Our Sorry Record On Housing
To find out how Canada is matching similar countries in housing Maclean’s assigned a social economist to survey the achievements since the war of Canada, Great Britain, the United States, Sweden and Australia. And how did Canada rate? Last
THE CANADIAN Welfare Council recently announced: “Housing remains the most serious and baffling social problem facing the Canadian people.” Everyone knows the housing shortage isn’t peculiar to Canada. It’s world-wide, an inevitable product of six war years in which birth rates outstripped death rates in most countries, and the universal motto was guns before bungalows. No one—in Canada or elsewherehas produced all the answers to the problems of housing. But in Canada there’s one question that up to now hasn’t even been asked:
“How well are we doing in comparison with other countries? Is the Canadian house hunter either specially favored or specially penalized because of being a Canadian?”
These are significant questions. To get factual answers to them I compared postwar home building in Canada with postwar building in the U. S., Australia, the United Kingdom and Sweden countries of similar standards and circumstances, except that bombed-out Britain started with the worst housing crisis of all.
The answer was startling: Canada lags far behind all these countries in its efforts to lick housing since 1946.
This article is accompanied by a chart comparing housing progress in the five countries I surveyed (see page 9). Here’s what it reveals:
Canada has built fewer new houses per capita since 1946 than the United States, Sweden and Australia, but more than the United Kingdom.
ín terms of population growth, Canada has built fewest houses of all. This is the most telling statistic, because it indicates the comparative housing squeeze. Canada does have the worst squeeze, with the possible exception of Britain, of the five countries surveyed.
Part of the reason is plain enough. Canada has had the greatest population boom. Incoming immigrants piled upon thousands of new families launched after the war have swelled Canada’s population thirteen and a half percent. Canada has both the highest birth rate of the five countries surveyed and the lowest death rate a healthy place to live if you can find a house. In its fertile valleys and plains about thirteen percent more children have been born per capita in the postwar years than in the U. S., which has the next highest birth rate. Only Australia has had a population boom of similar proportions (twelve and one half percent). The U. S. has had a ten-percent increase and the others don’t even show in this race.
In proportion to these increases in population
These New Canadian Projects Are Just a Drop in the Bucket
Canada has built fewer new dwellings than any of the other four countries. For every thousand new Canadians since 1946 (both home-grown and imported) we’ve completed 282 homes, compared with 304 for Australia. Compared with the U. S., housing here lags even more noticeably. The Americans started 417 new houses per thousand of new population from 1946 to 1951 roughly fifty percent more than we. (As the U. S. counts only housing “starts,” the comparison between it and the other countries is closely approximate but not literally exact.)
Building here hasn’t even kept up with the new families sprouted since the war, much less begun to catch up on the wartime construction deficit. From 1946 to 1951 about 513,000 new families appeared in Canada and only five hundred thousand homes were built to receive them, including old houses converted into flata.
The pinch is especially tight right now. The housing boom that was rolling along nicely in 1950 burst the next year. Look at these figures: 1950, ninety-two thousand houses started; 1951, sixtynine thousand; 1952, an estimated seventy thousand.
In 1951 there were 128,000 new marriages: most of these couples became immediate or prospective homeseekers. About thirty-seven thousand new families arrived from abroad, while only nine thousand left Canada to join the house hunt elsewhere, mostly in the U. S. A third of a million new children were born here to bulge the walls of homes already occupied. For all these, sixty-nine thousand housing starts. The builders are way behind the marriage-license clerks, obstetricians and immigration authorities.
By contrast, Australia with a population forty percent smaller put up almost as many houses only fifteen percent fewer in fact,.
Further aggravating the housing shortage in Canada’s cities has been the movement of people within Canada. During the last three years the wartime rush to the cities has been accelerated by another wave of industrialization. Other countries undergoing industrialization have experienced a rush to the factories too especially Denmark, Norway, Sweden but not to the extent Canada has. Here factory employment the barometer of city crowding has increased about eighty percent compared with rises of fifty percent in the similarly expanding Scandinavian countries.
Little Sweden has been the fastest builder of the five countries surveyed possibly because she wasn’t involved in the war itself. In any case, for every thousand inhabitants she’s built forty-one new homes since 1946, and for every thousand of new population, 773 new homes. (Denmark has built equally rapidly and Norway at even a higher rate.)
