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  • Housing crisis: Rent controls, rally's, tent cities, RV...

    Housing crisis upon us

    Sat, April 7, 2007
    By KERRY DIOTTE, Edmonton Sun


    Provincial officials constantly boast of the Alberta Advantage. "Albertans enjoy a very high quality of life," says a spiel on a provincial website that boasts of our low taxes and allegedly high level of services.

    "They have the highest disposable incomes in Canada and the lowest unemployment rate ... Alberta also has ... a strong and vibrant economy and ... affordable living costs."

    We're strong economically but the government has to cut the bull about "affordable living costs" because that's simply no longer true.

    It's scandalous that in a province so wealthy, so many people are being squeezed by soaring rents and an outright lack of accommodations.

    Tara Kuchar's rental horror story is becoming far too typical.

    "We had our rent go from $750 a month last fall to $895 on Dec. 31," says the stay-at-home mother of two girls ages two and seven. "It's going up to $1,125 in June.

    "That's a $375 increase in less than a year. There's no way we'll be able to afford that."

    She lives with her husband and kids in a three-bedroom apartment-style condo in Edmonton's Clareview neighbourhood.

    With her hubby making about $16 an hour, the couple will now have to spend almost 50% of their income for housing.

    Kuchar is now looking for a cheaper rental unit and her husband is seeking a second job to help make ends meet.

    "The owner said the only reason they're doing the rent increase is because they can," says Kuchar. "It's price gouging. People here are outraged."

    A man who wants to be referred to as George is in a similar bind.

    He supports his disabled wife. They pay $790 a month for a two-bedroom unit in a 10-storey building populated by numerous seniors and people on government assistance.

    But the jig is up on that. George just got a notice from the property owners that the entire building is being converted to condos.

    The lucky tenants will be able to purchase condos there for between $159,000 and $195,000 according to real estate documents. If they can't, or won't, they'll have to move.

    Two or three other smaller buildings are also being converted to condos, says George.

    "We might have to move out of town. We're thinking of moving to Saskatchewan where it's affordable," says George, who wouldn't be able to afford a down payment, much less qualify for a mortgage.

    "There are a lot of seniors in this building who've lived here forever and a day. What are they going to do? There's a young fellow down the hall in a wheelchair and he's got no idea what he's going to do."

    A third horror story: Heather Plante is frantic because her NAIT-area apartment's rent is going up from $680 to $925. After a debilitating car crash, the 45-year-old woman has to support an eight-year-old son on less than $1,000 a month in income.

    "I'm not sure where I'll live now," the worried mom told me. "I can barely make ends meet as it is right now, but I guess we'll just have to cut back somehow."

    In tomorrow's column I'll explore a few suggestions and solutions to the accommodation crisis occurring in the land where we boast about the great Alberta Advantage.

    --30--

  • #2
    Accommodating the Advantage

    Accommodating the Advantage
    NDP MLA Ray Martin calls for government-enforced rent increase guidelines


    Sun, April 8, 2007
    By Kerry Diotte, Edmonton Sun


    Albertans might enjoy Canada's highest per-capita incomes in this economic boom, but the housing squeeze in this province is reaching crisis proportions.

    I'm hearing that from real estate agents, politicians and people who have had their monthly rents jacked up by hundreds of dollars and can't find a cheaper place to live.

    None of them seems to have a magic solution but the horror stories are becoming legion and the province that boasts about the Alberta Advantage is getting a black eye nation-wide.

    In yesterday's Sun, I told of a young family facing a total rent increase of $375. They faced a hike in December and one that's coming in June. They'll wind up paying $1,175 for their north-end condo, a full 50% of their take-home pay.

    Another hard-hit tenant is having to move out of a 10-storey building in a poorer area of town that is being converted to condos costing up to $195,000.

    Many seniors and others on fixed incomes will be forced out on the streets because they won't be able to afford to buy their apartments.

    "It's all a very serious problem," says NDP MLA Ray Martin. "I've been getting tons of calls.

    "I've called for government-enforced rent increase guidelines."

    Martin noted there are "guidelines in both Ontario and in British Columbia where the ruling party is as conservative politically as Alberta's Tories."

    In Alberta, landlords are free to raise rents by as much as they want.

