When it comes to affordable housing, there seems to be two things everyone can agree on: developers aren’t building it, and the homes that are affordable are merely shells of their former selves.
Last week at Huron County council, a lot of the discussion was about the need for “affordable” homes under $500,000 in price.
Based on a quick search of realtor.ca for North Huron listings, there are only a handful of homes listed for under $500,000 – the lowest being $425,000, with the highest of the handful being listed at $499,999.
In my opinion, a house in the high $400,000s is not affordable.
With that in mind, I decided to crunch some numbers.
According to the Canadian Mortgage and Housing Corporation (CMHC), a home is considered affordable if it costs less than 32 per cent of a household’s total pre-tax income. Included in the 32 per cent are mortgage costs, taxes, heat and hydro.
In North Huron, the average household income is $88,900 annually, according to the 2021 Census.
With those numbers in mind, an affordable home in North Huron is about $2,370 per month.
Let’s attempt to break those numbers down further. For the sake of making the math easier, let’s take $350 per month out for property tax, $175 per month out for hydro, and $100 for heat/natural gas. That brings us to a mortgage payment of $1,745 per month, including interest.
It took some work, but I was able to figure out the math on what $1,745 per month including interest is in terms of an actual listing price.
For this calculation, I used an interest rate of 4.0 per cent, which is lower than what banks are offering today, and assumed an amortization period of 25 years.
For a home to be truly affordable, based on the CMHC definition and assuming the above costs, a home in North Huron needs to have a sale price of $331,900.
Yes, you read that correctly: $331,900.
Based on current interest rates – most are 5.0 per cent or higher – that actual sale price number gets much lower.
For a house to truly cost less than $500,000 – the number that Huron County council threw around last week as “affordable” – you are looking at an actual sale price of $316,950, based on a 4.0 per cent interest rate.
How many homes are listed in North Huron for $331,900? Zero. There are three lots for sale between $159,900 and $199,900 if one is looking for a piece of property to pitch a tent or park a trailer.
I’ve thrown a lot of numbers around, and it may seem like a lot to take in. With that said, I can boil it down to something simpler: if a household was to have two people working a 40-hour work week at the recently-announced Living Wage of $22.75, they would barely be able to afford a home at $331,900 in North Huron.
When it comes to affordable housing, we need to set the bar lower. Affordable isn’t something under $500,000; affordable is geared to income, and in North Huron, afford is actually under $332,000.
Speaking of affordable…
While covering Huron County council’s discussion about affordable housing last week, two comments stuck out to me.
First, Coun. Bernie MacLellan’s suggestion that the county should look at getting into the affordable housing game not by building apartments, but subdivisions.
The Huron East mayor said he believes developers are convinced that there is no money to be made in building affordable housing, and suggested that Huron County “lead by example” and show these developers that is not the case.
While the reaction from council was not voiced, the lack of response, to me, shows where the county lies on that idea. Personally, it is something that I have said on numerous occasions in conversation with friends and colleagues – that it will take government building affordable homes for it to happen, as today’s developers are more concerned about maximizing profits.
The second comment, which you could interpret as a response to MacLellan’s suggestion, was from Coun. Bill Vanstone, deputy mayor of Ashfield-Colborne-Wawanosh.
Vanstone told council that developers are in the game to make money, and that “we should quit beating on” them. He also said developers are creating affordable housing.
“And the way I look at it if I sell my nice little house that I’m living in now for $450,000 and I buy an $800,000 house this developer just made, then he has just created affordable housing because my old house was for sale,” he said.
I’m not sure that’s how it works, Mr. Vanstone… but if that thought process allows you to sleep better at night, then all the power to you.
Yes, Huron County is doing more than most to combat the housing crisis, but we have a long way to go to solving the problem.
With that said, I’m so very thankful that I bought my house when I did in 2011.
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Mike Wilson is the editor of the Wingham Advance Times. Comments and feedback are welcome at mwilson@midwesternnewspapers.com.
