The main p r i n c i p l e according to the Federal Government was that i n i t i -a t ive must come from the local government. However, i t is of more than House of Commons Debates, op. c i t . , November 22, i960. 39Jbid . , May 28, 1964. k8< passing interest that the Minis ter shows the Government's readiness to accept "some r e s p o n s i b i l i t y " for the slums and near-slums that ex is t in Canada. In searching for the reason for th is apparently new perspective of federal housing p o l i c i e s , what Mr. Nicholson, the Minis ter responsible for housing, said in the House of Commons provides a c lue . The Minister noted that previously , Canadian housing pol icy had been heavily committed to the support and aid of the private market and to the production rather than to the di s t r i but ion of housing. This d i s t r i b u t i o n had been l e f t en t i re ly to the private market forces . He argued that there was some good in th i s p o l i c y , addi ng: But while the government may undertake to continue t h i s p o l i c y , care must be exercised not to give i t the exclusive commitment of the government, because there are many things which this type of public f inancing cannot do.^0 Thus af ter many years of e x p l i c i t rel iance on the private market, often in the face of severe c r i t i c i s m , the Federal Government f i n a l l y came around to the pos i t ion that the private market was not very dependable af ter a l l in providing housing for cer ta in income groups. In p a r t i c u l a r , i t admitted that i t s housing p o l i c i e s had f a i l e d to produce the di st r i but i on of housing that would be most desirable in terms of need. What this means in effect is that the " f i 1 ter i ng down process", the most reasonable means whereby the p r i -vate market could supply the housing which was required for moderate- and low-wage and salary earners had not proved to be successful . The s i g n i f i c a n t aspect of th is l e g i s l a t i o n is that despite past exper i -ence, i t intends to get at the problem of slum clearance and low-income housing through provinc ia l and municipal government i n i t i a t i v e . The c o n s t i -tut ional powers of the provinces makes th is a necessary approach. But how House of Commons Debates, op. c i t . 4 9 successful an approach i t w i l l be i s s t i l l a matter of doubt. One major factor is that differences in regional approaches to the problem of slum clearance and res ident ia l deter iorat ion are bound to create an a l l o c a t i o n of funds which may well be in discord with the objectives of a balanced develop-ment for the federated state. '* ' Summa ry The purpose of th is chapter has been to establ ish what is a central argument of the thes i s , namely, that the predominant concern of federal hous-ing p o l i c i e s has been the production of housing for home-owners through the machinery of the private market. But i t is also true that government invest-ment in housing has been used as an instrument for creating employment opportunit ies as well as for producing an ameliorating effect on general economic condi t ions . The chapter i s considered to be of c r i t i c a l s i g n i f i -cance and is therefore comprehensive in nature. For i t is f e l t that the h i s t o r i c a l perspective and analysis w i l l help to avoid confusion and pre-occupation with new problems without focusing on underlying fac tors . From the evidence submitted, i t seems that i t can be asserted without reservations that th is part of the thesis has been borne out. P a r t i c u l a r l y since World War II , the Government has placed major rel iance for a t ta in ing the goals of home-ownership on the private market. One observer has expressed the opi nion that : The fundamental error in the Canadian housing program, i t must be apparent to a l l , stems from the approach which gives considerable assistance, encouragement and even subsidy to upper-income f a m i l i e s , considerably less to middle and lower-For problems of implementing urban renewal programs see John R. Searles, J r . , "Urban Renewal: Eight Problems", Community Planning Review, V o l . IX, No. 4 , (Ottawa: published by the Community Planning Associat ion of Canada, December 1959) . 50 income l e v e l s , and r e l a t i v e l y l i t t l e or often nothing at a l l to those at the bottom of the heap.^2 There are, no douubt, many underlying forces which would provide causal explanations of the p h i l o s o p h i c a l , economic, cu l tura l and psychological bases of these p o l i c i e s . It i s , for example, a g lar ing fact that a minimum of public housing has been supplied over the many years that the desired l e g i s l a t i o n ex is ted . But we note many c o n f l i c t i n g a t t i t u d e s . It is para-doxical that while the Acts seem to show some measure of support for low-rental housing, the philosophy expressed in the Commons and the actual amount of construction re f lec t rather the problems of federa1-provincia 1 relat ions and the strength of the Government's i m p l i c i t confidence in the p ri vate ma rket . Though i t would be relevant to the discussion to explore the under-lying values and at t i tudes of the soc ie ty , such a task cannot be undertaken in th is study. It i s s u f f i c i e n t , at th i s point , to note the great stress which North Americans place on e f for t and achievement as the keys to success. Robert E. Merton has pointed out the over - r id ing importance which the society attaches to success as a primary goal , although the means of a t t a i n -ing th is success presents the greatest d i f f i c u l t y for an overwhelming number of people.^3 Seen from th i s standpoint, the way in which public housing, which obviously, is for those who have f a i l e d in achieving, is regarded, become understandable. This aspect of the problem can be pursued only to the extent of adding that in an agrarian society , one can make a v i r tue out of e f for t and hard work on his own i n d i v i d u a l , s e l f - s u f f i c i e n t p l o t . In an Laidlaw, "What's Wrong with Housing in Canada?', Educat i on  Conference, (Ontario (Federation of Labour, Niagara F a l l s , February 13-14, 1965), p. 3. 43Robert K. Merton, Social Theory andSocial Structure, (Glencoe, I l l i n o i s : The Free Press, 1957), Chapters 4 and 5. 51 i n d u s t r i a l , technological society with i t s attendant urbanization, the re-quirements in terms of s k i l l s and t ra in ing are so complex, and competion so f i e r c e , that the incidence of withdrawal and rejection seems l i k e l y to be an unavoidable cost of these p r o c e s s e s . ^ Indeed, industry i t s e l f , geared as i t i s to increasing output and p r o f i t s , constantly produces obsolescence of s k i l l s and t r a i n i n g . These are only a very small sample suggestive of the many forces which are producing the very s i g n i f i c a n t changes. T h i s , i t could be suggested part ly underlies the increasing r e s p o n s i b i l i t y shown by governments for the social and economic well-being of i t s c i t i z e n s . The recent acceptance of some publ ic housing,^5 as seen in the M i n i s t e r ' s speech, is perhaps a p o l i t i c a l expression of basic changes in societal values, which have percolated through government del iberat ions to f ind the i r way into po1i c i es . 4 4 S e e Harry C. Bredemeier and Jackson Toby, Social Problems in America, (New York: John Wiley and Sons, Inc . , 1963). Especia l ly Part 4 which is e n t i t l e d "ThesCosts of an A c q u i s i t i v e Society" . ^5Hon. J . R. Nicholson, House of Commons Debates, op. c i t . , May 2 8 , 1964. CHAPTER I I I IMPACT OF FEDERAL GOVERNMENT LEGISLATION It has been shown that the scope of the National Housing Act is such that a wide range of housing types can be constructed within i t s framework, extending from s ingle - fami ly dwellings to hostel and dormitory u n i t s . In view of these extensive p o t e n t i a l i t i e s , the question a r i s e s : what has been the actual impact in terms of the supply of housing construction under NHA? An attempt w i l l be made to explore th is question. The main purpose w i l l be to v e r i f y whether or not the conclusions reached in the last chapter can be supported by Federal Government a c t i v i t i e s under the present A c t . The Stock of Housing in Canada' The tota l stock of housing in Canada consisted of approximately 4,554,500 occupied dwelling units in 1961. Of th is t o t a l , 66 per cent were owned. (See Table 4 ) , 2 The total number of new housing s tarts in Canada 'The term "housing stock" is a concept which relates to the supply and within a given time period. See for instance, Arthur Blank and Louis A. Minnick, "The Structure of the Housing Market", The Quarterly Journal of  Economi cs , V o l . 67, 1953, PP- 181-208. The wri ters speak of the "standing stock period" and the "construct ion p e r i o d " . In the former case, two time periods may be noted: (l) in the very short-run there is no time to increase the ex i s t ing stock of housing; ( i i ) in the short-run proper additions can be made but the amount is l imited by ex i s t ing manpower, plant capacit ies and level of technology. During the "construct ion period" the inventory can be increased greatly because plants can be expanded, the number of s k i l l e d and trained workers can be increased and innovations can take place. ^Census of Canada, 1961. 52 53 TABLE 4 OCCUPIED DWELLING UNITS BY TENURE IN CANADA AND IN URBAN AREAS Year Pbpu1 at i on Total (Canada) Total (Urban) b Number Per Cent Owned Number Per Cent Owned 1931 1 0 , 3 6 3 , 2 4 0 a 1 , 5 8 7 , 7 9 1 84.5 1 , 0 9 6 , 0 5 7 4 5 . 5 1941 1 1 , 4 8 9 , 7 1 3 a 2 , 5 7 5 , 7 4 4 5 6 . 7 1 , 4 9 9 , 6 1 0 3 8 . 7 1951 1 3 , 9 8 4 , 3 2 9 3 , 4 0 9 , 2 9 5 6 5 . 6 2 , 2 5 5 , 0 3 5 5 3 . 6 1961 1 8 , 2 3 8 , 2 4 7 4 , 5 5 4 , 4 9 3 6 6 . 0 3 , 2 8 0 , 4 6 8 5 9 . 3 a Excludes Newfoundland, The Northwest T e r r i t o r i e s and the Yukon. bUrban refers to centres of 1,000 population or more. Source: Dominion Bureau of S t a t i s t i c s , Census of Canada, 1931, 1941, 1951, 1961 . was 125,577 in 1 9 6 1 . T h u s allowing for the fact that housing s tarts are for the f u l l year, whereas census data were gathered at mid-year, new housing would range roughly from between two and three per cent of housing stock in i any "normal" year.^ Some indicat ion of the marked annual var ia t ions in new housing construction is shown in Diagram 3- There have been s i g n i f i c a n t v a r i -ations in the kinds of housing being b u i l t in Canada, re f l ec t ing no doubt changes in taste on the part of consumers and the desire on the part of builders to reduce bui ld ing costs . The result has been a- decline in the pro-portion of s ingle - fami ly s tarts as compared with the increasing proportion of mul t ip le - fami ly dwell ings . (.See Diagram 4.) Ownership of Housing Stock Since home-ownership is an important element in government p o l i c y , 3CMHC, Canadian Housing S t a t i s t i c s , 1965, Table 1. ^Note that in I 9 6 5 a record number of houses—166 ,565—were s tar ted . This would be about 3-6 per cent of the 1961 stock. See I b i d . , Table 6. 54 1954 '55 '56. '57 '58 '59 '60 '61 %2 '63 '64 '65 D i a g r a m 3. TOTAL NEW DWELLING STARTS IN CANADA AND IN THOSE URBAN CENTRES WITH POPULATION OF 5,000 AND OVER (1954-1966). S o u r c e : Based on T a b l e 6 o f CMHC p u b l i c a t i o n , C a n a d i a n H o u s i n g S t a t i s t i c s ( O t t a w a : I965). ~ ~ ~ New Res i d e n t i a 1 D w e l 1 i ngs ( i n ' 0 0 0 ) 9 0 8 0 7 0 6 0 50 4 0 3P 2 0 1 0 63 6 1 9 5 4 D i ag ram 4 , 63 26 1 io 6 2 2 7 0 / f i 2 • 5 5 STARTS 5 6 5 5 £ 8 30 1 10 4a 5 5 ' 5 7 36 1 5 8 3 4 1 /I ]] S i n g l e fami 1 y 22 A p a r t m e n t I -I Semi d e t a c h e d l'.^ ::V-:l Row h o u s i n g (Numbers a b o v e b a r s a r e annua i p e r c e n t a g e s ) 4 8 5 1 5 0 3 8 7. 37 1 I 39 ^10 2 = 3 4 8 1 2 5 > J 8 / y y 5 4 3 6 / y y y y y y y / 6 3 ' 5 9 60 61 62 0 3 6 4 '65 N NEW MOUSING, BY T Y P E , IN CANADA ( 1 9 5 4 - 6 5 ) S o u r c e : CMHC, C a n a d i a n H o u s i n g S t a t i s t i c s , 1 9 6 5 , see T a b l e 6 . 56 Table 4 has been presented to indicate the tenure of occupied dwellings in V . Canada between 1931 and 1961. The Table shows that p r i o r to the Second World \ War, the vast majority of a l l housing in the country were owned. Since the War, however, ownership has-been much less , although i t s t i l l represents the majority of housing in the nation as a whole. When one returns to urban centres, however, the proportion of ownership is much less than for the ent i re country, although there have been noticeable increases since the War. This increase in the proportion of houses owned in the urban centres w i l l also be seen in Table 13 (p .99 )below. The re lat ionship between these changes in tenure and the emergence of federal housing p o l i c i e s are c l e a r l y indicated in the developments reviewed here. In short , the proportion of increase in "home-ownership" re f lec ts the fact that a mortgage is the only way of "owning" a house. Housing Supplied Under the NHA 1954-1964 Since March 22, 1954 when the present National Housing Act went into e f f e c t , a large number of houses have been constructed under the A c t . A recent publ icat ion by CMHC, Canadian Housing S t a t i s t i c s , 1965, shows that for the period 1954-1965, a tota l of 1,752,808 new dwell ing units were s tar ted . And for the same period, 1,513,472 units were completed.5 Of the total s tarts mentioned above 657,100 u n i t s , 37.5 per cent were the result of e i ther direct NHA financing or of loans made by approved lenders under the provisions of NHA.^ These s tarts included both s ing le -detached dwellings and mult ip le -dwel l ing s tructures . During the same period approval was given for construction of a number 5CMHC, Canadian Housing S t a t i s t i c s , op. c i t . , Table 5-6 I b i d . , Table 34. 57 of low-income new housing? units under NHA. These consisted of : 30,148 units b u i l t by l imited-dividend companies on the basis of 405 loans; 1,1 A-9 new housing units constructed by non-profit corporations; and 1,3'8 units a r i s i n g out of twenty-three loans for public housing pro jects . Thus, a to ta l of 32,615 low-income units were b u i l t on the strength of approxi -mately 4.7 per cent of a l l loans made under NHA from 1954 to 1965. Expenditures on new housing during the period 1954 to 1964, amounted to 19.5 b i l l i o n dol lars from a l l sources. Public funds ( in the form of direct expenditures, CMHC loans and other loans) accounted for 2,777.8 m i l l i o n d o l l a r s . I n s t i t u t i o n a l lenders provided a to ta l of 8,819-8 m i l l i o n d o l l a r s , of which approximately 50 per cent was insured under NHA. Table 5 i l l u s t r a t e s the sources of these expenditures on new housing. The extent of Federal Government involvement can be gauged by consid-ering i t s housing investment a c t i v i t i e s and how these relate to , and com-pare w i t h , pr ivate market investment in housing. A study of Diagram 5 w i l l show the f luctuat ions in government expenditures on housing. By and large, the timing of these expenditures lend support to the suggestion that the public funds invested in housing are used in the form of counter -cyc l i ca l measures aimed at arrest ing recessionary tendencies in the economy. When economic conditions show signs and symptoms of sluggishness, as for example in I960 and 1961, an increased supply of publ ic funds is injected into the economy by way of greater funds for housing construct ion. As the economy shows recovery and conventional lenders increase the supply of money for 7"Low-income housing" is used here in the same way as the term is used in Canadian Housing S t a t i s t i c s . (See op. c i t . , Table 33.) It includes low-rental housing b u i l t by l imited-dividend companies, non-profit corporations (for example, provincia l and municipal governments) and public housing. (See also p. 20 i n t r a , for concept of low-income.) The data on low-income housing are also derived from Table 33-^Canadian Housing S t a t i s t i c s , 1965, op. c i t . , estimated from Table 33-G ross Nat i ona1 Expenditure ( in thousands of mi 1 1 i ons of $.' s) 58 Expendi tures on new housi ng (mi 1 1 i ons of $ 1 s) Diagram 5- FUNDS FOR NEW HOUSING BY SOURCE AND TRENDS IN THE GROSS NATIONAL EXPENDITURE. Source: CMHC, Canadian Housing - S t a t i s t i c s , 1965, Table 17. A - Funds supplied by I n s t i t u t i o n a l Lenders under NHA. B - Funds supplied by Conventional Lenders. C - Publ ic Funds. D - Gross National Expenditure (GNE) . 59 TABLE 5 EXPENDITURES ON NEW HOUSING BY SOURCE OF FUNDS 1954-65 ( in m i l l i o n s of dol lars) .Pub 1i c Funds 1nsti tut ional Funds3 Other Fundsb Total (1) Amounts 2,777.8 8,819.8 9,353.4 19,951.0 (2) Per cent of Total 13.9 44.2 41 .9 100.0 (3) Annual Aver-age spent in peri od: 1954-57 1958-61 1962-65 84.2 334.9 275.4 601 .0 629.5 974.4 756.1 679.6 651.6 Approximately 50 per cent of the i n s t i t u t i o n a l fundsrwas insured under NHA. "Includes owners' equity and funds supplied from such sources as provinc ia l governments, munic ipa l i t i es and developers. Note that provinc ia l and municipal contributions are not included under Publ ic Funds which are funds provided by the Federal Government (column 2). Source: CMHC, Canadian Housing S t a t i s t i c s , 1965, Table 17-housing, e i ther under the NHA insurance scheme or through non-NHA funds, the Federal Government tends to withdraw from the f i e l d . This withdrawal i s c l e a r l y evident in 1955 the year af ter the present Act came into existence. Having paved the wayfor chartered banks to enter the f i e l d of home-ownership mortgage f inanc ing , the Federal Government d r a s t i c a l l y cut back i t s supply of funds, but had to make a very l i b e r a l upward revis ion in i t s a l l o c a t i o n of funds for housing construction two years l a t e r . The issue here is not whether or not the Federal Government should exercise i t s judgment in using the most e f fec t ive means at i t s disposal to remedy a deter iorat ing economic s i t u a t i o n . Rather, the aim is to determine 60 whether federal housing pol icy is directed pr imar i ly towards the real source Qjf the housing problem and only secondarily to other considerations, or whether the opposite s i tua t ion obtains. Mortgage Financing: Effect on Supply of Housing The fundamental condit ion for securing shelter i s that the cost of providing i t must be met e i ther by the individual fami ly , or by some agency, such as the government or a char i table i n s t i t u t i o n . The essential fact is that securing shelter depends on the fami ly ' s a b i l i t y to pay. In short , whether or not a family is housed depends on the income of the fami ly , whether such income is obtained through the fami ly ' s own e f for ts or through subsidizat ion or some combination of these methods. Even for the majority of the nat ion, i t i s not possible to purchase a house o u t r i g h t . As the Canadian Welfare Council put the matter in summar-i z i n g the f indings of a study i t made in 19^7: There are reasons for ant i c ipa t ing that the supply of houses resul t ing from private i n i t i a t i v e w i l l continue to prove inadequate. This w i l l not be due to the shortages of materials but w i l l a r i se because the number of fami 1i es who can afford to buy new houses is d i s t i n c t l y l i m i t e d ; in normal times they do not represent more than a t h i r d of a l l f a m i l i e s , and under  present hi gh costs , probably not more than a_ f i f th of the fami -1i es i n the country can afford a new house. The volume of new housing i n i t i a t e d by t h i s group can not be enough to make up the large backlog that has now accumu1ated.9 These cone 1 usions, in p a r t i c u l a r the f inding that few fami l ies can obtain a house through i t s own unaided e f f o r t s , ce r ta in ly provide the grounds for assistance through mortgage f inanc ing . But i t would also tend to make an even stronger case for greater assistance to those at the lower end of the middle-income group, and s t i l l greater public support for the lowest and 9The Canadian Welfare Counci l , A National Housing Pol icy for Canada, (Ottawa: September 19^+7), p. 2. Underlining is wri ters for emphasis. 