    They have to give three months' notice to a month-by-month tenant. After raising the rent for a monthly tenant, it can't be raised again for six months.

    Rents in Ontario can only be raised annually by the rate of inflation.

    In B.C., rents are allowed to rise by inflation plus two per cent, says Martin.

    Martin wants rent hike restrictions as well as a program of tax breaks for people who could build affordable housing.

    "People say if you bring in rent increase guidelines nobody will build affordable housing," says Martin. "Well, they're not building it now either and vacancy rates in several Alberta cities are getting pretty close to zero."

    He's still steamed that the province isn't releasing a report by an affordable housing task force that had a mere 45 days to travel the province, then crank out a report.

    Martin was on that task force along with politicians of other parties. It delivered a report on March 19 but government officials won't release it until they study it thoroughly.

    Landlords are also caught in a financial pinch.

    Realtor Stan Gallant tells of a recent example where a six-suite apartment unit in the Ritchie neighbourhood recently sold for $775,000. Rents currently bring in $46,000 annually.

    But the new owner must pay out $50,000 per year on a mortgage, $3,500 in taxes and utilities and $8,000 in maintenance costs.

    In order to get a small return on his investment the new owner is being forced to increase total annual rents to $77,000.

    "This is causing a lot of owners/buyers to convert rental units to condos and sell them," says Gallant, admitting he feels badly for the tenants who can't afford to buy them.

    Clearly, something has to done to solve this whole accommodation crisis so the Alberta Advantage rings true for all citizens of this wealthy province.

    E-mail [email protected]

    --30--

    Comment


    • #3
      These people complaining about the high rents are probably the same ones who moved multiple times in the 90's when vaccancies where pushing 20% to find the cheapest rent. They took advantage of the market, now it's the landlords turn.

      Comment


      • #4
        Originally posted by LindseyT
        These people complaining about the high rents are probably the same ones who moved multiple times in the 90's when vaccancies where pushing 20% to find the cheapest rent. They took advantage of the market, now it's the landlords turn.
        maybe so, but it is still a problem. the reason they moved was to save money perhaps due to being unemployed (which was very common in the early 90's).

        Some people simply do not have the education or physical ability to find work that would pay enough to be able to rent for over $1000 a month.

        while landlords have the right to make money, there should be some protection for people. In many large cities there is rent control. Perhaps that is the model worth-while being looked at.

        Comment


        • #5
          I would have to agree. Adam Smith doesn't always work, nor does it ever work with any predictable timeframe...sometimes the invisible hand needs a wake up slap.
          President and CEO - Airshow.

          Comment


          • #6
            Originally posted by grish
            Originally posted by LindseyT
            These people complaining about the high rents are probably the same ones who moved multiple times in the 90's when vaccancies where pushing 20% to find the cheapest rent. They took advantage of the market, now it's the landlords turn.
            maybe so, but it is still a problem. the reason they moved was to save money perhaps due to being unemployed (which was very common in the early 90's).

            Some people simply do not have the education or physical ability to find work that would pay enough to be able to rent for over $1000 a month.

            while landlords have the right to make money, there should be some protection for people. In many large cities there is rent control. Perhaps that is the model worth-while being looked at.
            Please no... they don't work.

            Increase AISH, increase subsidies to those that need them, provide more student grant monies, implement a minimum income level tax rebate - make sure those that need our support get it. You will get no argument from me on those things.

            Just don't expect landlords to provide those subsidies where we aren't prepared to. You forget that a landlord is unable to target or monitor need. Does a student in a rent controlled two bedroom apartment get to keep a subsidized rent long after he graduated? Does someone on medical assistance after assistance is no longer needed? You will set up a black market in rent control units (i.e. Manhattan) that does NOT benefit those that need the additional support. You will just ensure that rental units do not get the repairs and replacements they need and you will in turn eventually turn good housing stock into slums.

            You will create more of the very circumstances you see in the market today - decent rental stock being converted to strata units because it is no longer economical to retain them as rental units. By all means provide those that need additional support because of their circumstances with sufficient means to acquire decent accommodation.


            Sorry RichardS but the biggest "control" on rents is exactly what we have experienced for the past two decades - having sufficient supply in the marketplace for the marketplace to respond. In fact it has kept rents as substantially less than what they "should" have been. You would not try and maintain this in the office market for the "good of the tenants" and it is no different on the residential side - you will NEVER increase supply by imposing marketplace controls and then expecting landlords to participate in that marketplace or add stock to it.