Britain is low man on our chart in actual number of new homes built in terms of her present population. But one out of every three British homes was damaged or destroyed by enemy action. Much of Britain’s construction energies had to go into rebuilding, converting large houses into fiats, throwing up temporary houses like the prefabricated aluminum shelter, and converting wartime service camps for family life. We’ve also done some converting. Counting fiats added that, way Canada has provided 299 homes for each thousand of added population since the war. But the other countries don’t keep the same statistics so we can’t make any comparisons there.
But maybe we had more houses than the other fellows to start with. Could that be why we seem to lag in current building?
Well, no. I looked into t hat too. Few countries have up-to-date data on total homes in existence (Canada keeps the most thorough figures of all). But, in comparison with the U. S., in 1950 we had two hundred and sixty homes for each thousand inhabitants; they had three hundred. Sweden even back in 1945 when she last counted had 314, and has been building with both hands since. In 1947, when Australia counted up, she found 247 houses per thousand inhabitants, and has since been building more rapidly than we have here in Canada.
Of course, Canadians may require, or be
accustomed to, better houses than people in some of the other countries. We’ve been able to compare numbers but not quality. A Canadian home must be better built and equipped to withstand the colder climate here. In the south of the U. S. and much of Australia it’s possible to build houses without the deeper foundations and heavier insulation required in much of Canada. Too, a home to a Canadian generally means a house. Two out of three Canadian homes are fully detached onefamily houses the costliest kind to provide. Only three out of five U. S. homes are fully detached. In England the semidetached family is famous; three out of four dwellings are joined unto the death by at least one other dwelling. In Sweden, four oui of five urban families live in flats. In fact, it wasn’t until the Forties when the Swedish government assumed responsibility for supplying the entire housing market that even a three-room apartment became standard in the cities. Previously the traditional working family’s home in the larger towns was a flat of one room and a kitchen. Sixty percent of Canadian houses have four to six rooms.
In such amenities as flush toilets and central heating Canadian homes are much on a par with those in the U. S., census figures reveal, and even more Canadian families enjoy electricity although Canadians use fewer mechanical appliances.
But to have comparatively good houses is obviously no full solution when there aren’t enough to go around. One effect of the abrupt collapse of Canadian home building in 1951 was that the family of average means was pushed out of the housing market. From 1950 to 1951 the cost of building jumped fifteen percent as materials leaped eighteen percent and labor wages nine. Too, the mortgage interest rate went up one-half of one percent in 1951 and another one quarter of one percent late in 1952— a jump of seventeen percent in financing cost. On top of that, real-estate taxes were raised by practically all towns. In the past three years taxes on houses have gone up an average of thirty percent, reports Central Mortgage and Housing Corporation, the Ottawa housing authority.
Quite naturally, the big project builders who put together moderate-priced bungalows by the hundreds began cutting down their operations. Requests for NHA government, loans, which are generally on moderate-cost houses, dropped by half. Thus, not only has less housing been built in the past two years, but a smaller proportion of it has been in the moderate-price bracket.
In 1950 almost two out of every five new houses were bought by families with incomes under three thousand dollars. For these houses the down payments averaged about nineteen hundred dollars. In 1951 only one of seven new houses was bought by a typical wage earner in the three-thousanddollar bracket. The average family that did buy in 1951 had an income of four thousand dollars and was able to put down thirty-two hundred.
Contrary to the popular impression, the roadblock is not really a shortage of materials or labor. Early in 1951 the government took steps to curb borne building because of rearmament. But these barriers were removed late that year and housing
starts have fallen off' anyway. The authoritative Maclean Building Report recently has been showing a fractional decline in prices of building materials, indicating an overhanging supply, especially of lumber. There’s plenty of labor, too. The Canadian government Labor Force Survey reported last May that, there were twenty thousand construction workers hunting jobs. The tide of immigration aggravating the housing shortage is also bringing in a new supply of skilled building workers from abroad at the rate of nearly eight thousand a year recently.