0 61 neediest income groups. This i s the more so as the Counci l ' s report foresaw no prospect of reducing bui lding costs . For the Council continued: There i s no real prospect of reducing the costs of houses b u i l t by present methods. Housebuilding has not benefitted from i n d u s t r i a l technology because the market has been too insecure and i r regular to at tract large-scale f a b r i c a t o r s . ' ^ Mortgage f inancing has gained wide acceptance as the typica l form of f inancing home-ownership. It is a f a c t , however, that th is method has only come into extensive, and even respectable, use since the Federal Government became involved in housing in 1935-'' The mortgage is a contractual , legal arrangement between a mortgagee (the lender) and a mortgagor (the borrower). The mortgagor runs the r i sk of having his property foreclosed i f he f a i l s to meet his monthly payments-something which became prevalent during the 1930's when unemployment was widespread. To see how incomes, mortgages and the supply of housing are re la ted, and p a r t i c u l a r l y , mortgages under NHA, i t is worthwhile examining the components of a mortgage instrument, which are described in deta i l in Appendix B. There are f i v e major components which affect the operation of every mortgage arrangement. These are: 1. The loan-to-value r a t i o ; 2. down payment required; '^The Canadian Welfare Counci l , op. c i t . , p. 2. ' 'woodard, op. c i t . , p. xi . Woodard remarks that : " I n V i c t o r i a n days, a mortgage transaction was regarded as something s i n i s t e r and not to be spoken of l i g h t l y " and he notes that i t is no longer a "badge of improvidence" to obtain a mortgage. ' 2 A n excellent account of mortgage f inancing is found in Woodard's Canadian Mortgages, op': c i t . , Chapters 1 and 2. The history of mortgage lending in Canada is reviewed as well as the conditions and arrangements surrounding the terms of mortgage loans made by the Federal Government since i t s involvement in the f i e l d of housing began in 1935 -62 3. interest rate; 4. amortization period; 5. debt service r a t i o . At th i s stage, i t is worthwhile examining, in some d e t a i l , the mechan-ism of mortgage financing using an example from Vancouver. The main point of the exercise is to show what income capacity i s required of the fami ly , i f i t seeks to obtain a house on the market. The example should be con-sidered espec ia l ly in re la t ion to the income groups as c l a s s i f i e d in Chapter I . Another important consideration is the res ident ia l market mechanism which the home-buyer faces and how th is market af fects the supply of housing. The average cost of a new bungalow in Vancouver in 1965,'3 was $18,326. This includes costs of land, construct ion, and other incidentals such as legal fees. Few indiv iduals could afford to pay cash for th i s in a s ingle cash payment. If the buyer decides to avai l himself of mortgage f inancing, he must have a s a t i s f a c t o r y , steady and reasonably secure income and must adhere c lose ly to the terms of the mortgage agreement. An example of how to ca lculate the debt service rat io is given in Chapter IV (page 106 infra) and can be reviewed at th is stage. It can be seen from that example that i t would be very d i f f i c u l t for those famil ies with incomes less than $4,000 to af ford a new house under NHA—even where the value of the house is as low as $13 , 000 . ' ^ This conclusion seems to be warranted when the data for 1961 is con-s idered. According to Canadian Housing S t a t i s t i c s , 1965 (see Table 67 of that publicat ion) the average dwelling cost of NHA houses for those in '3CMHC, Canadian Housing S t a t i s t i c s , op• c i t . , Table 87. The s t a t i s t i -cal q u a l i f i c a t i o n s surrounding the use of an "average" are ignored. The example may be considered as being simply hypothet ica l . '^For conventional mortgages in Vancouver the loan-to-value rat io ranges between 65 and 75 per cent. Thus, the down-payment required is greater. 63 the $3,000-3,999 income group was about $11,950. Suppose land costs an addit ional $2,000. Then using 196! m i l l rates in Vancouver for both school and general purposes the debt service rat io for the individual whose income is $4,000 is almost 42 per cent. Given the c r i t i c a l role which the gross debt service ra t io plays in determining the loan-worthiness of the prospective mortgagee, i t i s not at a l l l i k e l y that an income of $4,000 would q u a l i f y him for a NHA loan. But th is i s not a l l . If the borrower has other outstanding debts, the overa l l debt burden would be such that the family would f ind i t evBn more d i f f i c u l t to own a home.'5 It should be noted that Table 67 in Canadian Housing S t a t i s t i c s referred to above, shows that in 1961 the debt service ra t io for NHA loans for new housing ranged from 12.3 per cent for those with incomes of $10,000 and over, to 30.8 per cent for those whose incomes were under $2,999. However, only 0.2 per cent of a l l borrowers of NHA loans for new housing had incomes under $3,000--and a l l of these 0.2 per cent were in the $2,000 to $3,000 income range. Taking the group whose incomes were in the $3,999 and under range, they received s l i g h t l y over 6 per cent of a l l loans in 1961. By 1964, borrowers in th is group had declined to just over 2 per cent of a l l borrowers. '6 With respect to f a m i l i e s , 3-0 per cent of a l l famil ies borrowing from NHA for new housing received incomes of under $3,999; but famil ies in th is 1 5 Under the NHA consideration is not given to other debts in the ca lcu-la t ion of the debt service r a t i o . But according to information and evidence obtained in discussion with pr ivate companies, conventional lenders do take other debts into account. '^CMHC, Canadian Housing S t a t i s t i c s , op. c i t . , Table 61. 64 income group represented 35.6 per cent of non-farm fami l ies in 1961.'7 (See Table 6.) The major portion—81.0 per cent—of NHA loans for new housing, so far as fami l ies are concerned, went to those in the $4,000 to $7,999 income r a n g e . ' 8 Table 6 indicates some of the changes noted by CMHC in one of i t s recent publ i ca t ions . It is noticeable that family incomes had increased s i g n i f i c a n t l y by 1963 as indicated by the increasing proportion of fami l ies in higher income groups. However, i t would be necessary to relate these income data to the consumer price index to obtain a meaningful understanding of these t r e n d s . ' ^ CMHC has published certa in relevant price indexes, which establ ish the r i s i n g trends in bui ld ing costs and rents. (See Table 7.) The increase in the cost of home-ownership by over 47 per cent since 1964 as compared with 16 per cent for rents is another indicat ion of the increasing d i f f i c u l t i e s famil ies face who want to own a home. At any rate, i t is c l e a r l y indicated that a v a i l a b i l i t y of NHA loans to famil ies receiving $4,000 and under has become v i r t u a l l y non-existent and that th is a t t r i t i o n in the flow of loans has changed d r a s t i c a l l y with changes in the income structure r e f l e c t i n g the pressures of i n f l a t i o n . The Supply of Moderate- and Low-Income Housing under NHA: Limited-Dividend Provisions The Federal Government makes provis ion for supplying moderate- and low-income housing under Sections 16 and 16A in Part II of the National Housing 17CMHC, Canad ian Housing S t a t i s t i c s , op. c i t . , Table 61. ' 8 | b i d . '^Furthermore as M. 0. Lorenz showed in his a r t i c l e (op. c i t . ) , the changes in concentration of wealth and income cannot simply be shown by taking per cent increases in the o r i g i n a l income c l a s s . 65 TABLE 6 PER CENT OF A L L NON-FARM FAMILIES IN DIFFERENT INCOME GROUPS AND PER CENT OF THESE BORROWING NHA LOANS FOR NEW HOUSING FOR SELECTED YEARS F a m i l y 1ncome $ A l 1 F a m i 1 i e s % F a m i l i e s B o r r o w i n g % Y e a r Y e a r 1961 1963 1961 1963 1965 0 - 1 , 9 9 9 2 , 0 0 0 - 2 , 9 9 9 3 , 0 0 0 - 3 , 9 9 9 1 1 .2 10.7 13-7 8 .5 9.1 12 .5 0.1 2 . 9 1.2 0 .5 4 , 0 0 0 - 4 , 9 9 9 5 , 0 0 0 - 5 , 9 9 9 6 , 0 0 0 - 6 , 9 9 9 16.7 15.1 11.2 15 .5 14.7 11.2 19.7 28 . 4 19.9 13-0 29 . 2 20)5 8 .5 24 .2 21 .5 7 , 0 0 0 - 7 , 9 9 9 8 ,000 & o v e r 7.0 14.4 8 .3 20 . 1 13 .0 16.0 14.3 21 .8 15 .9 29 .4 S o u r c e : CMHC, C a n a d i a n H o u s i n g S t a t i s t i c s , 1965, T a b l e 6 1 . TABLE 7 CONSUMER PRICE INDEXES (CANADA) f o r S e l e c t e d Y e a r s (1949 = 100) P e r i od Rent Home Ownershi p S h e l t e r C o s t T o t a l Consumers 1 P r i c e 1 ndex 1954 129.8 122.2 126.5 116.2 1957 138.0 130.8 134.9 121 .9 1961 143.3 147.4 145.1 129.2 1965 146.0 169.5 157.8 138.7 S o u r c e : CMHC, C a n a d i a n H o u s i n g S t a t i s t i c s , 1965, T a b l e 82. 66 A c t . Under S e c t i o n . 1 6 , t h e A c t empowers C e n t r a l M o r t g a g e and H o u s i n g C o r p o r a t i o n t o make l o a n s t o l i m i t e d - d i v i d e n d c o m p a n i e s t o a s s i s t i n t h e c o n s t r u c t i o n o f l o w - r e n t a l h o u s i n g . W h i l s t S e c t i o n 16A p e r m i t s n o n - p r o f i t o 1 c o r p o r a t i o n s t o c o n s t r u c t h o s t e l and d o r m i t o r y t y p e d w e l l i n g u n i t s , w i t h NHA a s s i s t a n c e . An e x a m i n a t i o n o f t h e d a t a c o m p i l e d by CMHC has y i e l d e d t h e f o l l o w i n g i n f o r m a t i o n as r e g a r d s a c t i v i t i e s c a r r i e d o u t under S e c t i o n s 16 and 16A. Between 1954 and 1 9 6 5 , l o a n s were a p p r o v e d u n d e r NHA f o r t h e c o n s t r u c t i o n o f 30 , 1 4 8 d w e l l i n g u n i t s by l i m i t e d - d i v i d e n d c o m p a n i e s . In a d d i t i o n , 1 ,068 h o s t e l t y p e a c c o m m o d a t i o n u n i t s were p r o v i d e d . N o n - p r o f i t c o r p o r a t i o n s a l s o o b t a i n e d l o a n a p p r o v a l t o c o n s t r u c t 1 , 2 4 5 d w e l l i n g u n i t s t o g e t h e r w i t h 7 7 1,293 h o s t e l t y p e accommodat ion u n i t s . To say t h a t l o a n s have been a p p r o v e d f o r a number o f u n i t s , h o w e v e r , i s not t h e same t h i n g as s a y i n g t h a t t h e a c t u a l number o f d w e l l i n g u n i t s have been c o n s t r u c t e d . I t i s n e c e s s a r y t o keep t h e s e two f e a t u r e s o f h o u s e b u i l d i n g i n m i n d . A c c o r d i n g t o t h e p u b l i c a t i o n Good H o u s i n g f o r C a n a d i a n s : By f a r t h e g r e a t e s t a c t i v i t y i n t h e l o w - i n c o m e h o u s i n g f i e l d has o c c u r r e d under t h e L i m i t e d D i v i d e n d S e c t i o n o f t h e N a t i o n a l H o u s i n g A c t . T h i s a r e a o f h o u s i n g a c t i v i t y was b r o a d l y c o n c e i v e d t o s e r v e t h e needs o f m o d e r a t e l y low income f a m i l i e s who a r e g e n e r a l l y e x c l u d e d f r o m t h e c o n v e n t i o n a l home o w n e r s h i p m a r k e t , but whose income c h a r a c t e r i s t i c s p l a c e 20|nfo rmation from CMHC suggests that so far as Part II of NHA is con-cerned, only Sections 16 and 16A are being used to any extent, (the except-ion being Section 17 which is used s p a r i n g l y ) . 21 In each case the loans are made for ei ther construction of new b u i l d -ings or conversion of ex i s t ing bui ldings to low-rental housing, dormitory or hostel type as the case may be. Both new buildings and ex i s t ing structures are included. Non-profit corporations include provinc ia l and municipal government agencies. z z F o r these data see Canadian Housing S t a t i s t i c s , op. c i t . , Table 33. For information as to how a hostel functions see CMHC, Submission to the  Special Committee of the Senate on Aging, (Ottawa: October 1964), pp. 12-13. 67 them above the lowest income range for p u b l i c l y assisted Section 3 6 housi n g . 2 3 The Ontario Study estimates that up to 1961 some 2 9 , 8 9 6 dwelling units in Canada had been financed under the l imited-dividend sect ion , of which 23,826 units were to serve low-income famil ies and 6,070 units were to accommodate e l d e r l y persons. H The Ontario Study has estimated that : " ren ta l and ownership housing b u i l t in the post-war years and directed pr imar i ly to the lower t h i r d family income band approximates 43,000 units or 2.5 per cent of the total private housing production in th i s p e r i o d . " 2 ^ |t should be observed that th is included co-operative housing as well as l imited-dividend housing up to mid 1964. The basic features of l imited-dividend low-rental housing which are of concern to the individual family are the range of incomes within which the family q u a l i f i e s for considerat ion, and the fact that rentals are ad-justed to income l e v e l s . Thus the rental for a family with an income of $2,000 w i l l be less than with an income of $3 ,000. The Ontario Study also disclosed that in 1964, the income c e i l i n g for continued tenancy in Limited-Dividend housing was $4,850 whi ls t for federal -provincia 1 public housing the c e i l i n g was $ 4 , 9 P P . 2 ^ The most recent data in Vancouver shows that the maximum allowable income for famil ies applying for entry into low-rental 2 3 T h e Ontario Associat ion of Housing A u t h o r i t i e s , Good Housing for  Canadi ans, (Arnprior , Ontario: 1964), p . 42. Note that public housing now comes under Part VI of the NHA which comprises Sections 35A to 35E. 2 4 | b i d . , p. 40. 2 5 | b i d . , p. 40 . 2 6 I b i d . , p. 4 3 . 68 housing projects was $4-79 per month or $ 5 , 7 4 8 per y e a r . 2 ? |n both pro-vinces , rentals are calculated by complicated formulae on a progressive scale basis and are re la ted, as indicated before, to income. The minimum family income acceptable for entry into low-rental housing in Vancouver i s normally around $ 7 5 . A number of i n s t i t u t i o n a l factors affect the supply of low-rental hous-i n g . The Ontario Study has pointed out that there are major r e s t r i c t i o n s on the use of l imited-dividend funds for construction of low-rental housing pro jects . The Study c i tes the supervision which CMHC is required by the Act to carry out with regard to the operation of pr ivate companies. Moreover, in some areas, such as the Metropolitan Toronto Area, companies must have their proposals inspected and approved by the munic ipa l i ty . The Ontario Study ascribed the lack of interest which private companies have shown in l imited-dividend to the nature of these l i m i t a t i o n s , which the Study refers to as " res t r i c t ive . covenants " . The Study goes on to describe some of the problems: Pr ior to approval of a loan a 'Limited Dividend company V must agree to the termsof the mortgage and operating agree-ment drawn up by Central Mortgage and Housing Corporation. The operating agreement contains clauses governing the cost and construction of the pro ject , rentals of units in the project and the administration of i t s a f f a i r s . The rental structure once established must be preserved (except where conditions or circumstances j u s t i f y an adjustment upwards in indiv idual pro jec ts ) . The company must agree to furnish e f f i c i e n t management at a l l times, to keep the project in a sa t i s fac tory state of repair throughout the term of the loan, and to maintain books, records and accounts in a form s a t i s -factory to the Corporation. 29 2 71nformation obtained from the Vancouver Housing A u t h o r i t y . 2 8 l b i d . 2 9 0 n t a r i o Associat ion of Housing A u t h o r i t i e s , op. c i t . , p. 4 3 . 69 The Ontar io A s s o c i a t i o n Study a l s o noted that those l i m i t e d - d i v i d e n d companies which were e s t a b l i s h e d by c h a r i t a b l e i n s t i t u t i o n s , underwent l ess r e s t r i c t i v e c o n d i t i o n s in the o p e r a t i o n of t h e i r p r o j e c t s . The b a s i s f o r t h i s d i f f e r e n c e in the treatment of the p r i v a t e l y run and the c h a r i t a b l e o r g a n i z a t i o n s appears to be the f a c t that c h a r i t a b l e o r g a n i z a t i o n s do not conduct t h e i r o p e r a t i o n s wi th a view to making p r o f i t . On the whole, the p i c t u r e as regards l o w - r e n t a l housing produced under l i m i t e d - d i v i d e n d c o n d i t i o n s i s s t i l l c l o u d y . The M i n i s t e r r e s p o n s i b l e f o r h o u s i n g , Mr. N i c h o l s o n , speaking before a recent Housing Conference, s t a t e d t h a t : " t h e accomplishments of NHA a s s i s t e d l o w - r e n t a l housing were among the few b r i g h t spots in Canada's r e s i d e n t i a l p i c t u r e l a s t year."30 g 0 t h a t , a c c o r d i n g to the M i n i s t e r 1966 was a good year f o r l o w - r e n t a l housing const ruct i on . There i s a l s o new l e g i s l a t i o n afoot to make l i m i t e d - d i v i d e n d more a t t r a c t i v e to p r i v a t e e n t r e p r e n e u r s . In the speech before the Housing Con-fe rence r e f e r r e d to above, Mr. N icho lson remarked: To ensure that loans of t h i s type b e n e f i t those fami 1i es  which need a s s i s t a n c e most, Cent ra l Mortgage and Housing Corpor -a t i o n has used the more o r less formal dev ice of e s t a b l i s h i n g maximum r e n t a l s which may be charged . The Corpora t ion i s now  p repared , however, _to consi der loan a p p1 i c a t i o n s f o r p r o j e c t s  whi ch wouId provi de dwel1 ings at somewhat hi gher renta1s than those permi t ted to d a t e , n Whether or not tltnese measures, i f t a k e n , w i l l r e s u l t in the inc rease in low-renta l housing c o n s t r u c t i o n i s another m a t t e r . 