No longer affordable

Cost of County housing at crisis point

The number that is beyond hard to get your head around is in September 2021 in Prince Edward County the average list price of a home was $1,204,094,” stated Charles Dowdall, executive director, Prince Edward County Affordable Housing Corporation. “That is a 94 per cent increase comparable to September 2020.” It paints a dismal picture and is a stark reality, but one that won’t come as a surprise to many that the housing picture in the County is a very serious one, especially for those eager to purchase a first home, And the picture is just as bleak for renters. Most folks will already know affordable housing, even for those with good incomes, is becoming more difficult to achieve as the cost of housing, as well as the increasing cost of living generally, extends to levels not seen in recent memory. Both monthly rent and the cost of home ownership has ballooned, with low inventory exacerbating an already tough market. Charles Dowdall gave a presentation to the Committee of the Whole last Thursday outlining the impacts of a lack of affordable housing on the County with an overview on local trends.

Dowdall explained for a home to be considered affordable in the County, assuming a 15 per cent down payment, CMHC (Canada Mortgage and Housing Corporation) insurance with a 25-year mortgage, the purchase price would need to be $275,000 to $325,000. “Anything above $325,000 would not fit within the 30 per cent affordability rule,” he said. “I am not going to tell you that this is doable; it’s unrealistic to expect that house prices will be $275,000 to $325,000.” In 2021, the average amount a household spends on its occupancy costs increased 2.7 per cent to 45.3 per cent for home ownership. “This statistic has become the highest in almost 30 years, it has deteriorated considerably,” said Dowdall. The figure increases even further to 51.6 per cent for renters. He said the biggest deterioration in this measurability of affordability for housing is in rural communities. “Rural communities throughout Ontario and nationally account for almost 70 per cent of the worsening of this statistic,” he said. “The reason is simply the migration from the larger centres now individuals, as a result of pandemic, have the opportunity to work remotely.”

Housing prices nationally are anticipated to continue escalating, said Dowdall, but are predicted to come to a settling point in late 2022 or early 2023. “The prices as we see them now are here to stay.” He noted the current inflation rate is the highest since February 2003. Figures from the Canadian Real Estate Association show house price increases from 2020 to 2021, where Dowdall noted Prince Edward County held top spot in all of Canada with average house prices increasing 79 per cent year-over-year. “The average house price listings in September 2021 has approximately increased to 93 per cent based on 118 house listings in the County in September 2021.”

While home ownership is challenging for many to achieve, Dowdall notes the rental market currently is in an even more critical state. “We are starting to see some very interesting trends in the rental market, especially in Prince Edward County.” He said the shift in demand now is for bachelor units and for two-bedroomed units where increases in market rent are being felt. “The average market rent as of September for a bachelor is $1,047 (a 15 per cent increase), a one-bedroom is $1,448 (a marginal decrease), a two-bedroom $1,667 (a 7.4 per cent increase), and a three-bedroom is $2,376 (a 10 per cent increase). Dowdall noted these figures do not include occupancy costs for heat, hydro, tenant insurance and parking. “When that is added in the cost, the increase for a bachelor on average to $1,204, $1,665 for a one-bedroom, $1,929 for a two-bedroom, and $2,732 for a three-bedroom.

Councillor Mike Harper asked whether rental or ownership was the most critical priority at this time. “The more critical focus should be on the rental component,” said Dowdall, who added the development of multiple units can be done on a quicker timeframe.

The average household income based on CMHC summary data for 2021 is $72,431. Dowdall noted that according to affordability test guidelines, accommodation costs must not exceed 30 per cent of gross household income. “Therefore, anyone renting a bachelor has to have an income of $48,160, and for a threebedroom, the average household income needs to be $94,880.” With an average tax rate of 28 per cent, this number becomes even higher: $48,000 income for a bachelor would actually have to be about $61,000 in order for it to meet the 30 per cent affordability test guideline.

The importance of seasonal workers was also highlighted in Dowdall’s presentation, describing them as critical for Prince Edward County. “Approximately 35 to 40 per cent of the GDP (gross domestic product) that is generated within Prince Edward County comes from seasonal working sectors, whether wineries, agriculture or hospitality,” Dowdall said. He said the inability of affordable housing for these workers may have a dramatic negative impact on the economy locally for Prince Edward County. “It could impact negatively the public relations and the reputation of the County as being a destination place.” He noted prior to the pandemic, seasonal workers accounted for approximately 25 per cent of the total workforce in the County of which 83 per cent were between the ages of 24 and 64, with 51 per cent of all seasonal workers temporarily relocated from outside the County. Dowdall said prior to the pandemic, the average hourly wage for seasonal workers was $18.00. “The maximum rent a seasonal worker would be able to pay would be $864.00 per month for a rental accommodation, inclusive of all occupancy costs.”

Councillor Bill Roberts asked Dowdall if he agreed with his statement: “Unless we take bold measures now to address affordable housing as a crisis and an emergency that the impact on our community, our social fabric and our economy will be irreversible.” Dowdall said he agreed 100 per cent with the statement. “A bigger elephant in the room is the social impact on the community, which also translates into a financial component with the community,” Dowdall said.

“It’s a very upsetting snapshot, and all of us in the room feel that sense of urgency around this issue,” said Councillor Kate MacNaughton. “Cleary, we have created a community of have and have-nots and this is a very troubling and sad situation we find ourselves in,” said councillor Janice Maynard.

“What is the sustainability of an expanding tourist community? asked Maynard. “Further expansion of the tourism economy is not sustainable under the current conditions,” Dowdall responded. “In the years of promotion for the tourist economy in this area, it has now come to fruition and has been successful, which provided considerable pressures without thought possibly being given if this tourist economy takes off to the level that we are hoping it would be promoted, how do we have the housing infrastructure to support if this success takes off,” expressed Dowdall. “Unfortunately, I think there was a void, there was not the planning put in place for the housing infrastructure to accommodate the planning and expectation of the tourist economy, so now there is that gap. You add the layer of pandemic on top and it has further accentuated that gap to critical or crisis level.” The presentation is available for viewing on the County’s YouTube channel.