One serious holdback, according to David Mansur, president of Central Mortgage and Housing, is the growing scarcity of serviced land, especially on the rims of the larger cities where the need for more houses is also keenest. Most people think a place to puf down houses is the last thing to worry about in the vast domains of Canada; but houses need roads, water mains, sewers and schools. Central Mortgage estimates these services cost a town two thousand dollars for each new home. Most towns have already swallowed a throng of new families since the war. Now town fathers are apt to sigh wearily and say they’ve digested all the new homes they can for the time being. A growing number of schools already are on a two-shift basis.
Overriding even the shortage of serviced land is the shortage of money the magnet that brings materials, men and the services to a site on which houses will appear. At the last two meetings of the National Retail Lumbermen’s Council, these close observers of the housing problem unanimously reported that labor and materials are available and more houses would be built if more mortgage money could be made available at rates within reach of the people needing homes.
My survey shows it is harder to finance a home in Canada than in any of the other five countries studied. It’s harder to find someone to lend the money, you can’t borrow as high a proportion of the total cost, and you must pay more for interest.
In most countries, including Canada, national and local governments have Continued on page 55
Our Sorry Record On Housing
CONTINUED FROM PAGE 9
intervened in housing in varying degree. In Britain, housing has become largely a government sponsored and controlled affair, with nine out of ten houses built with at least some government aid. In Sweden, eight out of ten homes arise with government financial help, and co-operatives have become the leading form of home ownership. In Australia too, government-sponsored developments have become a large part of the housing production.
Even in the IJ. S., more than half of all new dwellings in recent years were built with some form of govern ment backing. In Canada the proportion is about two out of five. And in the U. S. the kind of aid offered has been more effective in keeping down t he cost of owning a home.
Biggest boost behind housing in the
II. S. has been the special interest rate of four percent, and low down payments for veterans. As the result of government guarantees of the mortgage, builders have been able to offer houses to ex-Cls for $250 to $500 down in most cases, and even nothing down for the lowest-priced houses. About three million homes have been built so far on this basis almost half of all postwar U. S. houses.
'The G I plan also cuts carrying charge for this large group of home buyers. Interest and amortization on a twentyyear nine - thousand - dollar mortgage cost about fifty-five dollars a month compared with sixty-one a month for a Canadian (vet or non-vet) under the new NHA rate of five and a quarter percent, and even more for privately financed mortgages, which currently command six and six and a half percent.
Even a non-vet in the U. 8. can move into a new ten-thousand-dollar house with a down payment of twelve to fifteen hundred dollars under the
IJ. 8. system of insuring the mortgage lender against loss. The non-vet pays interest of about four and one-half percent on a guaranteed Federal Housing Authority mortgage; about five to five and a half for a non-FHA loan.
The heart of the matter is that there is simply more capital available in the 11. 8. for investing in homes. There are many more sources lending money for houses. Canada has few savings and loan associations (the largest single home lending group in the IJ. 8.) and no mutual savings bank, another big source of mortgages in the IJ. 8. In Canada the large commercial banks are prohibited by law from lending on
mortgages. That’s the real pinch on mortgages, since these banks otherwise occupy the function of savings banks in the H. 8. In Canada credit unions are an important source of mortgage loans in rural areas especially in New Brunswick, Nova Scotia and Saskatchewan but on a national basis they provide only five or six percent of mortgage loans.
The most important source in Canada for the mortgage money that starts houses is insurance companies but, as David Mansur has pointed out, Canadian insurance companies don’t put as much of their funds into mortgages as do II. 8. insurance companies. Only eighteen percent of their investing funds go into mortgage loans as against twenty-five percent of the LI. S. insurance companies’ money. Even LI. S. insurance companies operating in Canada don’t invest the same proportion of their Canadian investment funds in housing as they do at home.
Furthermore, Canadian insurance companies are limited by law to lending only sixty percent of the appraised value of a home (except on NHA mortgages on which down payments are twenty percent and, for eligible defense workers, ten percent). Thus a would-be homeowner is sometimes compelled to get a second mortgage, at up to ten-percent interest.
The general result is that a Canadian in need of a roof for his family must often borrow from private individuals. For instance, two out of five houses being built in Canada at present are going up in Ontario where about forty percent of mortgage loans are supplied by private investors. In the U. S. the over-all figure is fourteen percent.