3 u Hon. J . R. N icho lson address ing the Housing Conference convened in Vancouver, February -3, 1967. 31 I b i d . 70 Co-operative Housing Co-operative housing is an area of housing construction for which pro-vis ions exis t in the NHA but the use of these provisions has been n e g l i g i b l e . What meagre a c t i v i t y there is in Canada in this f i e l d of low-rental endeavour, takes place almost e n t i r e l y in the eastern provinces of Nova Scotia and Prince Edward Is land. There are, i t i s t rue , some co-operative housing on a few univers i ty campuses. Toronto Campus Co-op and Co-op College Resi -dences Inc . , (a new federal organizat ion) , are recent developments in th i s d i r e c t i o n . The la t t e r serves both the Univers i ty of Toronto and the Univers i ty of Waterloo. In f a c t , the Waterloo Univers i ty students are said to have b u i l t the f i rst new residence, which is owned and operated by students, in North America. 32 The National Secretary of the Co-operative Union of Canada, Dr. A. F. Laidlaw, while discussing the lack of success of co-operative housing in Canada, and in North America general ly, makes these points : Why has i t not "caught on" in Canada, a country where there are such serious gaps in housing for low and middle income fam-i l i e s ? There is no s ingle or easy answer. To begin, the cooper-at ive movement in Canada is largely rural and a g r i c u l t u r a l — i t s or ienta t ion has been engrossed in other areas and concerns— i t has given l i t t l e attention to housing. Credit unions—the only form of co-operative that is highly developed in urban Can-ada—have had their hands f u l l t ry ing to s a t i s f y the demand of members for consumer c r e d i t .33 Dr. Laidlaw further pointed out that even the highly successful ca i sse popu1 a i re system in Quebec has given i t s f i n a n c i a l support to home-ownership f inancing . He argued, moreover, that the concept of group-housing 32These developments in campus housing have been noted by The Globe and  Mai 1 , Saturday, January 22, 1966 in an a r t i c l e e n t i t l e d " A New Way of L i f e in Campus Co-ops". 33A . F. Laidlaw, "Co-operative "Housing in Canada" , Canadian Labour, V o l . I I , No. 3, March 1966, pp. 6-7. 71 on a non-profit basis has not been accorded strong support from government agencies. F i n a l l y , he blamed the lack of leadership in the co-operative hous ing f i e l d . In another recent review of a c t i v i t i e s in co-operative housing under NHA 1954, the Co-operative Union of Canada had th i s to say: Co-operatives are playing a very small role in housing in Canada and th is role seems to be decreasing rather than 1nc reas1ng. 34 Co-operative housing project loans approved between 1954 and 1965 are supposed to have produced 1,115 u n i t s . In a d d i t i o n , 234 units have been b u i l t by approved lenders under NHA scheme.35 Thus, NHA has been i n s t r u -mental in providing a total of 1,34-9 u n i t s . However, recent developments in Winnipeg, where Willow Co-op consist ing of 200 units has been b u i l t , as well as a proposed federa1-provincia 1 scheme in Northern Saskatchewan, have given some cause for s l i g h t optimism, as regards the future of co-operative housing. Public Housi ng For those who are so dest i tute that they cannot afford to pay any rents at a l l , f u l l y subsidized public housing has been established as the only a l t e r n a t i v e . In general, the public housing provisions are to be used to aid fami l ies with c h i l d r e n , although the e lder ly are also included.36 Yet from a l l accounts, however, the supply has been exceptionally smal l . This has been admitted by the Minis ter responsible for housing, who has affirmed ^ Co-operative Union of Canada, Memorandum on Co-operative Housing, " A Review of the Present S i tuat ion in Canada", August 19&3. 35cMHC, Canadian Housing S t a t i s t i c s , op. c i t . , Table 29. 36cMHC, Brief Submitted to the Special Committee of the Senate on Aging, op. c i t . , p . 18. 72 that : Our best accomplishments in publ ic housing are not impressive. In the view of the government i t represents the greatest s ingle area of f a i l u r e in our federal housing po1i cy. 37 The public housing provisions under NHA exist in Part IV of the A c t — Sections 35A through 35E. Loans made under these sections are based on federa l -provinc ia l agreement on cost-sharing arrangements. The data avai lab le for the 1954 to 1965 period show that 1,318 public housing units were approved for construct ion. The Federal Government has taken the a t t i tude that so far as public housing is concerned, i t is from the provinc ia l and municipal levels that i n i t i a t i v e must be forthcoming.38 The question may be asked: why have provinces and munic ipa l i t i es f a i l e d to show any but the most grudging enthus i asm? Public housing has also been t ied to the problems of urban renewal. This comes about because the famil ies displaced from slum clearance areas have to be re- located. This re- locat ion often means that famil ies removed from the areas involved have to f ind accommodation in publ ic housing u n i t s . For th is reason, the three levels of government have used public housing f a c i l i t i e s to re-house famil ies uprooted from slum areas. To date, huge sums of money have been disbursed from the federal treasury for urban re-newal. Beginning with Regent Park in 1948, urban renewal schemes implemented in August 1965 required Federal Government expenditures of over 50 m i l l i o n d o l l a r s .39 37Mr. Nicholson, House of Commons Debates, May 28, 1964. Nicholson, op. c i t . 39 S ee CMHC p u b l i c a t i o n , Implementation of Urban Renewal Schemes, (Ottawa: August 1965; NHA 128-1). 73 A not i n s i g n i f i c a n t portion of urban renewal areas is re-used for purposes other than res ident ia l use. This fact has led many observers to conclude that urban renewal helps least of a l l those who have been ejected from the slum clearance areas. Other Factors A f f e c t i n g Housing Supply (1) A number of factors of a regulatory nature af fect housing supply. Among these are the regulations established under the National Housing A c t . A primary requirement for NHA mortgage loans is that houses mustbe in areas ko where sewerage f a c i l i t i e s are a v a i l a b l e . Other requirements include the s ize of lots demanded and compliance with the spec i f i ca t ions out l ined in the National Building Code.**' Apart from the question of the advantages or disadvantages of these regulations, the point here is that they i n e v i t -ably r e s t r i c t the flow of housing. (2) A key factor a f fec t ing the supply of housing is the costs of con-s truct ion of houses and of the land on which houses are to be s i tuated . For private entrepreneurs cannot supply housing at less than i t costs to produce them. Thus, cost is at the very heart of the problem of housing supply, as is true of any other good produced for sa le . Consumer pr ice indexes are used to show the increases in housing costs . Table 7 on page 65 above gives price changes in certain c r u c i a l areas for selected years. The s igni f icance of these changes has been remarked upon already. But they should be referred to again. Among the components of housing costs that have been r i s i n g at an 4 U Informat ion obtained from Central Mortgage and Housing Corporation, Vancouver. ^ N a t i o n a l Research Counc i l , Residential Standards: Canada 1965, Supplement No. 5 to the National Bui lding Code of C a n a d a , ( O t t a w a :Tssued by the Associate Committee on the National Building Code). 74 i n f l a t i o n a r y rate is the cost of land. In the Memorandum on Co-operative Hous i ng c i ted above, i t i s remarked that: Land in and around large urban centres has become so expensive that individual home ownership is more burdensome... In a speech delivered at an Education Conference arranged by the Ontario Federation of Labour, Dr. Laidlaw stated: It must be obvious to a l l that one of the major stumb-l ing-blocks to better housing programs in Canada is the problem of land, our Canadian system of land tenure and prof i t eer ing in land. But this is something that i s very dear to the Canadian way of l i f e — t h e right to speculate in land, the p r i v i l e g e to make p r o f i t out of land, not by adding anything of value to i t but simply by v i r t u e of the presence of people who need i t for space to l i v e . 3 Urban renewal has also f e l t the slowing down effects of costs . This was a serious factor even in the e a r l i e s t stage of slum clearance as the f o l l o w -ing statement tends to confirm: There are other, perhaps more important, reasons why slum clearance has not proceeded apace in the c i t y of Toronto. Regent Park North proved to be far more cost ly than a n t i c i -pated. Although the number of units was increased from 1,056 to 1,289, the estimated overa l l cost has risen from s ix or seven m i l l i o n s to perhaps sixteen m i l l i o n s . ^ Thus, the cost of land, construct ion, labour and materials have exerted a tremendous force on housing supply, both in the area of home-ownership as well as in publ ic housing pro jec ts . ^ ^ T h e Co-operative Union of Canada, Memorandum on Co-operative Housing, op. c i t . , p. 6. ^ 3 A . F . Laidlaw, "What's Wrong with Housing in Canada?' Education Con- ference of the Ontario Federation of Labour, (Niagara F a l l s , Ontario: February 13-14, 1965), p. 6. ^ A l b e r t Rose, "Slum Clearance w i l l Continue in Toronto", Communi ty  Planning Review, (Ottawa: published by the Community Planning Associat ion of Canada, V o l . V, No. 3, September 1955). ^5see the speech of Hon. J . R. Nicholson, House of Commons Debates on May 28 and June 1, 1964 where he stated that the average cost per acre of c lear ing municipal land is $100,000. But in the two major c i t i e s , Montreal and Toronto, the average cost is $300,000 per acre. 75 (3) The a b i l i t y and capacity of munic ipa l i t i es to bear the increasing costs of providing urban services for res ident ia l areas is another important considerat ion. This factor was recognized at the time when the present National Housing Act came into being in 1954. For example, Mr. Donald Fleming, who at the time was a Member of Parliament, in discussing the Hous-ing B i l l on January 21, 1954 argued that one of the main reasons for the large housing shortage was the shortage of serviced land. He quoted Mr. Winters, Minis ter responsible for housing, who in A p r i l 1953 had himself stated that the pr inc ipa l cause of the bottleneck in housing supply had been the lack of serviced land and the heavy municipal expenditures required to provide the services . Quite often munic ipa l i t i es were unwi l l ing and unable to undertake these e x p e n d i t u r e s . ^ In th is review of some of the main causes a f fec t ing the supply of housing-for a l l income groups, i t must be kept in mind that there are a number of other factors involved. The ultimate l imi ta t ions would be the avai lable labour and mater ia ls . Another l i m i t a t i o n is the fact that at least in the case of publ ic housing, competition with other federal programs for the supply of capita] investment resources i s an inescapable problem. The factors noted above tend to reduce the effectiveness of what, at the best of times, is also an inadequate method of ensuring adequate sup-p l ies of housing for low-income groups. This method is the " f i 1 t e r i n g down process". Numerous author i t ies in the f i e l d of housing have expressed the growing disappointment with this p r o c e s s . ^ The M i n i s t e r , Mr. Nicholson, has himself s a i d , in the House of Commons, that : " the f i l t e r i n g down pro-4 b Donald Fleming, speaking on the problem of Housing Shortage. See House of Commons Debates, op. c i t . , January 21, 1954. ^ s ee for example, R. U. R a t c l i f f , Urban Land Economics, (New York: McGraw H i l l Book C o . , Inc . , 1949), p. 330. 76 cess is too i n d i r e c t . It is too uncertain; i t is too slow; and i t is too expensive in the long run." Catherine Bauer has*.noted that: The central issue in most American debates about housing pol icy can be stated quite simply. Should we bui ld p r a c t i c a l l y a l l new housing for the upper income groups, on the assumption that i t w i l l gradually f i l t e r down to s a t i s f y the needs of the rest? Or must we provide new dwellings d i r e c t l y within reach of low and moderate income famil ies? The basic data required to c l a r i f y these questions are p r i -marily of an economic nature : . . .The " f i l t e r i n g down" process cuts across the whole f i e l d of c i v i c h i s t o r y , and relates to population movements, soc ia l mores, and the d i f f e r i n g needs and habits of p a r t i c u l a r groups of people.48 In view of these fac tors , housing supply through the market forces are u n l i k e l y to solve the housing problem of low-income f a m i l i e s . But even i f i t were more e f f e c t i v e the cost factors which have been reviewed, would s t i l l be a major problem for low-income f a m i l i e s . Summary An attempt was made in th is chapter to examine the actual ef fects of the NHA through the results of i t s operation. A fundamental assumption which this approach involves is that the National Housing Act is aimed at supplying adequate housing for a l l Canadians. This intention seems to be i m p l i c i t in the ex i s t ing housing l e g i s l a t i o n , which of fers a s u f f i c i e n t l y wide range of provisions to accommodate the needs of a l l income groups. However, implementation of the l e g i s l a t i o n has been marked by heavy government commitment—both economically and p o l i t i c a l l y — to the production ofowner-0;ccup Led, si ngle-f ami ly dwellings as the primary avenue of approach to the housing problem. At the same time, there has been Catherine Bauer, Social Questions in Housing and Town Planning, (London: Univers i ty of London Press L t d . , October 1 9 5 2 ) , p . 1 5 \ 77 a noticeable difference in the approach to low-rental housing. This is apparent even when considered on no other basis than the actual output of low-rental housing. It seems to betray a c o l l e c t i v e desire on the part of the three levels of government, as well as the market on which they have decided to r e l y , to avoid the low-rental provisions of the A c t . In the meantime, i t remains very d i f f i c u l t for a substantial section of the population to own or rent sa t i s fac tory accommodation. There are two main reasons for i this: f i r s t l y , the mortgage financing which CMHC and the private market o f f e r is beyond the f inanc ia l a b i l i t y of low-income famil ies to afford,and secondly, conventional lenders are unwi l l ing to undertake the task of providing the various types of low-rental housing because the returns are not s u f f i c i e n t l y a t t r a c t i v e in terms of p r o f i t even i f rentals are guaranteed. Reliance on the private market as the primary means of supplying housing can not be an e f fec t ive method of supplying housing to those who are severely res t r ic ted by the level of income which they receive. This re-s t r i c t i o n , i t has been shown, operates to the disadvantage of those with incomes below $4,000, and often th is is true for many famil ies receiving i n -comes above this l e v e l . According to the Hon. J . R. Nicholson: While i t is true that they cannot get new houses, there are many people with incomes of upwards of $5,000 who would l i k e to buy new houses. People with incomes of less than $5,000 can be accommodated today in public housing where you have rent related to income. The Minis ter went on to say that i t was those groups earning $5,000 and over who would benefit from the new amendment which allows borrowers to make 49 H on. J . R. Nicholson, House of Commons Debates, op. c i t . , October 26, 1966. 78 NHA insured loans upwards of $10,000 to buy and improve a house.50 More and more, use of the mortgage f inancing provisions of the Act has shi f ted towards the upper-middle and higher-income groups, and away from those fami l ies in the moderate- and lower-income brackets as evidenced in Table 6. One reason no doubt is the fact that absolute incomes have increased during recent years. Meanwhile, the systematic downward flow of used housing from one income group to the next, which takes place through the " f i 1 t e r i n g down process", has been most i n e f f e c t i v e . But in order to reach the point where a more salutary discussion can be entertained, i t is necessary to assess the other side of the housing quest ion, that i s , the needs and demands. This w i l l be the subject of the fol lowing chapter. 