Quote:
Originally Posted by opendoor
There were a few programs like that between the '60s and the early '90s. I know one was the "low rental limited dividend" program (or something like that). Basically the government would loan money at below-market rates to anyone who would build rental stock (effectively subsidizing it), as long as they committed to renting to low-to-middle income families and strong rent control measures for a certain period of time (I think it was 15-20 years or something like that).
But I don't know that there was actually a whole lot of uptake in the private sector. There were a lot of non-profit and cooperative organizations that took advantage of that though, and eventually provinces and municipalities were offered the same terms. Because the non-private sector organizations could get 100% loan-to-value from these loans, it led to a fair amount of housing units getting built. And the CMHC would sometimes even buy the land and lease it back at a low rate to encourage even more construction. I know at some points, ~25% of the new units in Canada each year were directly a result from Federal government programs.
There was a real push in the '70s to get non-profit organizations and cooperatives to build rental housing. The idea being that with the favourable loan terms and not having to generate profits, that rents would stay low. And it did work to some extent.
That said, there were also reasons why it stopped. The programs were expensive, and some of the results were kind of underwhelming. In terms of housing units getting built though, post WWII policies were pretty effective. Canada built as many units in 1975 with a 23M population as we did in 2022 with a 39M population. And 2022 was a good year, with about 35% more housing starts than the average from the 2010s.
|
If we tried to implement this now, we'd likely find the same market conditions creating the housing shortage would lead to major obstacles preventing the construction of low income housing.
Building huge swaths of low income housing is likely a lot easier when land and construction costs are a fraction of what they are now. It would take a lot more than dropping a few percentage points on a loan to make building livable and affordable housing feasible.