Another big aid to home ownership in the U. S. is the income-tax dispensation. The American home buyer is excused from the federal tax on that part of his income which he pays for mortgage interest and real-estate taxes. A family with a nine-thousand-dollar mortgage thus may save eighty to ninety dollars a year. Add the typical difference of four to six dollars a month in mortgage interest in the American’s favor and you see why it’s easier to sellor buy homes there than here. Even in the middle of its rearmament boom the LI. S., with not quite eleven times Canada’s population, is building eighteen times more homes.
Among the provincial governments, only Quebec, through its Farm Credit Bureau, subsidizes home ownership to an extent noticeably easing carrying charges, and this help is limited to low-priced dwellings. Quebec will pay part of the interest charges on approved mortgages for new houses of not more than seven thousand dollars for a single-family dwelling and twelve thou-
sand dollars for a L -family dwelling. This plan is becoming widely used. About forty-nine hundred dwellings were built under it in 1950, about sixty-four hundred in 1951.
Another special reason why it’s especially hard to find money for homes in Canada is the relatively brisk competition for capital. There’s plenty of construction going on but you can’t live in it, unless you know the night watchman. It’s in defense industries and natural resources developments like the iron-ore development in the Quebec Labrador region i and the oil pipe line from Alberta and hydro-electric and transportation facilities. While construction of homes dropped ten percent in the first half of 1952, const ruction of natural-resource projects jumped fifteen percent.
W it h such projects bidding for money against the man who wants to borrow ten thousand dollars for a house, interest rates naturally have increased. The government’s own long-term bonds recently have been yielding close to three - and - a - half - percent interest , a jump of two fifths of one percent over last year, and yields on some municipal bonds have gone up as much as one percent. Naturally the insurance companiesand other investors find it easier to put money into bonds rather than into mortgages on houses each of which requires clerical work and expense to appraise, service and collect.
Too, Canada has hewed to the tradition of individual initiative and j private enterprise in housing more than most other industrialized nations. European countries of course now almost completely subsidize housing for lower-income families. The U. S. public housing program also exceeds Canada’s, at least at this writing between administration changes. In 1949, among other measures to plant low-cost homes, Congress authorized construction of eight hundred and ten thousand low-rent public housing dwellings over a six-year period for joint sponsorship by the government and local communities. The program started fast—the communities spoke up for almost one fourth of the entire number the first year. Hut more recently it has slowed down because of rearmament demands, Congress’ desire to keep down the ballooning U. S. budget, and opposition of realtors and other community groups in some cities led them to decline participation.
Right after the war Canada had a large program of publicly initiated rental housing designed in the main to shelter returning veterans. Hut it has dwindled each year to where just twenty-six hundred publicly initiated dwellings of any type were launched in 1951.
To some extent, too, Canadian families may have to decide what they want or need most urgently in this time of expansion. Mansur has pointed out that the rate of spending for housing during the postwar years hasn’t kept up with increased spending for cars and television sets. In fact, there are now close to three million cars buzzing around Canada’s streets and highways, only slightly fewer than our three and a half million homes. That’s seventy percent more vehicles than before the war. This may mean only that people like riding around better than sitting at home, but it’s all part of the problem of finding money for houses.
What are the chances of the shortage i easing?
There are some signs of improvement in the offing—more in the long run than in the short. For one thing, housing starts have picked up since last spring, thus promising there will
be a few more homes available next year than this, including more apartments to rent.
Too, a number of development builders have rolled up their sleeves again and are challenging the housing problem with some reasonably priced developments. In Ajax, near Toronto, a builder is offering a three-bedroom brick-veneer bungalow for $9,600, with the land cost of more than one thousand dollars included in the price. In Quebec, a group of four-bedroom houses recently went on the market at $12,500. An Oshawa builder has obtained CMHC’ approval for plans to build two-bedroom frame bungalows to sell for $8.000.
CMHC also reports there’s a noticeable improvement in living conditions in some of the new developments as the result of better planning. Huilders are getting away from the monotonous moderate-cost pattern of houses of uniform color and appearance arranged in grids with no thought of grouping or other variations.
As in most other countries, Canadians may have to sacrifice some space and privacy for more dwellings. In the last three years there’s been a noticeable trend toward more apartments and row houses and fewer one-family dwellings, although detached houses are still in the majority. All over the world governments and builders an striving to produce more houses with less material. England has come up wit h a design for government-sponsored houses that saves ten percent of materials while providing as much area. The design runs the stairway to the second floor right from the living room and otherwise cuts down on hallway space.