50|Hon. J . R. Nicholson, House of Commons Debates, op. c i t . , October 26, 1966. CHAPTER IV HOUSING DEMANDS AND NEEDS: BASIS FOR POLICIES The point was made at the end of the last chapter that an understanding of the forces underlying the demand for housing is an essential consideration in formulating housing p o l i c i e s . However, i t i s important at the outset to d is t inguish conceptually between the charac ter i s t i cs of the demand for housing and the need for housing. Basic Concepts: Needs and Demands Needs: The Ontario Associat ion of Housing Author i t ies recently evolved what i t ca l l ed a "Theory of Housing Needs". ' According to th is theory, housing needs are the number of dwellings which a population requires in order to achieve a sa t i s fac tory level of l i v i n g accommodation, This d e f i n i t i o n refers simply to the physical needs of the population over a given period of time. Housing needs must also be seen from the perspective of the urban-rural d i s t r i b u t i o n of the populat ion. Urban population housing needs are d i f ferent in kind and q u a l i t y from a g r i c u l t u r a l housing needs, in spi te of the increasing demands rural dwellers for what, t r a d i t i o n a l l y , have been urban services and f a c i l i t i e s . This dimension of the concept of housing needs has been expressed by Dr. 0 . J . Firestone. In his words: lThe Ontario Associat ion of Housing A u t h o r i t i e s , op. c i t . , pp. 57-81. 79 80 The housing needs of today have to be seen in the l ight of h i s t o r i c trends in population growth. It i s s i g n i f i c a n t in this connection that , whereas in 1871 the rural population com-prised about 80 per cent of the t o t a l , th is proportion had by 1941 dropped to 45 per cent. Since the turn of the century, the urban population of Canada has increased more than 300 per cent. This rapid growth of the urban population is one of the primary causes of the prevalence of substandard and slum dwellings in the major Canadian c i t i e s . 2 We see emphasized here the q u a l i t a t i v e , as well as the quant i tat ive aspects of housing needs. Demand: In order that i t may be meaningful in the draf t ing of p o l i c y , housing demands must be related to a given period of time. The Ontario Study defines the concept of demand in terms of what i t c a l l s " p o t e n t i a l demancfr and " e f f e c t i v e demand" .3 The d i s t i n c t i o n between these two, the study points out, ar ises because potential demand relates only to the preferences and desires of potential consumers who indicate a wi l l ingness to buy. But i f demand is to be e f f e c t i v e , there must be, in addit ion to wi l l ingness and des i re , the a b i l i t y to pay.'* The a b i l i t y to pay depends pr imar i ly on the wealth and income of indiv iduals and famil ies and the cost of the goods they wish to purchase. 2 0 . J . Firestone, "Measurements of Housing Needs, Suppjy and Post-War 'Requirements", in Housing and Community Planning, McGil l Monograph Ser ies , No. 4. A Series of Lectures delivered at McGil l Univers i ty November 2, 1943 - March 21, 1944, (Montreal: Quality Press L t d . , 1944) p- .111. 3The Ontario Associat ion of Housing A u t h o r i t i e s , op. c i t . , pp. 57-81. **The Ontario Associat ion of Housing A u t h o r i t i e s , op. c i t . , p. 57. In addit ion see Clark Lee A l l e n , tlames M. Buchanan, Marshall R. Colberg, Pri ces,  Income and Public P o l i c y , (New York: McGraw H i l l Book C o . , Inc . , 195471 pp. 18-19, where i t states: "Demand impl ies , in the f i r s t place, a desire for a good or s e r v i c e . . .But demand implies in addit ion to this an a b i l i t y and a wi l l ingness to pay for the good or service . If one of these e lements -des ire , a b i l i t y to pay, wi l l ingness to pay—is lacking i t may be said that ' p o t e n t i a l ' demand e x i s t s . Such i n s t i t u t i o n s as a d v e r t i s i n g , salesmanship and installment credi t attempt to convert potential into ' e f f e c t i v e ' demand." 81 This fact emphasizes the importance and the necessity of taking the income structure of the population into account when drawing up a national housing po1i cy . Of p a r t i c u l a r relevance is a point made in the Ontario Study with respect to the difference between need and demand. It stressed the fact that " n e e d . . . p e r s i s t s independent of demand",5 the underlying cause of th i s difference is c l e a r l y denoted in the d e f i n i t i o n s and concepts outl ined above. Needs emb,racej much more than demand, since i t comprehends both the e f fec t ive demand as expressed in the market for housing and unexpressed requirements of those lacking the f inanc ia l a b i l i t y to pay. The Elements of Housing Demand Tradi t ional approaches to the question of housing requirements consider the matter in re la t ion to cer ta in components of demand. The Royal Commission on Canada's Economic Prospects out l ines the fo l lowing demand factors which influence res ident ia l construct ion: 1. Population growth (formation of new family and non-family households); 2. The reduction of crowding; 3 . Replacements; 4. Sh i f t s in population, notably from rural to urban areas; and 5. Changes in the vacancy rate.6 Population Growth: Population growth affects the demand for housing because i t influences the rate at which new fami l ies and non-family house-5The Ontario Associat ion of Housing A u t h o r i t i e s , op. c i t . , p . 57-^Yves Dube, J . E. Howes and D. L. McQueen, Housing and Social C a p i t a l , a Study prepared for the Royal Commission on Canada's Economic Prospects, Study No. 20, (Ottawa: Queen's P r i n t e r , 1957), p. 46. 82 holds are formed. Population growth affects the demand for housing through increase in net family formation and non-family househo 1 di,formation. As the Study of the Royal Commission referred to above points out : Net family formation, in a given year, i s defined as the number of famil ies ex is t ing at the end of the year minus the number of famil ies ex i s t ing at the beginning of the year. 11 rep resents the most i mportant source of new demand for  housi ng.^ Non-family households refer to those households formed by persons who inhabit separate housing units but who are not, according to the census d e f i n i t i o n , referred to as f a m i l i e s . 8 Crowding: Overcrowding which results because too many persons occupy e x i s t i n g housing f a c i l i t i e s i s another indicat ion of unmet needs. The idea of crowding necessari1y implies that some standard is assumed as to the number of persons per room which a dwelling should accommodate. Furthermore, any reduction in overcrowding would require an increase in the supply of housing in order to meet the increase in e f fec t ive demand. Replacements: As dwelling units decay and become d i l a p i d a t e d , they must be replaced by new res ident ia l units to meet the demands of the population. The necessity to replace worn-out physica1 plant results in demands over and above the amount needed for the increased number of family and non-family formation. Increasing urbanizat ion, especia l ly where rural to urban d r i f t is strong, means that demands for housing in urban areas are created although there may well be sound but unoccupied dwellings in rural areas. In short , i t is a form of replacement induced by the urbanizing process. ?Yves Dube, e t . a l . , op. c i t . , p. 46. Underlining by wri ter for emphasi s. 8|bid. , p. 47. 83 Vacancy Rate: The requirement that a proportion of the housing stock remain vacant ar ises f i r s t because oftthe increasing mobi l i ty of the popu-l a t i o n . But as the Study made by Dube, et . al has noted: "even inrperiods of acute housing shortage, some part of the useful housing stock w i l l at any given time be vacant, awaiting tenants or purchasers".9 Secondly, a reasonable vacancy rate ranging say between 3 per cent and k per c e n t , ' 0 would ensure a measure of competition in rentals and sale prices asked for housi ng. It can readily be understood that these market demand factors exert tremendous pressures on the housing market. The.market here refers to i n s t i -tut ional arrangements affording opportunity for the sale and purchase of goods and services by individual 's , fami l ies or groups acting pr imari ly in the i r pr ivate capac i t i es . There i s also no s ingle housing market, but a number of d i f ferent sub-markets such as the rental housing market, s ingle family res ident ia l market and the mult iple dwell ing market to mention some f a i r l y broad c a t e g o r i e s . ' ' It should be pointed out that not only economic but also social and c u l t u r a l processes influence the demands for housing. Changes in taste , in the standard of l i v i n g and in societa l values, influence demand for housing. Moreover, such changes affect the kind of housing demanded. Thus, the Royal Commission Study points out that in the movement from a rural to an urban environment: 9Dube, e t . a l , op. c i t . , p. 53. l° lbi d . The Study by Dube, et . a l . used a 3-3 per cent vacancy rate. An e a r l i e r Report recommended a k per cent vacancy rate. See £i.nal Report of the Sub-Committee on Housing and Community Planning, op. c i t . , p. 141 . " R a t c l i f f , op. c i t . , Chapter 1 1 . 84 Housing, too, should be considered in re la t ion to urban growth.. .But urban growth has a most s i g n i f i c a n t bearing on the.kind of housing that is l i k e l y to be needed.'2 In short , the physical aspects of housing demand, namely the number of dwell ing units has been emphasized, but the q u a l i t a t i v e aspects, notably in the terms of space requirements, tenure, and other fac tors , can be just as decis ive in determining housing demand.'3 Measurement of Housing Needs in Canada At various times, studies have been carr ied out to assess the housing needs of the Canadian population. Some of the causal factors which were ante-cedent to the undertaking of these studies are ref lected in the assertion that When the depression came in 1931, an estimated 163,000 fami l ies were not separately housed but were doubled up with other f a m i l i e s . The poor qua l i ty of housing and the crowding of e x i s t i n g dwellings indicated that prosperity had not solved the housing problem. Conditions worsened as a result of the depression. Slum areas grew in number and became more con-gested as construction a l l but ceased. The general lowering of housing standards gave r ise to widespread d i s s a t i s f a c t i o n . A f t e r studies made at the local l e v e l , a special Parliamentary Committee was appointed to inquire into the subject. The Committee concluded that public assistance to new housing and r e h a b i l i t a t i o n projects was greatly needed. Then, in 1935, Parliament passed the Dominion Housing A c t , which was super-seded in 1938 by the National Housing Act .'4 The pressures on housing created by urbanization and the back-log of construction of res ident ia l units during the depression and World War II created a serious shortage .in housing. As a resu l t , the Advisory Committee on Reconstruction which was set up in 1943 to study post-war reconstruction p o l i c i e s was commissioned to study and report on housing needs in Canada. '2n ube, e t . al ., op. c i t . , p. 17. ••' ?i. '3 .Ratcl iff , op. c i t . , Chapter 4. ^Dube, e t . a 1 . , op. c i t . 85 The Report of the Sub-Committee which was created within the framework of the Advisory Committee has been referred to previously . That Report, which conducted perhaps the most exhaustive survey of housing ever carr ied out in Canada, subsequently became the major point and source of reference with regard to housing needs in Canada. The Report of the Advisory Committee on Reconstruction The Sub-Committee established two methods for measuring housing needs.'5 The f i r s t method consisted of estimating the back-log of res ident ia l con-s t r u c t i o n . This involved comparing past performance in terms of the average during what was considered a period of high construction and the average during a period of low construct ion. The difference between these averages represented the back-log. The second measure used was the accumulated b u i l d -i ng need. This measure involved estimating the housing shortage created by population growth and movement, the amount of dwelling units required to reduce overcrowding, and the requirements with respect to replacement of sub-standard houses and slum dwell ings . The accumulated bui lding need pro-vided an estimate of the housing needs b u i l t up in Canada over the years up to 1946.'6 On the basis of these.data, the Sub-Committee established what i t referred to as the desi rable and mi ni mum annual bui1d i ng need whi ch, i f accepted as an integral part of a national housing program, would dispose of the housing shortage within a decade af ter the war . ' ? Two other recent studies have also attempted to determine the housing '5Final Report of the Sub-Committee on Housing and Community Planning, op. c i t . I6|bid. See pages 137-149 for a detai led account of the analysis of housing requirements. 1 7 I b i d . , p. 143. 86 needs of Canada through the use of what are substant ia l ly the same measure-ments used e a r l i e r by the Sub-Committee on Housing. The f i r s t of these 1 Q studies was conducted by the Ontario Associat ion of Housing A u t h o r i t i e s . The second was a study made by the Economic Council of Canada.'9 The former, in addit ion to evolving a theory of demand for housing noted already, emphasized the needs of the e lder ly and low-income groups, at the same time showing methods u t i l i z e d in a r r i v i n g at an estimate of these needs . 2 0 The study used by the Economic Council was concerned pr imar i ly with making projections of the general housing needs of the population to 1970. In summarizing this section therefore, we observe that there is a f a i r l y standard approach employed in measuring the needs and requirements for housing. The components inc1ude net family and non-family household formation as key determinants of housing demand. In a d d i t i o n , the effect of overcrowding, provis ion for a vacancy rate, the necessity to restore worn out bui ldings or those destroyed through accidental and natural causes, are c ruc ia l factors that have to be taken into account. Measurement of needs must also consider the economic factors influencing change, for instance changes in tastes and standard of l i v i n g . And changes brought into being by socio-cu1tura1 forces , such as rural to urban movements, must be considered. A f i n a l factor in considering demand for housing in Canada is the effect of government p o l i c i e s themselves in inf luencing demand. In this regard, the Economic Counci l ' s study has noted that: l8fJntario Associat ion of Housing A u t h o r i t i e s , op. c i t . , Chapter 4 . Ifgang 11 l i n g , "Housing Demand to 1970", Review, Economic Council of Canada. See Study No. 4 prepared for the Economic Counci l , (Ottawa: 1964). 2 u I I l i n g , op. c i t . 87 An impetus towards a r e l a t i v e l y more rapid rate of construction than during the 1950's within c i t i e s may result from the observed narrowing of the d i f f e r e n t i a l s in terms between conventional and National Housing Act mortgages.21 The point here i s that the effect of government p o l i c i e s may be to influence the demand for housing by l i b e r a l i z i n g ei ther the flow of investment funds or relaxing other r e s t r i c t i o n s normally imposed by i n s t i t u t i o n a l market condit ions . It may be noted parenthet i ca l ly , that th is i s yet another of the many e f fec t ive changes which governmental a c t i v i t i e s has induced through experimentation in the t r a d i t i o n a l market. S i m i l a r l y , e f fec t ive results may well be forthcoming with more experimentation in low-rental housing. Housing Needs in Canada The arguments presented above, indicate that a number of competent studies have been completed in Canada for the purpose of determining the country's housing needs. The data quoted on page 82 from the study of Dube, e t . a l . , for example, shows that Canada entered the depression with an estimated 163,000 doubled-up famil ies and that sub-standard housing was a cause for great concern. By 1944, the Sub-Committee invest igat ing housing and community planning estimated that in urban areas alone some 175,000 sub-standard dwelling units needed replacing, 125,000 of these in major c i t i e s . 2 The Sub-Committee further recommended adoption of a bui ld ing program to accomplish the construction of 535,000 over the fo l lowing ten-year period at the annual rate of 57,000 dwell ing u n i t s . 2 3 Nevertheless, one authority was s t i l l able to assert in 1956 that : Z l l l l i n g , op. c i t . , p. 20. 22 F inal Report of the Sub-Committee on Housing and Community Planning, op. c i t . , p . 14-3 . 23 Ib id . , p. 148. 88 The major ci t i es of Canada now contain about 100,000 dwellings in serious state of d i s repa i r many of them concentrated in blighted areas.24 A recent statement made by the Minis ter responsible for housing, has i n d i -cated that " the number of doubled-up famil ies "has gone down by 150,000" dur-ing the ten-year period 1954-64. However, he later added that "C'lose to a ha l f a mi 11i on fami 1i es are s t i l l sha r i ng accommodat ion wi th others."25 The study by Dube, e t . a l . made quinquennia] estimates of housing demands to 1980. It also provides an i l l u s t r a t i o n of the components of housing demand and the re lat ionship between the components. (See Table 8.) These same f igures were revised in the Ontario Study and were also used to indicate expected housing needs to 1980. For instance, the Ontario Study ant ic ipates that by 1980 there w i l l be a population of some 27,360,000 persons composed of 6,060,000 family and 1,285,000 non-family formations. For a population of th is magnitude 3,147,000 new dwellings must be con-structed between 1964 and 1980, and an addit ional 787,000 units must be forthcoming through a l tera t ions and conversions of ex i s t ing bu i ld ings . Future Urban Needs To estimate future.urban housing needs, the Ontario Study used the percentages of the population which the study on "Housing and Social Capi ta l " projected would be d is t r ibuted in urban and non-urban areas. (Table 9.) Dube, e t . a l . had made projections of the expected spat ia l d i s t r i b u t i o n of population to 1980. According to these estimates, 56 per cent of a l l house-^Testimony by Mr. Stewart Bates while presenting the Brief of CMHC to the Royal Commission on Canada's Economic Prospects Hearings before the Commission, (Ottawa: Queen's P r i n t e r , March 6, 1956, V o l . 43), p. 8483. Underlining by w r i t e r . 