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Halfway through the Alberta election campaign, both the United Conservative Party (UCP) and New Democratic Party (NDP) are surprisingly weak on housing policy at a time when affordability is top of mind for many Albertans.
The average price of a home in Alberta is approximately $447,000. It requires 10 years of full-time work for a typical young person to save enough for a 20 per cent down payment. This represents a significant deterioration of opportunities for homeownership; when baby boomers started out as young adults in Alberta (around 1976), it took only six years of work to save for an equivalent down payment.
Nonetheless, Alberta still has a major affordability advantage, with relatively low housing prices compared to Ontario and B.C., where the average home costs $932,000 and $996,000, respectively. Hard work pays off so much less for younger Ontarians and British Columbians, who must work full time for 22 years to save for a 20 per cent down payment on the average home — 12 years longer than in Alberta.
Housing affordability is a major economic asset for Alberta that will attract workers and investment.
Unfortunately, neither party proposes to nurture and protect this asset (so far) by offering a clear plan to stall home prices and give earnings a chance to catch up.
Instead, a new study of the parties’ platforms shows the UCP is stuck at the starting line in the quest to protect and improve Alberta’s housing affordability advantage. The NDP is better but still promises to implement just one-third of the policy changes needed to protect Alberta’s housing advantage. The study examines party platforms for evidence of commitments to scale up non-profit housing, fix the regular housing market and break the addiction to high and rising home prices.
As of May 15, housing is not even identified as one of the 27 priority issue areas on the UCP’s campaign website. This signals the party intends to rely on luck to promote housing affordability, instead of careful and deliberate policy design.
The UCP offers no goal or vision for housing. It has yet to adopt the goal that all Albertans can afford a home that meets their needs by 2030 — one set by the Canada Mortgage and Housing Corporation, which manages the National Housing Strategy. Achieving big objectives — like housing affordability for all — requires clear goals and planning. It’s a major weakness that the UCP fails to offer this on housing.
The average price of a home in Alberta is approximately $447,000. It requires 10 years of full-time work for a typical young person to save enough for a 20 per cent down payment. #ABVotes
The NDP is stronger when it comes to a housing goal, promising to “house another 40,000 Albertans within the next five years,” and describes housing as a right. “Alberta’s NDP will act so all Albertans can have a safe place to call home and have the support they need to live a healthy and dignified life,” the party’s website reads. This language aligns with the National Housing Strategy goal but omits the 2030 timeline. Statistics Canada data show 10 per cent of Albertans (or approximately 46,000) are in core housing need, meaning they “live in an unsuitable, inadequate or unaffordable dwelling and cannot afford alternative housing in their community.”
If the NDP accomplishes the party’s promise, the province will be well on track to eliminate core housing need by 2030. While relatively strong at offering plans to scale up non-profit housing, the NDP largely ignores policy levers available to address problems in the regular market where the vast majority of residents find their homes.
Few policy details
Neither party proposes housing policy measures now commonplace in B.C. and Ontario to fend off forces that erode affordability. For example, both the UCP and Alberta NDP are silent about steps to discourage foreign buyers, empty homes, money laundering or regulation of short-term rentals that reallocate housing as hotels for vacationers rather than preserving it primarily for those who work and study in the province.
Both parties ignore the value of supporting all Alberta cities to produce rigorous housing needs assessments that position them to open up low-density zoning for a diversity of people, families, forms and tenures (including lots of rental). Nor do the parties promise to encourage new housing to integrate energy-efficiency objectives.
Risks to renters from renovictions and demovictions are also overlooked. While these problems have grown substantially in B.C. and Ontario, the UCP remains quiet about protections for renters and affordable rental housing.
The NDP promises to review rental legislation, expand rental assistance for another 11,000 low-income households and establish a rent bank to help low-income households pay rent after a sudden disruption to income due to job loss, marriage breakdown, etc.
The primary housing policy detail offered by the UCP is in Budget 2023 (p. 86), which promises to invest “$105 million over three years to reduce homelessness.” The budget makes no mention of specific targets for the number of people who will benefit or the number of supportive housing units that will be built.
By contrast, the NDP commits to scaling up non-market housing for those most vulnerable. Its promise to house another 40,000 in the next five years includes a commitment to build 8,500 new social housing units, and will “focus on housing the people with the deepest need, including Albertans with disabilities, families fleeing domestic violence, and those experiencing homelessness.”
Emphasis on economic diversification is a housing strength for both parties
While the two parties are weak on housing policy, their shared emphasis on sparking further economic diversification for Alberta is important to retain the province’s housing advantage.
Unlike B.C. and Ontario, where real estate, rental and leasing is the largest contributor to GDP, one of Alberta’s key strengths is that its economy is not as tied to real estate.
Real estate accounts for 11 per cent of Alberta GDP. This makes it the province’s second-largest industry. In the rest of Canada, real estate is the biggest contributor to national GDP, at 13 per cent — and a whopping 19 per cent in B.C. Despite its large contribution to GDP, fewer than two per cent of Canadians make their living in the real estate sector. Nationally, no other industrial sector has such a big gap between its share of GDP and its share of employment.
This suggests the rest of Canada has been growing its economy by increasing housing, the major cost of living, without generating jobs in that industrial sector at a rate that keeps pace with local earnings, especially in urban centres.
Instead, small numbers of Canadians (notably realtors) enjoy very large incomes.
Homeowners, especially in B.C. and Ontario, gain equity in ways that drive worrisome wealth inequalities between owners and renters, and older and younger residents.
All the while, younger people and newcomers struggle to earn enough from full-time work to pay for their primary cost of living — housing.
While weak housing policies are reason for concern, the UCP and NDP deserve credit for proposing economic strategies that rely on industry rather than real estate to drive prosperity. This overarching policy orientation will help Alberta fend off the addiction to high and rising home prices that has taken stronger root in B.C. and Ontario.
Dr. Paul Kershaw is a University of British Columbia policy professor and founder of Generation Squeeze. Andrea Long is Gen Squeeze’s senior director of research and knowledge mobilization.
They are the authors of a new study of housing commitments made by the UCP and Alberta NDP in the 2023 election. This analysis is part of Generation Squeeze’s non-partisan, evidence-based Alberta Voters Guide. The guide helps to inform Albertans about actions parties are proposing to address key issues in the 2023 election, like affordability, health and protecting natural resources. Follow us at www.gensqueeze.ca, Twitter, Facebook and listen to our Hard Truths podcast.