New building materials and techniques also hold out promise for producing a greater abundance of dwellings at less expense—like the lightweight building blocks called aggregates which make possible a lighter and cheaper framework. There’s also a reviving interest in prefabricated houses as the result of recent success with them in Europe particularly. The homeowner’s dream of a few years ago of low-cost houses factory-produced by the thou sands never materialized — chiefly because some prefabs are really eco nomical only when put up on a large scale by experienced contractors. Hut prefabs are still developing. In the Netherlands, where more homes per capita have been built since the war than anywhere else, one sixth of all recent homes are prefabs. In England, nearly one fifth of all permanent homes built since 1945 are prefabs. In Sweden, the government lends builders prepared to erect prefabs up to ninety percent of their cost and as a result more than one fifth of recent Swedish homes have been built in this way. Some successful European manufacturers are now planning to sell their prefabs to Canadian homeseekers.
More dwellings for the lowest income groups at least will appear in the next several years, which may ease some pressure in the cities. A number of towns are now moving to start public housing projects, controversial as they are. This has been possible since 1949 under Section 35 of the National Housing Act, which has been little used up to now, partly out of deference to defense requirements. Hy 1951 only one such project was actually built; a development of one hundred and forty dwellings in St. John’s, Nfld. Under this program the federal government lends seventy-five percent of the money for a housing project (it has to be paid hack) and the province and municipality put up the rest.
Now seven provinces have arranged to participate (Newfoundland, New Hrunswick, Quebec, Ontario, Manitoba.
Saskatchewan and British Columbia) and the program is beginning to spark some dwellings. Some of these are subsidized but a number are planned to pay their own way. The Ontario cities of Windsor and St. Thomas are now constructing 365 single - family detached houses under the plan and Hamilton is putting up a 500-familv rental development. Projects have been blueprinted for Halifax, Vancouver, Kingston and several other cities. There’s also a provision for grants to municipalities to rehabilitate blighted areas, but the only such effort under way with government aid is the Regent Park redevelopment in Toronto, now two-thirds completed. More than a thousand families will finally be housed there. Especially interesting is a fifty-family terrace house project planned for Ottawa. Each residence will have six rooms (three bedrooms), basement, and a small attic. The homes will be ottered to families with incomes of two thousand dollars to two thousand five hundred, who will pay rent of fifty dollars to fifty-five. CMHC is putting up ninety percent of the building cost in the form of a low-interest mortgage (three and a half percent). After forty years, ownership of the project reverts to the city. The city is putting up ten percent of the four-hundred-thousanddollar cost of the project. There’s growing consciousness in the building industry and government of the need for more financing. CMHC’s ! action in raising the ante on the amount | of money supplied for the new Ottawa housing development is one sign. So was the announcement by Robert H. Winters, Minister of Resources and Development, that CMHC will make mortgage loans in any town under fifty thousand population where private j loans are hard to find. Another sign is the agency—Interprovincial Building Credits Ltd.—set up by Canada’s building - materials dealers to lend money for home improvements, extension and expansion. The dealers defray I close to twenty-five percent of the interest charges on such loans. A homeowner simply applies to any buildingmaterial firm. While this doesn’t help : a fellow who must start from scratch to build a house, it’s another step in the direction of shaking loose more money for homes. One aspect of Canada’s admittedly painful housing shortage should not pass unnoticed. The very scarcity of mortgage money has provided a more recession-proof base under housing here than in the U. S. A family with a large equity is less likely to let loose of its house in an economic storm; in Canada a new homeowner generally has a high equity to begin with. Unfortunately, Canada’s larger do.vn payments have not proved as antiinflationary in themselves as they were generally expected to he. The costs of building a house here have risen faster than the average of other commodit ies. They’ve gone up one hundred and sixty percent since 1939, compared with onehundred and forty-five percent in the U. S. Of course those economists who still favor large down payments as a weapon against inflation can argue that tags on houses might have ballooned still higher under Canada’s special population pressure if down payments had been lower.
In any case, it all shows what happens when a nation starts growing in all directions. The old homestead just isn’t big enough any more. If we continue to produce houses at the present low rate, the homestead is going to remain crowded for a long, [ long time.