25H on. J . R. Nicholson, M . P . , House of Commons Debates, op. c i t . , May 28, 1964. TABLE 8 ESTIMATED HOUSING CONSTRUCTION REQUIREMENTS, 1956-80 (thousands of units) Allowances Population Growth Other Factors f o r : (1) (2) (3) (4) (5) (6) (71 Rep 1ace-Re- ments oc-p1 ace- curr i ng men ts as a re-Non- other sult of f ami 1 y Reduct- than popu1 at i on Net house- i on those movement family hold of a l low- from farm form- f orm- crowd - ed for to urban Vae-Peri od at i on at i on i ng in (5) a reas anci es Total 1956-60 348 66 50 50 25 20 559 1961-65 414 67 50 58 20 24 633 1966-70 500 70 50 66 5 29 720 1971-75 605 78 50 74 — 33 840 1976-80 683 89 50 82 — 38 942 Total 2,550 370 250 330 50 144 3,694 Source: Reprinted from Royal Commission on Canada's Economic Prospects, Housing and Social  Capi t a l , (Queen's P r i n t e r , January, 1957), p. 54, Table 10. 90 TABLE 9 DISTRIBUTION OF NET CHANGES IN DWELLINGS 1961-80 BETWEEN METROPOLITAN, URBAN AND OTHER AREAS S i tuat i on Di s t r i bution of Households 1980 (per cent) 1961 Hous i ng Stock 3 1980 Housi ng Stock 3 Di s t r i but ion of Net Changes Met ropo1i tan Areas 45 2,24.0,000 47.5% 3 ,450,000 1 ,210,000 41% Major Urban Cent res 11 306,000 6.5% 846,000 540,000 18% Other Areas 44 2,160,000 46.0% 3,360,000 1 ,200,000 41% 100 4,706,000 7,656,000 2,950,000 a inc luded vacancies--196l—4,547,000 occupied units and vacancies = 4,706,000 u n i t s . 1980—7,345,000 occupied units and vacancies = 7,656,000 units Source: Reprinted from the Ontario Associat ion of Housing A u t h o r i t i e s , op. c i t . , p. 86. holds w i l l be in metropolitan and major urban areas alone. This also fore-shadows the extent of urbanization which can be expected by 1980. Moderate- and Low-Income Housing Demands Low-income and e lder ly fami l ies because of p h y s i c a l , social and economic circumstances w i l l require substantial a i d . This has been c l e a r l y empha-sized by a number of author i t ies and is i m p l i c i t in many of the provisions of the NHA. In 1964, the National Housing Act was amended to allow the federa l -provinc ia l partnership to purchase or lease ex i s t ing properties or 91 construct new housing for the use of low-income f a m i l i e s . 2 ^ The amendment also allowed for the establishment of " l a n d banks" financed up to 90 per cent by federal loans, to be used to construct low-rental pro jects . Limited-dividend companies can also borrow up to 90 per cent of the cost of bui ld ing or acquiring low-rental pro jects , hostels or dormitory type d w e l l -ings for older people . 2 ? If strenuous e f for t s were made to use these pro-v i s i o n s , th i s too would have an effect on the demand for new housing because of undoubling and el iminat ion of sub-standard u n i t s . I 1 Ting, for example, states in discussing publ ic assistance to housing: If i t were assumed that the addit ional expenditures due to i ncreasedc'government p a r t i c i p a t i o n would amount to $200 m i l l i o n per year by 1970, th is would provide an addit ional 15,000 units annually in the form of new developments, purchase of ex i s t ing uni ts , .and r e h a b i l i -ta t ion of worthwhile res ident ia l p r o p e r t i e s . 2 8 This level of expenditures between 1965 and 1970 would mean the production of 90,000 publ ic assistance housing units to meet the section of the popu-l a t i o n in need of low-income housing. But author i ta t ive estimates s t i l l place th is far below the supply required to meet ex i s t ing needs. Thus, the Ontario Study has estimated the tota l housing requirement for moderate (that i s , f u l l rental recovery) and subsidized housing between 1966 and 1980. (See Table 10.) The Table shows the amounts required by the popula-t ion in each successive year per iod. But in view of the public housing and low-rental experience in construction in the past, an accelerated pro-gram reinforced by Herculean e f for ts and continued enthusiasm are required i f supply is to overtake the ex i s t ing demand and needs. 29 26see l l l i n g , op. c i t . , p. 31, for these references to the 1964 amend-ment to the National Housing A c t . 2 7 | b i d . 2 8 l b i d . , pp. 31-32. 2 9|t should be observed that the extent of low-rental housing need is seen not only in the income structure but in the occupational composition of the population. Occupational status is also a f a i r indicat ion of education, t r a i n i n g and l i k e l y income of the respondents. 92 The changes in demand envisaged in these data take into account popu-la t ion growth and composition. They provide a useful measure of the demands of moderate- and low-income family housing. Not a l l the ava i lab le data can be assembled in a study of th is k ind. But enough has been incorporated here to es tabl ish that the ex i s t ing data are avai lable and should be u t i l i z e d when formulating housing p o l i c i e s for low-income f a m i l i e s . TABLE 10 LOW-INCOME HOUSING REQUIREMENT Period Ful l Recovery Segment Moderate-1ncome Housing (25% of population)---Subsi di zed Housi ng (33% of population) Non-rE 1 der 1 y Fami 1 i-es E 1 der 1 y Fami 1 i es and Non-fami 1i es 1966 - 1970 228,000 194,000 108,000 1971 - 1975 250,000 210,000 118,000 1976 - 1980 289,000 252,000 139,000 Source: Adapted from the Study made by the Ontario Associat ion of Housing A u t h o r i t i e s , op. c i t . , p. 99. Summa ry The housing needs and requirements which underlie demand are important considerations for guiding government decisions as regards housing expendi-tures . Above a l l , demand and need must be seen in correct re lat ionship to each other. In p a r t i c u l a r , market demand w i l l not o r d i n a r i l y re f lec t total housing needs because lack of income often makes i t impossible to translate \ basic needs into e f fec t ive demand. Therefore, those groups which are often unrepresented, in the market are moderate- and low-income f a m i l i e s . Besides, housing is but one of several necess i t ies , and must compete in the family budget with food, c l o t h i n g , transportation and other items. 93 It would seem, then, that in order to determine the extent of needs, p a r t i c u l a r l y of moderate- and low-income f a m i l i e s , certain measurements must be emphasized, A number of studies have already established the tools which should be u t i l i z e d in gauging the housing needs of various income groups. What is more, these tools have on occasion been used to study housing needs in Canada. Federal p o l i c i e s should therefore have f u l l regard for these studies in the actual operation of housing l e g i s l a t i o n . T h i s , of course, assumes that p o l i c i e s are aimed at der iving maximum welfare from social p o l i c i e s and through the optimum a l l o c a t i o n of public expenditures. In considering needs and demands from the standpoint of community planning, two further aspects of the housing problem emerge. The problem can be seen as an individual matter, in which case, market forces , based on the interplay of e f fec t ive demand and the supply ca l l ed for th in response to that demand, play the determinative ro les . The problem can be seen, on the other hand, in terms of planning to meet e x i s t i n g and future needs, espec ia l ly where the pace of urbanization is increasing. In a mixed economy, such as that e x i s t i n g in Canada, the proper development of the urban structure requires the sat i s fac tory balancing of these fac tors . CHAPTER V SOCIO-ECONOMIC FACTORS IN HOUSING: VANCOUVER AS A CASE STUDY The City of Vancouver is used here as a case study to examine the effectiveness of the National Housing Act provisions in meeting the hous-ing requirements of the d i f fe rent family income groups. The most recent source of extensive data on family income in Vancouver i s the 1961 Census of Canada. Therefore, appl ica t ion of 1961 census data to housing output between 1961 and l966 - - the method which w i l l be employed— assumes that conditions e x i s t i n g in 1961 have remained stable to the present time. For the purposes of t h i s analy/sis, recently gathered data on convent-ional mortgage f inancing and on housing a c t i v i t i e s under NHA w i l l be used. Emphasis w i l l be placed on s t a t i s t i c a l data re la t ing to housing output for the period \SGk to 1966, par t ly because of the ease of securing data for th i s per iod, and par t ly because of the t o p i c a l i t y of such data. It i s recognized, however, that the construction industry in general, and- housing construction in p a r t i c u l a r , often show violent f luctuat ions due to the s e n s i t i v i t y of the industry to p r e v a i l i n g economic c o n d i t i o n s . ' Growth of the Ci ty and Metropolitan Areas The growth of the City of Vancouver and i t s suburbs.has been impressive during the last t h i r t y years. In describing how and when this urban See Diagram 3, p. 5^ above. 95 expansion occurred, E. D. B a r t l e t t , e t . a l . express the view that : Changes in suburbia date from the early and late For t i es , when '; : population at f i r s t increased in B.C. attracted by war-time industry, house-building was severely c u r t a i l e d . For some years, choice of neigh-bourhood and choice of housing were both l i m i t e d . The c i t y core and the old suburbs accommodated the old and the young, the married and s ing le , middle and working c l a s s , the stable and the t rans ient . Later , when bui lding materials and labour were freed from war de-mands the new suburbs began to take shape and real estate projects started further and further a f i e l d . 2 Thus, rapid decentra l izat ion from the core of the Metropolitan areas has been of quite recent o r i g i n , and has been c losely related to the opportunity to construct houses in out ly ing suburban areas and to the mobil i ty a r i s i n g from improved transportat ion, espec ia l ly the automobile.3 It wi11 be shown later that the provisions of the National Housing Act have been i n s t r u -mental in f a c i l i t a t i n g th is outward movement as w e l l . Socio-Economic Character is t ics Population c h a r a c t e r i s t i c s : In 1961, the census population of the City of Vancouver stood at 384,522. This represented an 11.5 per cent growth over 1951—an average annual rate of growth of approximately 1.2 per cent during the decennial per iod. ln contrast , Vancouver Metropolitan area grew from approximately 562,000 in 1951 to over 790,000 in 1961 which means an i n -crease of 40.6 per cent during the ten-year per iod. It is therefore evident that the areas of major growth were in the suburban areas. These aspects of the growth trends of the area are apparent in Table 11. 2 E m e r a l d Dorothy B a r t l e t t , e t . a l , A Regional Study of Social Welfare  Measurements, unpublished Master of Social Work Thesis , Univers i ty of ' B r i t i s h Columbia, Vancouver, 1964, pp. 3 9 - 4 0 . 3 j o h n R. Wolforth, Residential Location and Place of Work, B.C. Geo-graphical Ser ies , No. 4 , (Vancouver: Tantalus Research- L t d . , 1965) Chapter I I I . 96 TABLE 11 COMPARISON OF POPULATION GROWTH IN THE CITY OF VANCOUVER AND GROWTH IN VANCOUVER METROPOLITAN AREA 1951-61 1951 1956 1961 Met ro. Vane. % Increase 561,960 18.3 665,017 18.3 790,165 18.8 Vancouver City % Increase 344,833 365,844 6.1 384,522 11.5 Ci ty as % of Metro. Vane. 61 .4 55.0 48.7 Source: Dominion Bureau of S t a t i s t i c s , Census of Canada, 1951, 1956, 1961. The C i t y ' s population in 1961 was composed of 23.4 per cent in the under 15 age group and 13*8 per cent was in the 65 and over bracket. If we compare th is with the Metropolitan area as a whole, i t w i l l be found that 28.7 per cent of the Metropolitan population are under 15 with 11.1 per cent 65 and over.4 |t is true that in the total Metropolitan area there are l o c a l i t i e s with much higher concentrations of older people such as White Rock with over a t h i r d of i t s people 65 years and over. However, i t is evident that the City of Vancouver has a much higher proportion of the e lder ly than the Metropolitan area as a whole. The reasons for the concentration of e lder ly in the Metropolitan area are many. Vancouver has a mild winter c l i -mate and the province of B r i t i s h Columbia as a wholehas a prosperous economy. Thus i t a t t rac ts people from the P r a i r i e Provinces and other Eastern Prov-inces, many of these come to r e t i r e in the Metropolitan area. 4Dominion Bureau of S t a t i s t i c s , Census of Canada, 1961, "Populat ion and Housing Character is t ics by Census Trac ts " , Vancouver, B u l l e t i n CT-22, Table 1 . 97 Income Character is t ics The average wage and salary income per family in Vancouver in 1961 was $5,366 as compared with $5,489 in the Metropolitan area.5 Although to ta l family income from a l l sources was an average of $6,084 for the c i t y , ^ re f l ec t ing the fact that the non-wage earning groups, for example the self-employed, have a much higher average family income. On the other hand, i f the d i s t r i b u t i o n of income is considered we f ind that in 1961, 29.2 per cent of fami l ies received less than $4,000 and 46.3 per cent of famil ies received between $4,000 and $8,000. (See Table 12). TABLE 12 DISTRIBUTION OF FAMILY INCOMES: VANCOUVER (1961) 1ncomes Families in Each Income Group Cumulative Number Per Cent Per Cent Less than 1,000 2,638 2.8 1,000 - 1,999 6,602 6.9 9.7 2,000 - 2,999 7,629 7.9 17.6 3,000 - 3,999 11,172 11 .6 29.2 4,000 . - 4,999 14,102 14.7 43.9 5,000 - 5,999 12,744 13-3 57.2 6,000 - 6,999 10,184 10.6 67.8 7,000 - 7,999 7,407 7.7 75 .'5 8,000 - 8,999 8,183 8.5 84.0 9,000 - 9,999 5,999 6.3 90.3 10,000 -14,999 3,182 3.3 93.6 15,000 and over 6,084 6.4 100.0 Total 95,926 100.0 Source: Dominion Bureau of S t a t i s t i c s , Census of Canada, 1961. 5c ensus of Canada, 1961, op. c i t . , Table 2. 6 I b i d . , V o l . . IV, Part 1, Table F -8 . 98 Housing C h a r a c t e r i s t i c s : City of Vancouver There were some 118,A-OO dwellings in Vancouver in 1961 , housing on the average 3.1 persons per dwelling, and havhng a median value of $13,783. Of the t o t a l number of occupied dwellings, app roxi matel.y 3.6 per cent were in need of major repairs.? Crowded dwellings, according to census count, accounted for almost 7-2 per cent of a l l dwellings in the c i t y . 8 Rentals in the form of contract or cash rent averaged $77 per month. Owner-occupied dwellings were in the neighbourhood of 60.8 per cent,^ compared with 69.7 per cent in the Metropolitan area., as can be seen from Table 13- There has c o n s i s t e n t l y been a r e l a t i v e l y high proportion of owner-ship in the Vancouver area as compared with other Metropolitan areas. The changes in patterns of home-ownership in Table 13 also show the s i g n i f i c a n t trends which occurred during the twenty-year period 1941-1961. And we should note that i t was during most of this period that NHA has been in operation. With these socio-economic c h a r a c t e r i s t i c s in mind, the provision of housing in the C i t y w i l l now be considered. The Structure of the Mortgage Market in Vancouver A word needs to be said regarding the organizations and agencies that constitute the mortgage market in Vancouver. The i n s t i t u t i o n a l f a c i l i t i e s a v a i l a b l e to the family seeking to buy or rent accommodation in Vancouver p a r a l l e l those which exist in other parts of Canada and which were reviewed in Chapter III. At the governmental l e v e l , Central Mortgage and Housing Corporation through i t s regional branch located in Vancouver, represents the 7Census of Canada, 1961, op. c i t . , Table 22. 8 i b i d . 9|6id. 99 TABLE 13 CHANGES IN THE PATTERN OF HOME-OWNERSHIP IN THE CENSUS METROPOLITAN AREAS OF CANADA (1941, 1951 and 1961) Per cent of Houses Owned Met ropoIi tan Area 1941 1951 1961 Ca1ga ry 39 60 63 Edmonton 44 62 65 Hali fax 33 55 55 Hami1 ton 41 68 74 London 44 64 67 Mont rea1 11 24 33 Ottawa 27 45 52 Quebec 19 36 42 Saint John 22 38 44 St . John's n . a . 66 70 Sudbury 37 58 56 Toronto 36 71 67 Vancouver 44 68 70 Vi c tor i a 40 70 71 Wi ndso r 36 62 72 Winnipeg 36 61 67 ri.a. = not ava i lab le since Newfoundland did not enter confederation u n t i l 1949 and therefore census data are not a v a i l a b l e . Source: Census of Canada, 1941, 1951 and 1961. Federal Government in administering the National Housing A c t . Its import-ance stems not just from the physical act of making loans or insuring loans, but even more s i g n i f i c a n t l y from the role which the Federal Government plays in es tabl ishing the rates of mortgage financing and other terms and condi-tions of acquiring house mortgages. In addit ion to CMHC, there are a number of conventional lenders con-s i s t i n g of such " i n s t i t u t i o n a l lenders" as l i f e , loan and trust companies, Quebec Savings, banks, fraternal and mutual benefit s o c i e t i e s . ' ^ 10For def i n i t i o n s of approved, i n s t i t u t i o n a l and conventional lenders, see Footnote (1) of Table 22 and also p. 84 in CMHC p u b l i c a t i o n , Canadi an  Housing S t a t i s t i c s , 1965-100 Chartered banks have been involved in mortgage lending at various times. It w i l l be recal led that the NHA 1954 was revised to al low chartered banks to make mortgage loans. However, when the mortgage rate rose above:6 per cent, which, was then the maximum rate that chartered banks were allowed to charge on loans under statutory regulat ions, the banks withdrew from the mortgage lending f i e l d . Steps have la te ly been taken to amend The Bank Act in order to at tract banks to the mortgage f i e l d . In addi t ion to these, there are credi t unions, such as the B r i t i s h Columbia Teacher's Federation and certain finance companies which are engaged in the f i e l d of second mortgage f i n a n c i n g . ' ' Use of National Housing Act in Vancouver by I n s t i t u t i o n a l  Mortgage Lenders Recent evidence indicates that i n s t i t u t i o n a l lenders in Vancouver have been turning the i r backs on the National Housing Act as a source of mortgage f inanc ing . As late as 1961, i n s t i t u t i o n a l lenders obtained NHA assistance in making loans for 25 per cent of the new dwellings started in the c i t y . 1 9 By 1965, the proportion had declined to 8.8 per cent. Even more dramatic is the fact that the number of dwelling units which were started under the provisions of NHA mortgage f inancing were as fo l lows : 25 dwelling units in 1964, 34 in 1965 and 12 in 1966.'3 ''''According to information from CMHC, second mortgages have now been brought within the scope of NHA. For a record of the kinds of res ident ia l mortgage f inancing organizations in Vancouver, see Realty Sales Review, published in Vancouver by Teela Market Surveys. ' z P h i l i p H. White, Dean of the Faculty of Commerce, Universi ty of B r i t i s h Columbia, "Some Character is t ics of the New Housing Market in Metro-pol i tan Vancouver", in Real 'Estate Trends in Metropolitan Vancouver 1966, (Vancouver: published by The Vancouver Real Estate Board, 1966) p. A-4. 13Data from Central Housing and Mortgage Corporation, Vancouver. 101 During the same.period, new dwelling units started average more than 4,000 in each year and was in excess of 7,000 in 1964. (See Table 14.) TABLE 14 DWELLING STARTS CITY OF VANCOUVER, 1961-66 Year Single FamiIy a Apartments'3 Total 1961 596 1 ,772 2,368 1962 888 2,221 3,109 1963 795 3J76 3,971 1964 902 6,229 7,131 1965 903 5,149 6,052 1966c 587 2,359 2,946 4,671 20,906 25,577 Sources: a P . H. White, op. c i t . , A -27; b j . P. Roberts, "Condominum Ownership in B r i t i s h Columbia" in Real Estate Trends in Metropolitan Vancouver, (Vancouver: published by Vancouver Real Estate Board, 1966), B-17; c1966 data from CMHC, B u l l e t i n A -38, January 11, 1967. One of the noticeable features of res ident ia l construction in Vancouver has been the increase in construction of apartment dwel l ings . The factors contr ibut ing to the large investment in apartments are quite v a r i e d . However, the structure of the population in the' area provides some clue to the under-lying causes which have resulted in this phenomenon. In the West End, which has the largest concentration of h igh-r i se apartments, 28.3 per cent of the famil ies are e l d e r l y , ' ^ 38.4 per cent are one-person households whereas 53.2 per cent are non-family households. '^ One study of the Vancouver Metropolitan area has noted that : ' 4 E . D. B a r t l e t t , e t . a l . , op. c i t . , Chapter 4, Table 8. ' 5 | b i d . , p. 73. 102 In a l l of Metropolitan Vancouver, the West End has the highest proportion of s ingle people l i v i n g alone as well as households that do not represent f a m i l i e s . There are t r a n s i -ents and e lder ly ret i red people in this sect ion; but there are also many working people who want to be near the i r jobs in the downtown section of the c i t y . . . w i l l c l a r i f y the mixed and rapidly changing pattern in the "West End" of today. ' 6 Thus, the increase in apartment dwelling construction in the City has accompanied the r i se in the number of young single-householders seeking decent accommodation close to the downtown area. There are of. course many other motivating factors which underlie th is change in l i v i n g habi ts . For example, the a v a i l a b i l i t y of o f f i c e jobs for young people in the downtown area provides an opportunity for younger people to leave the i r parental home e a r l i e r than was previously the case. The geographical location of the West End, in p a r t i c u l a r i t s proximity to English Bay and Stanley Park are important factors contr ibut ing to the continued growth of th is trend. Wil l iam B. Watts of Watts Marketing Research Ltd . w r i t i n g in the Rea1 Estate Trends in Metropolitan Vancouver 1 9 6 4 , has observed that: Apartment construction in Metropolitan Vancouver has been going ahead at an ever increasing rate in the past few years as apartment l i v i n g grows in popular i ty . Investors are taking advantage of th i s s i t u a t i o n , attracted by the sound and moder-ately high rate of return offered by apartments. Both l i f e insurance companies and other investors are interested in the long-term mortgages with the i r high degree of s e c u r i t y . ' 7 Here are expressed some of the basic economic factors in the changing l i v i n g conditions of the C i t y . The prime mortgage lenders have been attracted to apartment construction by the p r o f i t s and the security to be derived from investment in apartment bu i ld ings . Watts at tr ibuted a s i g n i f i c a n t part of th i s trend in apartment bui ld ing to the high cost of land. l 6 B a r t l e t t , e t . a l , , op. c i t . , p. 7 3 -' 7 w i l l i a m B. Watts, "Apartment Trends in Metropolitan Vancouver", Rea1  Estate Trends in Metropolitan Vancouver 1 9 6 4 , (Vancouver: published by the Vancouver Real Estate Board, 1 9 6 4 ) , p. B - l . 103 J . P. Roberts has presented some information data on apartment dwel l -ing location in the Ci ty of Vancouver for 19o5 . ' 8 Of a l l the apartments in the Greater Vancouver Area 76.8 per cent (or 34,15' suites) are in the Ci ty of Vancouver. Thir ty- three per cent are in the West End and a l i t t l e over 10 per cent in the South Granvi11e-Oak Street region. Twenty-five per cent of West End suites are bachelor apartments; 65 per cent are one-bedroom; 12 per cent are two bedroom. S i m i l a r l y , South Granvi 1le-Oak Street area (which presumably caters to the nursing s ta f f at the Vancouver General Hospital as well as downtown workers) had 21 per cent bachelor su i tes ; 68 per cent one-bedroom and 10.4 per cent two-bedroom. In short , the areas of highest concentration of apartments do not cater to famil ies except on a very mi ni ma 1 sea 1e. It was estimated that apartment starts during the period 1961 to 1966 would provide 20,906 s u i t e s . (See Table 14.) During the same period 4,671 s ingle family structures were s tar ted . Hence approximately 82 per cent of new dwelling s tarts during the s ix-year period were in the form of apartment dwel l ings . Dean White has shown that between 1961 and 1965 the percentages of dwell ing s tarts financed under the National Housing A c t , for each consecutive year, were 25, 16.3, 11.8, 9.2 and 8.8 for the ent ire Metro-poli tan Area . '9 There i s , however, a great deal of construction a c t i v i t y in the Metro-pol i tan area as well as in Vancouver as seen in Map 1. The National Housing Act has never been the predominant source of funds for house construction in the City of Vancouver, but i t s v i r t u a l demise in ' ° J . P . Roberts, "Condominum Ownership in B r i t i s h Columbia" in Rea1 Estate Trends in Metropolitan Vancouver, op. c i t . , B-6. 19white, op. c i t . , A-4. West. V a n c o u v e r (547) [618] New D w e l l i n g U n i t s S t a r t e d i n t h e C i t y o f V a n c o u v e r : 1965 -1966 -T o t a l S t a r t s NHA A s s i s t e d 6 , 117 2,946 34 12 UEL - U n i v e r s i t y Endowment Lands o -s 1 z E M E T R O P O L I T A N V A N C O U V E R * Number o f New D w e l l i n g U n i t s S t a r t e d i n : (1965) and [i960] =fcfor s e l e c t e d a r e a s . M A P 1 105 r e c e n t y e a r s i s a m a n i f e s t a t i o n o f c e r t a i n c o n f l i c t s between t h e m a r k e t f o r c e s and t h e p o 1 i c i e s e x p r e s s e d i n t h e A c t . W h i t e has s t a t e d : The d e c l i n e i n i m p o r t a n c e o f t h e N a t i o n a l H o u s i n g A c t i n V a n c o u v e r m a r k e t i s a s s o c i a t e d w i t h an a l m o s t c o m p l e t e w i t h d r a w a l o f a p p r o v e d l e n d e r s . From m a k i n g more t h a n h a l f o f t h e l o a n s i n 1962, a p p r o v e d l e n d e r s made l e s s t h a n one i n t e n o f t h e l o a n s i n 1965.20 To p r o b e ' , i n t o t h e c a u s e s o f t h i s d e c l i n e wou ld r e q u i r e f u r t h e r s t u d i e s o f an j l . n tens i ve s o r t . Some c o n v e n t i o n a l l e n d e r s have s u g g e s t e d a number o f f a c t o r s i n c o n v e r s a t i o n w i t h t h i s w r i t e r . In t h e words o f one i n t e r v i e w e r : " I t i s e a s i e r to i n v e s t two and a h a l f m i l l i o n d o l l a r s i n t e n a p a r t m e n t s u i t e s t h a n i n two hundred s i n g l e f a m i l y m o r t g a g e s . The management p r o b l e m s a r e l e s s and t h e p r o f i t s a r e g r e a t e r . " P e r h a p s t h e key t o t h i s d r a m a t i c s h i f t i s t o be f o u n d i n t h e l a s t p h r a s e ; f o r , t h e p r o f i t s under NHA a r e l i m i t e d . 2 1 i t was a l s o p o i n t e d o u t t h a t i n V a n c o u v e r , t h e r e a r e a number o f 3 3 - f o o t w i d e l o t s . These a r e p r e c l u d e d f r o m r e c e i v i n g mor tgage f i n a n c i n g a s s i s t a n c e under NHA r e g u l a t i o n s . F i n a l l y , i n a m a r k e t i n w h i c h l a n d p r i c e s have s o a r e d t o e x t r a o r d i n a r y l e v e l s , t h e v a l u a t i o n p l a c e d on l a n d by CMHC may not be i n a c c o r d w i t h t h e d o l l a r a s s e s s m e n t w h i c h d e v e l o p e r s have p l a c e d on t h a t l a n d . D e v e l o p e r s and m o r t g a g e c o m p a n i e s have r e s o l v e d many o f t h e d i f f i c u l t i e s o f f i n a n c i n g by i n t r o d u c i n g v a r i o u s m e t h o d s . In one c a s e , t h e method used was a f o r m o f v e r t i c a l i n t e g r a t i o n i n w h i c h t h e o p e r a t i o n s o f t h e d e v e l o p e r s , B l o c k B r o t h e r s R e a l t y C o . L t d . have become i n t e g r a t e d w i t h a mor tgage 2 0 W h i t e , o p . c i t . , p. A-4. 2 ' T h i s i s o f i n t e r e s t b e c a u s e p r i m e mor tgage l e n d e r s , e s p e c i a l l y l i f e i n s u r a n c e c o m p a n i e s , have t r a d i t i o n a l l y been h i g h l y i n f l u e n c e d by g r e a t e r s e c u r i t y o f c a p i t a l i n v e s t m e n t . I 106 finance company. (See Diagram 6.) The relat ionships between the various parts of the whole corporate establishment reveals the interest ing i n t e r -connections of the parts of the private market s t ructure . C l e a r l y , use of NHA as a means of creating greater home-ownership in the City of Vancouver has dec l ined. This marked decrease in use has not only occurred in the C i t y , but in the whole Metropolitan area a l so . The evidence should be viewed in l ight of the argument of th is t h e s i s , namely, that the housing pol icy has been weighted in favour of the home-owner. Yet the events of recent years indicate that the Act i s not f u l f i l l i n g th i s purpose as e f f e c t i v e l y as the emphasis would merit at least in Vancouver. An Example of Mortgage Calculat ion It is i l luminat ing to examine an hypothetical case, in order to see how the operation of the mortgage market af fects the three income groups which have been dist inguished in Chapter I . Assume that a family consis t ing of two or three c h i l d r e n , with an income of $4,000, wanted to purchase the hypo-thet i ca l bungalow mentioned on page 62 (supra). The family makes appl icat ion for a NHA loan to meet the cost of th is bungalow which has been valued at $ 1 8 , 3 2 6 . With an interest rate of 7 1/4 per cent on the loan, which is to be amortized over a twenty-five year period, the ca lcu la t ion w i l l be as fo11ows: 1 . 95% of the f i r s t $13 ,000 = $ 1 2 , 3 5 0 . 0 0 2. 70% of the remaining $5,326 3,728.00 16,078.00 3. Insurance fee (2% of the loan) = 3 2 1 . 5 6 4. Total NHA loan avai lab le 16,399-56 5. Down Payment (18,326 - 16,078) = 2,248.00 6. Total amount paid for property $ 18,647.56 A mortgage loan of $16 ,399-56 at 7 1/4 per cent interest requires monthly payments of $ 1 1 7 over twenty-f ive years to r e t i r e the d e b t . 2 2 2 2 See Montftly Amortized Mortgage Payments, Tables prepared by Financial Publi shi ng C o . , (Boston: 1965, Publicat ion No. 324), p. 71. DIAGRAM 6. AN EXAMPLE OF THE STRUCTURE OF MORTGAGE MARKET OPERATIONS MORTGAGE C r AT 962) CO. LTD, SMCSNG BLOa R Tea LTD. REALESTATE SALES WHAT: R E L S I D E N H A L -N E W H O M E S U S E D H O M E S jR£VEM.U£ — APARTMENTS FARMS COMPANIES H O W : POLICIES — - 1 I N 1 0 D A Y PROGRAM - GUARANTEE ACTION ' -TRADING (SOUTHERN SLOPE [isssj LTD.) -PROMOTION! MATERIAL— TRAINING PROGRAM —MANAGEMENT EXPANSION: -PERSONNEL— MARKET PENETRATION PROPERTY MANAGEMENT MORTGAGE P O R T F O L I O DEVELOPMENT PORTFOLIO ANALYSIS INCOME ARREARS FINANCING NUMBER OF PROPERTIES STAFF — INCOME POTENTIAL ""STAFF — POTENTIAL DhJC P til BEACH TOWERS MUSQUEAM F U T U R E C O N S T R U C T I O N ' BLOCK BROS CONSTRUCTION LKAWN i BRITISH CONSTRUCTION J. J ANT ZEN ! HEATHER CONSTRUCTION A. KROEKER BIDWELL CONSTRUCTION PREGEHR ; O S L E R CONSTRUCTION-100% OWNED [TREASON NUMBER AND TYPE OF BUILDINGS ; INCOME i FINANCING ] F U T U R E (Source: Block Bros. Realty Co.  Ltd . , Vancouver.) 108 Thus, the annual payments of $1 ,404—or 35 per cent of income--is to be devoted to mortgage payments alone. Since the taxes for school and general purposes on th i s property is approximately $700.00,^3 the debt service rat io would then be calculated as fo l lows: DSR = 1,404 + 700 4,000 = 0.53 Expressed in percentage terms the debt service rat io i s approximately 53 per cent which is far in excess of the 27 per cent maximum which the regulations under NHA s p e c i f i e s . The fact i s , that even i f a house were valued at $13,783, which was the median value of houses in the City in 1961, (see above page 98 ) , the debt service rat io would be in the neighbourhood of 40 per cent using 1961 m i l l r a t e s . ^ Thus, for almost 30 per cent of the fami l ies in the C i t y , namely, those with incomes under $4,000 (see Table 12), the pr ice of a new house is, concei.vabl y..bu rdensome. Only when income approaches $8,000 does i t appear to be reasonably convenient to afford to own a home valued at $18,000 and yet be under the 27 per cent debt service r a t i o . 23] t i s assumed that the market value and the assessed value are i d e n t i c a l . The provinc ia l home-owner's grant of $110 has been deducted. The tax rates used are those applied to the assessed values of property in the Ci ty of Vancouver in 1966, namely, general purpose taxes on 100 per cent of the value of the land and 50 per cent of values of improvements; school purpose taxes on 100 per cent of land values and 75 per cent of improvement. General purpose taxes were at the rate of 4l m i l l s , school at the rate of 24.564 m i l l s . In 1967 these rates are 41.5 and 27-553 respect ively . 2 ^This is calculated on the assumption that in addit ion to the value of the house, the lot i s valued at $1,000. Vancouver m i l l rates for 1961 of 40 m i l l s for general purposes and I8 .96I for school purposes have been em-ployed. The interest rate of 6 3/4 per cent on a twenty-five year mortgage loan, based on 95 per cent of the f i r s t $13,000 and 70 per cent of the remainder was used. 109 Demand Factors The demand for housing springs pr imar i ly from the new family formation, from immigration and other demographic charac ter i s t i cs of the population. The growth in the population of the City has been shown in Table 11. Immigration is also important in Vancouver. Between 1956 and 1961, approximately 11.6 per cent of the 635,9^2 immigrants entering Canada sett led in B r i t i s h Columbia.25 We can assume that many of the migrants gravitate towards the V ncouver area, and that a large proportion set t led in the City a i t s e l f . Also note in this connection the seasonal demands of univers i ty s t u -dents who move i n t o , and out of , the City at various times during the academic year. Vacancy Rate The vacancy rate is yet another factor which is indica t ive of the demand pressures created in the market. It was estimated in the survey carr ied out by J . P. Roberts 26 thattthe-;average vacancy rate for apartments in Metropolitan Vancouver was 1.5 per cent in 1961. In the Ci ty i t s e l f , the rate was e s t i -mated at 1.6 per cent. It wi11 be recal led that Roberts has also estimated that 76.8 per cent of a l l apartments in the Metropolitan area are to be found in Vancouver C i t y . When i t is real ized that only one year previously the vacancy rate stood at k per cent , 2 ^ the recent accumulation of pressures on housing can better be grasped. The pressure exerted on l i v i n g space as a result of the shortage of housing, which i s evident from the vacancy rate , is reflected in rental values 25census of Canada, 1961, op. c i t . , General Review, V o l . V I I , Part I I . ^ R o b e r t s , op. c i t . , B-2. 2 7 1 b i d . 110 of apartment suites and houses. For famil ies with s u f f i c i e n t incomes to inent apartment s u i t e s , the rentals range from $115 per month in the East Hastings area to $175 per month in the West End for two-bedroom s u i t e s . In Kerrisdale the rentals range from $120 per month for one-bedroom suites to $155 for the two-bedroom u n i t s . 2 8 For the large family with only modest income, having to pay these rentals would tend to create a heavy f inanc ia l burden. Regardless of th i s eventual i ty , these fami l ies later have to seek other accommodation elsewhere because owners of modern apartments do not appear to welcome the low-income fami ly , espec ia l ly those with c h i l d r e n . Moderate- and Low-Rental Housing in Vancouver Moderate- and low-rental housing consists of l imited-dividend housing co-operative and pub 1ic housing. At the present time, a l l public housing projects in the Greater Vancouver Area are to be found in the Ci ty of Van-couver. These projects are financed through federa1-provincia 1 cost-sharing agreement. The provis ion of housing under the federa1 -provincia 1 agreement scheme, Section 35A, has resulted in the construction of s ix housing projects in the Ci ty . Public Housing P r o j e c t s ^ No. of Units 1 . Li t t l e Mountain 224 2. Orchard Park 169 3. MacLean Park 159 4. Skeena Terrace 234 5. K i l l a r n e y Gardens 188 6. Raymur Place (not quite completed) 376 Total 1,350 " R o b e r t s , op. c i t . , B - 9 . 29Source: City of Vancouver Planning Department, F i l e Reference H95-95. 111 Costs of Schemes The estimated cost of land and construction for these s ix projects amounted to $15,351,000.30 In addit ion to the publ ic housing projects mentioned above, there are three more s i tes under study by CMHC. Sketch plans have been prepared for these proposed schemes and i t is expected that they w i l l , provide 590 addit ional dwell ing u n i t s . Provis ion of public housing in the City is associated with the urban renewal program which the City has undertaken. The Director of Planning, W. E. Graham, referred to th is pract ice when he stated: The pol icy of providing banks of housing in advance of clearance is being continued with respect to Redevelop-ment Project No. 2 and two further public housing schemes are under construction which .wi l l provide for the re-accommodation of persons displaced by the project.31 There are four major projects and schemes under federa1-provincia 1 cost-sharing agreements. The estimated costs of two of these projects i l l u s t r a t e federa l -provinc ia l cost-sharing arrangements.32 Project No. 1 (now nearing completion) Estimates of Costs: Expend i tu res to February 1966 - costs of acquis i t ion and clearance $2,932,000 - r e c o v e r i e s 1,014,000 - net costs 1,918,000 Sharing of Net Costs: - Federal Government (50%) 959,000 - Provinc ia l Government (25%) 479,500 - Ci ty of Vancouver (25%) 479,500 30w. E. Graham, "Urban Renewal in Vancouver", Real Estate Trends in  Metropolitan Vancouver, C-14. 31|bid. , C -9 . 32|bid. , C-14. 112 Project No. 2 ( in progress) Est i mates Estimates of Cost: - cost of acquis i t ion and clearance - recoveries - net cost $5,955,000 2,098,000 3,857,000 Sharing of Net Costs: - Federal Government (50%) - Provinc ia l Government (25%) - Ci ty of Vancouver (25%) 1 ,928,500 964,250 964,250 Limited-Dividend Housing In addit ion to the public housing schemes above there is a l i m i t e d -dividend housing project (at Sixth Avenue and Carolina) which contains 45 uni t s .33 The Role of the Provinc ia l Government The Province occupies a c ruc ia l posi t ion because of i t s const i tut ional r e s p o n s i b i l i t i e s , and because i t has the power to approve or reject a p p l i c a -t ions made by munic ipa l i t i es for assistance under the National Housing Act with regard to public housing pro jects . There are two kinds of proposals that can be made in making appl ica t ion for public housing assistance. F i r s t l y , there are long-term loans avai lable to the province for construction or ac-q u i s i t i o n and conversion of housing projects and grants for operating losses. Secondly, there is the federa l -provinc ia 1 partnership scheme for construct ing, and managing a housing project . The Province of B r i t i s h Columbia passed the Housi ng Act in 195034 to 33See "Summary of Low Rental Housing in Vancouver". Prepared by the Planning Department, F i l e Ref. H .95-95 , November 25, 1966.. 3^B.C. , Housi ng A c t , R . S . B . C , I960, C. 183, S. 1. 113 take advantage of the NHA l e g i s l a t i o n with respect to federa1-provincia 1 cost-sharing housing programs. The preamble to the Act acknowledges that " i t is deemed necessary and expedient that assistance be given towards the provis ion of adequate low-cost housing and urban redevelopment", that the Government of Canada was prepared to undertake j o i n t l y with provinces pro-jects aimed at acquiring and developing land for housing purposes, and that the Government of Canada had made proposals " t o ass is t munic ipa l i t i es subject to the approva1 of the Provinee in the clearance, planning, rehab-i l i t a t i o n and modernization of blighted or substandard areas".35 The B r i t i s h Columbia Housing Act established the basis for f e d e r a l -provinc ia l agreements (Section 3)-. It seemingly gives the munic ipa l i t i es extensive la t i tude under Section 12. Again, the provincia l government can create "bodies corporate and p o l i t i c " , under Section 11, with power to plan, construct and manage any housing project under the A c t . It is under th i s Section that the Vancouver Housing Authori ty was established in 1953- The Provinc ia l Government also contr ibutes , to the extent of one t h i r d of the cost , to construction of rental housing or conversion of ex i s t ing buildings to rental housing. The Provinc ia l Government makes f i n a n c i a l contributions to non-profi t organizations which construct housing for the e l d e r l y . This Senior C i t i z e n s ' Housing, as i t is c a l l e d , are b u i l t by private agencies with assistance from the senior levels of government. It i s estimated that about 1,000 units of these private senior c i t i z e n ' s dwellings are to be found in the City.36 But i t is worthwhile noting that publ ic housing projects such as L i t t l e Mountain and Orchard Park house some e lder ly fami l ies even though 35Loc. c i t . 36S ee "Summary of Low Rental Housing in Vancouver", 1 oc. c i t . 114 they are meant pr imar i ly for rehousing of displaced fami l ies from renewal areas. The Planning Department's "Summary of Low Rental Housing in Vancouver" estimates that at present 535 senior c i t i z e n s are lodged in ex i s t ing public housing, that Raymur Place w i l l provide accommodation for another 150, and that i t i s expected that other projects elsewhere in the Ci ty w i l l provide for over 1,000 senior c i t i z e n s . The provisions of the Housing Act re f lec t the absence of a comprehensive housing pol icy on the part of the Provinc ia l Government.37 The Act allows the provinc ia l government to benefit under the National Housing Act public housing sect ions. But i t is well to note that the provinc ia l government has to approve a pro ject . It would therefore be pertinent to have some established p o l i c i e s as to the c r i t e r i a used in deciding on t h i s important i ssue. Indications of Needs The needs of moderate- and low-income f a m i l i e s , i t has been stated, must be translated into income terms. This is not to say that income is the only c r i t e r i o n : there are such other factors as the age of the fami ly , s ize of the family and i t s heal th . But given a family of adequate income then i t can provide the housing i t requires. In Vancouver, 29 per cent of the population received less than $4,000 in wages and sa lar ies in 1961 (see Tab Ie 12). For most of the fami1i es in th i s group, espec ia l ly those with large f a m i l i e s , some form of low-rental 37The Vancouver Housing Associat ion has stated: " U n l i k e the Ontario Government, our Provinc ia l Government has not encouraged the munic ipa l i t ies to take advantage of the generous assistance avai lable from the Federal Government for publ ic housing purposes. See " P r o v i n c i a 1 Housing Pol i cy" in B u l l e t i n #65, published by the said Assoc ia t ion , A p r i l 19&7. 115 and subsidized public housing is required. Even maiy who are in the lower segments of the middle-income group require some measure of low-rental housi ng. The Vancouver Housing Authori ty has indicated that a waiting l i s t of over 500 e x i s t s .38 /\ survey on housing needs conducted by the United Community Services and submitted in questionnaire form to low-income fam-i l i e s in the Greater Vancouver area, reveals some s t a r t l i n g information. In a number of cases, rents were as much as half the income received. M. J . Audain of the United Community Services of the Greater Vancouver Area has l i s t e d f i v e components of housing needs in Greater Vancouver: 1. There is chronic shortage of rental housing for fami l ies with chi ldren regardless of income. 2. Low income famil ies are l i v i n g under the most wretched conditions of squalor imaginable. 3. E lder ly persons with low income commonly pay 50 per cent of t h e i r income for rent of substandard accommodation. 4. V i r t u a l l y no sui table f a c i l i t i e s exist for the phys ica l ly handi capped. 5. Students and immigrants are other groups suffer ing for lack of housi ng.39 A study of expenditures in the Strathcona Area and MacLean Park was made in 1966 by Regional Marketing Surveys Ltd . The investigators surveyed 199 famil ies and the result of the i r study shows the d i s t r i b u t i o n of income structure presented in Table 15. Note also the pattern of expenditures on food, which was found to exist in the Strathcona Area, in Table 16.below. 38pata from Vancouver Housing Author i ty . 39M. J . Audain, " H i g h l i g h t s of the Housing Si tuat ion in Vancouver", unpublished material ava i lab le by the United Community Services of the Greater Vancouver Area. TABLE 15 INCOME DISTRIBUTION OF FAMILIES LIVING IN PUBLIC HOUSING AREA (in per cent) MCLEAN PARK OTHER STRATHCONA AREA TOTAL Si ngle Fami1y Si ngle Fami ly Si ngle Fami1y 1ndi v . G roup Total 1 nd i v . G roup Total 1ndi v . G roup Total Yearly 1ncome (21) (27) (48) (61) (90) (150 (82) (117) (199) Under $1 ,500 90 65 75 66 4 42 68 13 45 1 ,500- 2,000 5 3 4 9 9 9 9 8 9 2,000- 3,000 5 24 16 4 25 13 4 25 13 3,000- 4 ,500 - 8 4 6 31 16 6 27 15 4 , 5 0 0 - 7,500 - - - 3 20 10 3 17 9 7,500-10,000 - - - 3 3 3 3 3 3 Over 10,000 - - - - 3 1 - 3 I No Answer _ _ _ 8 4 6 8 4 6 Total Too 100 Too 100 100 100 100 100 100 Source: Regional Marketing Surveys L t d . , A Study of Retail Expenditures, prepared for Vancouver Ci ty Planning Department, Project No. 1435, May 1966, p. R-39. 117 TABLE 16 AVERAGE FOOD EXPENDITURES Nat i ona1 Strathcona (DBS 1959) Area $ $ 1 nd i vidua1s 531 669 Fami1i es 1,323 1,552 Per Person ( in famil ies) 352 368 Source: Regional Marketing Surveys L t d . , op. c i t . , R - l . The charac ter i s t i c most noticeable is the proportion of individual householders whose incomes are under $1,500 per year. The fami l ies in the MacLean Park public housing project a l l have incomes of $4,500 and less . In 1965, the consumer price index was 9.5 per cent higher than in 1961 (see Table 7) . The famil ies receiving $4,500 would, under 1961 condit ions , have an income equivalent to about $4,070—just above the $4,000 cut -of f point for the lower th i rd of the family income groups. Summary and Conclusions Vancouver has never used the National Housing Act as extensively as other large urban areas in Canada. But even what use has been made of the Act in the past is f a l l i n g of f to the point where the proportion of d w e l l -ings b u i l t under NHA is n e g l i g i b l e . Major a c t i v i t i e s have been in apartment construction but recently the scale of apartment bui lding has dropped to lower levels indicat ing a slow-down in thhs area. Apartments are b u i l t in areas where the locational ad-vantages bring in high returns. Apartment accommodation is also directed towards special groups—the young non-family group and the e lder ly able to 118 pay the renta ls . Large famil ies with chi ldren are being excluded due to soc io logica l and economic reasons. Vancouver has been experiencing a record-breaking increase in land and bui lding costs . This development is not pecul iar to Vancouver. Undoubtedly, the effect has been to c u r t a i l the supply of housing and the a b i l i t y of prospective home-owners to purchase homes. This comes about because increases in costs result in a higher i n i t i a l down-payment and higher monthly payments over the amortization period. One effect of the high land cost i s l i k e l y to be an increase in apartment construction within the City and in the suburban a reas . It seems then that not only is the NHA not used extensively for con-s truct ion of s ingle - fami ly housing and large apartment su i tes , but also that the housing that is being b u i l t and the rentals are quite outside the scope of the income of moderate- and low-income f a m i l i e s . Nor does i t appear that th is kind of dwelling greatly ass is ts the moderate- and low-income groups at the present time. Public housing is carried out on a small sca le . But in nothing l i k e the proportion demanded in terms of needs. The upsurge in apartment l i v i n g c a l l s into question, and raises doubts about the matter of home-ownership being the ideal form of tenure. But i t does show that part of the urban population ei ther favours mult iple dwelling l i v i n g , or i s constrained to l i v e in mult iple dwel l ings . Note that mult iple dwell ing residences do not remove the opportunities for home-ownership, which is perhaps s t i l l the most desirable form of housing accommodation to the majority of f a m i l i e s , espec ia l ly large f a m i l i e s . Condominium is a tool that can be used to provide both home-ownership and mult iple family l i v i n g . CHAPTER VI We rely mainly on a system of pr ivate enterprise to provide needed f a c i l i t i e s , goods and services , but with the growing complexity of an urban and indust r ia l soc ie ty , we have had to turn more and more to government as an ad-just i ng facto r . National Resources Planning Board, "Development of Resources and S tab i I i za t ion of Employment in the Uni ted States" . ' SUMMARY AND CONCLUSIONS 1. The central question which th i s survey of federal housing p o l i c i e s has sought to explore bo i l s down to t h i s : What are the consequences of a housing program based on a pol icy which stresses individual home-ownership while neglecting to s t ress , with equal force , the re lat ionship between hous-ing need and family income? It was hypothesized that the national housing pol i cy was such a pol icy and i t would unavoidably result in a housing short-age that would be most detrimental to moderate- and low-income f a m i l i e s . 2. Examination of the emergence of federal housing p o l i c i e s established beyond question that , p a r t i c u l a r l y a f ter World War ||, two major concerns of housing pol icy developed. F i r s t l y , emphasis on home-ownership as the most desirable form of housing was seen to be an important ingredient of government philosophy. Secondly, the private market has been considered the most e f fec t ive means of a t ta in ing the objectives of the Government's hous-'House Document # 1 A-2, U.S. Government P r i n t i n g O f f i c e , Washington, 19^2, P . 3. 119 120 ing p o l i c i e s . These f indings emerge from the analysis in Chapters II and I I I . 3. It should be c l e a r l y emphasized that the purpose has not been to pre-judge the federal p o l i c i e s in terms of Tightness or wrongness. Rather the .pos i t ion taken is that of examining the soc io logica l and economic con-sequences that flow from certa in p o l i c i e s , recognizing that these ef fects have serious and important ramifications on urban, community and regional planning. For, af ter a l l , i t is ul t imately the r e s p o n s i b i l i t y of c i t i z e n s in a p l u r a l i s t i c society such as exis ts in Canada, to decide whether or not the p o l i c i e s of the i r elected representatives are e i ther good or bad. Their choice should, t h e o r e t i c a l l y , re f lec t the preva i l ing desires of the people based on values, customs, motives and socia l condit ions . Even so, the existence of a large, non-vocal disadvantaged group cannot be ignored, even i f i t is a " face less " minori ty . And i t is here perhaps that government leadership and r e s p o n s i b i l i t y are e s s e n t i a l . k. Tremendous forces created by technological and i n d u s t r i a l develop-ments are producing conditions beyond the means of the individual c i t i z e n to c o n t r o l . Urbanization on an unprecedented scale has been one of the most pronounced results of these technologica1-industria 1 changes. In Canada urbanization is not simply a process of rural-urban movement. It involves massive in-f lows of immigrants that swell the volume of those converging on Canadian c i t i e s . For this reason, housing p o l i c i e s become c r i t i c a l issues in the development of the structure of c i t i e s . To the planner—concerned as he must be with the uses of land and the socio-economic ef fects of these v uses—urbanization is of paramount importance. In the case of housing, some of the socio-economic ef fects of pol icy are seen in the good or bad housing that resul t:. from the types of housing that are constructed, in the amount of doubling up, and in the increased rents and r i s i n g costs of land, construction 121 and bui ld ing materials which influence property values. An understanding of these processes is therefore v i t a l , since they affect the development of the urban s t ructure . In th is regard, a housing program involves vast publ ic expenditures in capita l investments. The proper a l locat ionof these resources in order to achieve optimum use, i s also an area in which community planning is deeply involved. Thus, a major underlying concern of th i s thesis is the use and a l l o c a t i o n of federal resources. Mortgage Financing On the assumption that fami l ies w i l l purchase or rent suitable accommo-dation i f the i r incomes allow them, the task was to determine the level below which incomes of famil ies would not permit them to benefit under the National Housing Act mortgage f inancing arrangements. The present mortgage market conditions in the City of Vancouver were examined. It was found that those fami l ies having incomes of $4,000 or less at the present time, or in 1961, could hardly be expected to af ford to buy a home under ex i s t ing condi-t i o n s , especia l ly the large f a m i l i e s . For Canada as a whole, there has been a constant drop over the years in the proportion of famil ies with i n -comes below $4,000 who are obtaining mortgage loans under the National Hous-ing A c t . 2 It can be concluded therefore that an income level above the lower level of the middle-income range would be a pre-requis i te to securing a loan under the National Housing A c t . Moderate- and Low-Income Housing For those unable to get accommodation in one of the publ ic housing pro-j e c t s , or a pr ivate cit izen's housing project , the a l ternat ive is to pay 2Canadian Housing S t a t i s t i c s , 1965, op. c i t . , Table 62. 122 exhorbitant rents and often they are crowded into unhealthy and inadequate housing. Studies conducted by the United Community Services show that rents are often higher than 50 per cent of income. Yet i t has been established that where rents!paidlby moderate- and low-income fami l ies ex-ceed 20 to 25 per cent of income, the family must perforce suffer extreme p r i v a t i o n . It is well to note that in Canada, housing is doubly important because of the harsh c l imat i c conditions which prevai l during many months of the year. Federa1-Provincial Relations It is well known that the National Housing Act contains a large array of provisions for meeting the housing needs of moderate- and low-income fam-i l i e s . But i t is not enough to be able to point to provisions and argue that these provisions are there, ready for use, i f only those who have the const i tut ional r e s p o n s i b i l i t y to use them wou.ld do so. Concern for national heal th , security and/welfare has been accepted as a national r e s p o n s i b i l i t y . This in i t s e l f would imply that the national government would have to f ind means to assert i t s e l f v igorously , but e f f e c t i v e l y , to achieve th is goal . Perhaps the state of federa1-provincia 1 re lat ions in Canada i s not quite such that one can without reservation, say with Arthur S. M i l l e r (who, parenthet ica l ly was speaking on "Formal Federalism Today" that more and more important decisions are becoming c e n t r a l i z e d . To quote M i l l e r at some length, The result i s that today the federal grant - in -a id is the pr inc ipa l means of f inancing the new a c t i v i t i e s of state governments. State taxation systems s t i l l take.care of the t r a d i t i o n a l functions of state and local governments, but any-thing new—is, by and large, involved with a federal grant or a federal s u b s i d y . . . States today operate, in general, less as p r a c t i c a l l y autonomous units than as administrat ive d i s t r i c t s for cent ra l ly established p o l i c i e s . They are not quite hollow po1J t i ca l s h e l l s , but the i r once great power has been v i t i a t e d -by the movement of h i s t o r y . They have "housekeeping" dut ies , but l i t t l e real concern with important decis ions . When new 123 problems a r i s e , eyes turn to Washington, not to the state c a p i t a l . It i s undoubtedly accurate to say that states exercise a great deal of control over i n d i v i d u a l s — i n f a c t , much more today than they did during the nineteenth century— but mostly in r e l a t i v e l y minor or purely local matters. In areas of major publ ic concern the decision-making process has been nat iona l ized . We are apparently unwi l l ing to to lerate fragmentation of pol icy in those areas. We also apparently believe that the broad problems of government— social service domestical ly, national security ex terna l ly— are beyond the e f fec t ive powers of the individual s tates . Our demands can be s a t i s f i e d only through the promulgation of uniform national p o l i c i e s . The national government thus must be the chief policy-making organ of formal government.3 A careful study of recent l e g i s l a t i o n in Canada may well bear out M i l l e r ' s content i on. Related to " the movement of h is tory" of which M i l l e r speaks, i s , no doubt, the scale of problems created by urbanization in the form of housing, transportation and indust r ia l concentration. With regard to housing, and espec ia l ly public housing, the federal pol icy re f lec ts reluctance to antagonize provincia l governments. Yet , at least in the case of B r i t i s h Columbia, no serious attempt has been made, to date, by the Provinc ia l Government to es tabl ish a co-ordinated pol icy framework to take f u l l advantage of NHA provis ions . S p e c i f i c a l l y , there, i s no expressed, long-range pol icy to guide municipal government programs. It can hardly be a matter of pure coincidence that , among the municipal governments in the Vancouver Metropolitan area, only in, the City of Vancouver i t s e l f has public housing been constructed. Some provinces, i t is t rue , appear to be taking a more pos i t ive ap-proach. The example on Ontario has often been c i t e d . It would seem however, 3Arthur S. M i l l e r , " P r i v a t e Governments and Const i tut ion" in The  Corporation Take-Over, edited by Andrew Hacker, (Garden C i t y , New York: Anchor Books, Doubleday and C o . , Inc . , 1965) , pp. 122-123. 1 24 that an e f fec t ive housing pol icy in Canada, while i t must depend on greater co-operation between a l l levels of government, would p r o f i t greatly from federal leadership and act ive involvement in a l l aspects of a housing pro-gram. This in turn would mean a c lear enunciation of goals and p o l i c i e s in keeping with federal r e s p o n s i b i l i t y in the f i e l d of housing. BIBLIOGRAPHY Pub 1ic Documents B r i t i s h Columbia. Housing A c t . R.S .B.C. I960, C. 183. Canada. Central Mortgage and Housing Corporation. Administrat ive and  S i te Planning Requirements. The National Housing Act 1954. Canada. Central Mortgage arid Housing Corporation. Canadian Housing  Stat i st i cs . Ottawa: Economics Research Department, March 1965• Canada. Central Mortgage and Housing Corporation. Implementation of Urban Renewal Schemes. .Ottawa: August 1965, National Housing Act . Canada. Central Mortgage and Housing Corporation. Submission to the Special Committee of the Senate on Aging. Ottawa: Queen's P r i n t e r , October 1964. Canada. Dominion Bureau of S t a t i s t i c s . Census of Canada, 1931, 1941, 1951 and 1961. Canada. Dominion Housing Act 1935- Ottawa : Pariiament of Canada . Canada . Dominion-Provincial Conference on 1 Reconst ruct i on. Ottawa: P r i n t e r , 1944. Canada. Home Improvement Loan Act 1937. Canada. House of Commons Debates. 1935-66 Ottawa. Canada. National Housing Act 1938. Ottawa : Pariiament of Canada. Canada. National Housing Act 1944. Ottawa : Pariiament of Canada . Canada . National Housing Act 1954. Ottawa : Pa r1 i ament of Canada . Canada. National Research Counc i l . Residential Standards: Canada Ottawa: issued by the Associate Committee on the National Bui lding Code, Canada. Report of the Royal Commission on Canada's Economic Prospects. " B r i e f Submitted by Central Mortgage and Housing Corporat ion" . Ottawa: Queen's P r i n t e r , March 6, 1943, V o l . 43. United Nations. Report on the World Socia 1 S i tuat ion . Department of Economics and Social A f f a i rs . ST/SOA/42, New York, 1961. 125 126 Books Abrams, Charles. Man's Struggle for Shelter in an Urbanizing World. Cambridge, Mass.: M.1 .T . Press, 1964. A l l e n , Clark L . , Buchanan, James M. and Co.lberg, Marshall R. Pr ices , Income  and Publi c Pol i c y . New York: McGraw H i l l Book C o . , 1954. Bredemeir, Harry C. and Toby, Jackson. Social Problems in America. New York: John Wiley and Sons, Inc . , 1963. E l r i d g e , Hope T. "The Process of Urbanizat ion" , Joseph J . Spengler and Otis D. Duncan (eds . ) . Demographic A n a l y s i s . Glencoe, I l l i n o i s : The Free Press, 1958. Ericksen, E. Gordon. Urban Behaviour. New York: The Macmi 1lan C o . , 1954. Garner, J . F. Administrat ive Law. London: Butterworth and Co'., 1963. Merton, Robert K. Social Theory and Social Structure. Glencoe, I l l i n o i s : The Free Press, 1957. M i l l e r , Arthur S. " P r i v a t e Governments and Const i tu t ions" , Andrew Hacker (ed.) The Corporation Take-Over. New York: Anchor Books, Doubleday and Co . , T 9 6 T Porter , John. The V e r t i c a l Mosaic. Toronto: The Univers i ty of Toronto Press, 1965. R a t c l i f f , Richard U. Urban Land Economics. New York: McGraw H i l l Book C o . , 1949. c Roberts, J . P. "Condominium Ownership in B r i t i s h Columbia". Real Estate  Trends in Metropolitan Vancouver. Published by the Vancouver Real Estate Board, 1966 . Rose, A l b e r t . Regent Park: A Study in Slum Clearance. Toronto: Universi ty of Toronto Press, 1958 Watts, Wil l iam B. "Apartment Trends in Metropolitan Vancouver". Real Estate  Trends in Metropolitan Vancouver 1964. Vancouver: published by the Vancouver Real Estate Board, 1964. White, P h i l i p H. "Some Character is t ics of the New Housing Market in Metro-pol i tan Vancouver". Real Estate Trends in Metropolitan Vancouver I966. Vancouver: published by the Vancouver Real Estate Board, 1966. Wirth , Louis. "Urbanizat ion as a Way of L i f e " . Paul K. Hatt and A. J . Reiss, (eds . ) . C i t i es and Soci et i es. I l l i n o i s : The Free Press, Glencoe, 1957-Woodard, H. Canadian Mortgages. Toronto: printed by The Regent Press L t d . for Wil l iam C o l l i n s , Sons and Co. (Can. L t d . ) , 1957 127 Wurs te r , C a t h e r i n e Bauer. S o c i a l Quest ions i n Housing and Town P l a n n i n g . London: U n i v e r s i t y of London Press L t d . , October 1952. A r t i c l e s and P e r i o d i c a l s B l a n k , A r t h u r and M i n n i c k , Louis A . "The S t r u c t u r e of the Housing M a r k e t " . Q u a r t e r l y Journa l of Economics, V o l . 67, 1953-C o - o p e r a t i v e Union of Canada. " A Review of the Present S i t u a t i o n i n Canada" . Memorandum on C o - o p e r a t i v e Hous ing . August 1967. D a v i s , K i n g s l e y . "The U r b a n i z a t i o n of the Human P o p u l a t i o n " . Sci ent i f i-c  Ameri c a n . New York : V o l . 213, No. 3, September 1965. "Hous ing C o n f e r e n c e " , February 3, 1967. Hon. J . R. N i c h o l s o n Address• L a i d l a w , A . F . " C o - o p e r a t i v e Housing in Canada" . Canadian Labour . Ottawa: V o l . 11, No. 3, March 1966. L a i d l a w , A . F . " W h a t ' s Wrong w i th Housing in Canada?' Educat ion Conference. Onta r io Federa t ion of Labour , N iagara F a l l s , February 13-14, 1965• L e v i n , E. A . "The Cobweb C u r t a i n " . Community P l a n n i n g Review. To ronto : p u b l i s h e d by the Community P l a n n i n g A s s o c i a t i o n of Canada, V o l . V , No. 3, September 1958. Lorena , M. 0. "Methods of Measur ing the C o n c e n t r a t i o n of W e a l t h " . Ameri can  S t a t i s t i c a l A s s o c i a t i o n , New S e r i e s , No. 70, June 1905-Marsh , Leonard C. "The Economics of Low-Rent H o u s i n g " . The Canadian Journal of Economics and P o l i t i c a l S c i e n c e , V o l . XV, No. 1, February 19^ +9• N i c h o l s o n , Hon. J . R. Housing Conference . Vancouver : February 3, 1967. P e a r s o n , Norman. "Hous ing i s f o r P e o p l e " . Community P l a n n i n g Review. To ronto : p u b l i s h e d by the Community P1anning A s s o c i a t i o n of Canada, Spr ing I965. P e r l o f f , Harvey S . "Common Goals and the L i n k i n g of P h y s i c a l and S o c i a l P l a n n i n g " . P l a n n i n g 1965. S e l e c t e d papers from the J o i n t P l a n n i n g Conference of the American S o c i e t y of P l a n n i n g O f f i c i a l s and the Com-munity P l a n n i n g A s s o c i a t i o n of Canada. To ronto : p u b l i s h e d by the Community P l a n n i n g A s s o c i a t i o n of Canada, 1965. Rose, A l b e r t . " S l u m C learance w i l l Cont inue in T o r o n t o " . Community P lann ing  Rev i ew. Ottawa: p u b l i s h e d by the Community P lann ing A s s o c i a t i o n of Canada, V o l . V , No. 3, September I965. S e a r l e s , John R. , J r . "Urban Renewal: E ight P rob lems" . Community P l a n n i n g  Review, V o l . IX, No. 4, December 1959. Tee la Market Surveys . Rea l ty Sa les Review. Vancouver : 1964-66. 128 The Globe and M a i l . Toronto: January 22, 1966. The Province. Vancouver: August 2, 1966. Vancouver Sun. Vancouver: February 9, 1967. Reports Advisory Committee on Reconstruction. Final Report of the Sub-Committee  on Housing and Community Planning. Ottawa: Queen's P r i n t e r , V o l . IV, Canadian Welfare Counc i l . A National Housing Pol icy for Canada. Ottawa: September 1947. Co-operative Union of Canada. Memorandum on Co-operative Housing. " A Review of the Present S i tuat ion in Canada". August 1963 -Dube, Yves, Howes, J . E. and McQueen, D. R. "Housing and Social C a p i t a l " . Study No. 20, Report of the Royal Commission on Canada's Economic  Prospects. Ottawa: King's P r i n t e r , 1957. Central Mortgage and Housing Corporation. A Brief Presented before a Hearing of the Royal Commission on Canada's Economic Prospects. Ottawa: Queen's P r i n t e r , March 6, 1956, V o l . 43. City of Vancouver. Planning Department. F i l e Reference H95-95-I 11ing, Wolfgang. Housing Demands to 1970. A study prepared for the Review of the Economic Council of Canada. Ottawa: Queen's P r i n t e r , 1964. National Resources Planning Board. Development of Resources and S t a b i l i z a -t ion of Employment in the United States. House Document No.142. Washington: United States Government Pr in t ing Press, 1942. Report of the Royal Commission on Dominion-Provincial Relations:  Recommendat i ons*^  Book I I , Ottawa : 1 940 . The Ontario Associat ion of Housing A u t h o r i t i e s . Good Housing for Canadians. A r n p r i o r , Ontario : August, 1964. Wurster, Catherine Bauer. "Housing Aid for Underdeveloped Countries" . The  Study of International Housing: Sub-Committee on Housing. Commi ttee on Banking and Currency, United States Senate, Government Pr in t ing O f f i c e , March I963. Unpublished Material B a r t l e t t , Emerald D . , e t . a l . "A Regional Study of Social Welfare Measure-ments". Unpublished Master's Thesis , School of Social Work, Universi ty of B r i t i s h Columbia, 1964. 129 Other Sources Centra] Mortgage and Housing Corporation. Personal Interviews with Messrs. Rebizant, Skuce, Iverach. Block Bros. Realty Co. L t d . Personal Interview with Mr. Arthur Block, March 1967. City of Vancouver. Personal Interviews with o f f i c i a l s from the Assessment Department, Bui lding Department and Redevelopment Div is ion of the Planning Department. Ci ty H a l l , March 1967. Coronation L i f e . Personal Interview with Mr. Bleackley. March 1967. Manufacturers' L i f e Insurance Company. Personal Interview with Mr. Harold Ross, Apri1 1967. United Community Services of the Greater Vancouver Area. Personal Inter-view with Mrs. Hamilton, March I967. Vancouver Housing A u t h o r i t y . Information from Mrs. Mowatt, A p r i l 1967. 1.3.0 APPENDIX A Preamble to the National Housing Act 1938 2 G E O R G E VI . C H A P . 49. Axi A c t to assist i n the C o n s t r u c t i o n of Houses . [Assented lo 1st July, 19SS.] WH E R E A S The Dominion Housing Act, 1935, has cncour- 1935,0.53. aged the b u i l d i n g of houses b y persons w i t h moderate p r e a mbio. incomes b u t the facilit ies of the A c t have not been largely • used b y persons w i t h smal l incomes or b y persons l i v i n g i n smal l or remote communi t ies ; and Whereas, i t is desirable to s t imulate the construct ion of houses to be owned b y persons w i t h smal l incomes and by persons l i v i n g in remote or smal l communi t ies ; and Whereas, as a result of the low level of b u i l d i n g a c t i v i t y d u r i n g the recent depression, the emplo j ' ab i l i ty and efficiency cf the urban popula t ion m a y . ' be adversely affected b y reason of congestion i n potent ia l s l u m areas and of overcrowding in housing accommodat ion • w h i c h falls short of m i n i m u m standards of heal th and a m e n i t y ; and Whereas, such decline of .employabil i ty and efficiency m a y retard the f u l l employment of the w o r k i n g p o p u l a t i o n l i v i n g under such condit ions ; and Whereas, the task of providing , adequate housing accommodat ion at •rentals w i t h i n the capaci ty of low income groups to p a y is, i n i ts aspects of publ ic heal th , morals and m i n i m u m l i v i n g condit ions, p r i m a r i l y a responsibi l i ty of the provinces and m u n i c i p a l i t i e s ; and Whereas,- nevertheless, i_t_j«__in the nat ional interest that a l i m i t e d experiment in.JoMi-rcritaT-h b i i s i f f g s h m ^ creating needed employ-nTeTifr'arid""directing publ ic a t tent ion to the importance of • housing problems generally, and p r o v i d i n g a basis of experience on w h i c h the provinces and munic ipal i t ies m a y fol low sound and proven policies in the future ; and Whereas, h igh real estate taxes have been a factor retarding the con-struct ion of new houses and i t is therefore desirable to ' encourage prospective home owner's to construct houses for their own occupation, b y p a y i n g a proport ion of the m u n i -c ipa l taxes on such houses for a l i m i t e d p e r i o d : Therefore H i s M a j e s t y , b y and w i t h the advice and consent of the Senate and House of C o m m o n s of C a n a d a , enacts as f o l -l o w s : — P A R T 1—23 353 1 . 13-1-APPENDIX B The Loan-to-Va1ue Ratio The mortgage is based on some relat ionship between the value of the property mortgaged and the loan which w i l l be granted by the mortgagee. For i t i s very un l ike ly that a mortgagee w i l l grant a loan to cover 100 per cent of the value of the property of the kind that are being discussed here. Under NHA 1954, the loan-to-value ra t io f a l l s into two parts , that i s , (a) 95 per cent of the f i r s t $ 1 3 , 0 0 0 ; and (b) 70 per cent of the value of the loan in excess of $ 1 3 , 0 0 0 . There are addit ional s t i p u l a t i o n s . Under the NHA 1954, the maximum loan is $ 1 8 , 0 0 0 andean insurance fee-amounting 1 3 / 4 per cent of the loan is required to insure the loan which is ac tual ly guaranteed by the Federal Government.' The down-payment consists of that part of the loan which the home-bui lder provides. It represents his equity. Thus i f the value of the house is $ 1 3 , 0 0 0 , then under the NHA 1954, the mortgagor q u a l i f i e s for 95 per cent of the value of the house. He must provide 5 per cent of the total value. Note that his equity increases as he pays of f the monthly instalments. The Interest Rate Since the money which the mortgagee loans the mortgagor could earn revenue in some other use, and moreover, because the loan w i l l be converted into a very i l l i q u i d form of investment, that i s housing, the mortgagee w i l l 'This maximum of $ 1 8 , 0 0 0 was established by NHA Regulations, June 1965, when i t was raised from $ 1 5 , 6 0 0 . 132 charge the mortgagor for the use of the funds at a rate which he feels w i l l recover the revenue he t h e o r e t i c a l l y gives up by making the loan to the mortgagor. From the standpoint of the mortgagee therefore, the interest rate represents the opportunity cost of not investing his money elsewhere. Under the NHA 1954, the interest rate i s set by the Governor-in-Counci 1. It must not exceed the interest rate on long-term government bonds by more than 2 1/4 per cent in respect of insured, home-owner, mortgage loans.2 The Amortization Period This i s the period over which the mortgagor makes monthly payments to r e t i r e the mortgage loan. The amortization period extends over several years as a r u l e . The longer the amortization period the lower w i l l be the monthly payments and v ice -versa . Under the present regulations of the NHA 1954, the amortization period for a home-owner mortgage cannot be less than twenty-five nor more than thi r t y - f i ve years. The Debt Service Ratio (DSR) The debt service ra t io is the i n i t i a l basis on which the mortgagee determines the loan-worthiness of his c l i e n t . If the DSR is not sa t i s fac tory , i t is un l ike ly that the mortgagee w i l l advance the loan. In what then does the DSR consist? It is the ra t io of the sum of the total monthly payments and the property taxes which the mortgagor must make, ^ l t should be noted here that chartered banks withdrew from the mortgage f inancing f i e l d because market rates of interest on mortgages were higher than the statutory l i m i t of 6 per cent as provided under Section 91 of the Bank Act 1954. The Minister recently indicated that steps w i l l be taken to at tract them back in the new bank ac t . This reca l l s the circumstances sur-rounding the revamping of the NHA 1944. 1.3.3 to his gross income. The DSR drives home to the borrower the f u l l effect of the importance of his income. Under NHA Regulations, the DSR was set at 27 per cent in December 1957. Pr ior to th i s i t was 23 per cent.3 3H . Woodard, Canadian Mortgages, (Toronto: printed by the Regent Press L t d . for Wil l iam C o l l i n s , Sons and Co. , Can. L t d . ) , 1957, pp.62-63. 

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