            We do not expect Safeway or Superstore or Walmart to offer "subsidized" food pricing based on "our" circumstances and not theirs. Competition among them provides lower pricing than we would have if we attempted to legislate it. Can you imagine if we tried to enter their marketplace on the same basis - would we allow them to only raise prices on a basket of goods (determined by who?) or allow them to raise prices on cake but not bread?

            We do not have Epcor sell gas and electricity nor Telus provide cell phones based on means. Rent's are no different - we try and ensure everyone has the means to acquire and support a reasonable life style for themselves and their children and we should do exactly that - not try and download it (or pieces of it) where it doesn't belong.
            "If you did not want much, there was plenty." Harper Lee

            Comment


            • #7
              Originally posted by kcantor
              Increase AISH, increase subsidies to those that need them, provide more student grant monies, implement a minimum income level tax rebate - make sure those that need our support get it. You will get no argument from me on those things.

              Just don't expect landlords to provide those subsidies where we aren't prepared to. You forget that a landlord is unable to target or monitor need. Does a student in a rent controlled two bedroom apartment get to keep a subsidized rent long after he graduated? Does someone on medical assistance after assistance is no longer needed? You will set up a black market in rent control units (i.e. Manhattan) that does NOT benefit those that need the additional support. You will just ensure that rental units do not get the repairs and replacements they need and you will in turn eventually turn good housing stock into slums.

              You will create more of the very circumstances you see in the market today - decent rental stock being converted to strata units because it is no longer economical to retain them as rental units. By all means provide those that need additional support because of their circumstances with sufficient means to acquire decent accommodation.


              Sorry RichardS but the biggest "control" on rents is exactly what we have experienced for the past two decades - having sufficient supply in the marketplace for the marketplace to respond. In fact it has kept rents as substantially less than what they "should" have been. You would not try and maintain this in the office market for the "good of the tenants" and it is no different on the residential side - you will NEVER increase supply by imposing marketplace controls and then expecting landlords to participate in that marketplace or add stock to it.

              We do not expect Safeway or Superstore or Walmart to offer "subsidized" food pricing based on "our" circumstances and not theirs. Competition among them provides lower pricing than we would have if we attempted to legislate it. Can you imagine if we tried to enter their marketplace on the same basis - would we allow them to only raise prices on a basket of goods (determined by who?) or allow them to raise prices on cake but not bread?

              We do not have Epcor sell gas and electricity nor Telus provide cell phones based on means. Rent's are no different - we try and ensure everyone has the means to acquire and support a reasonable life style for themselves and their children and we should do exactly that - not try and download it (or pieces of it) where it doesn't belong.
              I totally agree Ken. Rent controls lead to just as many horror stories as the invisible hand does. They are effectively a huge tax that specifcially targets rental property owners, and which allows the population at large to offload all responsiblity for affordable housing.

              Direct subsidies are a much more equitable and sustainable way to deal with the fluctuations of the market.

              Comment


              • #8
                I'd have to go against Lindsey on this one.

                Yes, there will be people who are just being cheap, but there are also students, young couples, families, etc, that need affordable housing. Note that I didn't say cheap housing...affordable housing.

                However, I do partially agree with Ken. Massive amounts of subsidized housing is not the way to per se. Subsidized housing done right can be a very good thing, but often it is done wrong and leads to the infamous projects of many cities. Several years ago when I was in London the City's museum had a big exhibit on how the City's 'projects' were finally being renovated and turned around.

                We do have a problem, though. I don't for one second believe that rental units are being converted to condos because they are not economical as rental units. That's pure poppycock. The owners of the apartment block simply see an opportunity for a greater amount of money with the current market.

                So, let's return to that example of a student. A single student shouldn't need a subsidized two bedroom apartment. He/she should have a selection of more affordable bachelor or one bedroom options.

                Perhaps the best kind of 'control' would be to have a development have so many suites that are to be sold at a lower price. Lower because they are smaller/less elaborate, not because they are supported with government funds. It would also create a mixed population in a building instead of creating extreme cases of social stratification.
                LA today, Athens tomorrow. I miss E-town.

                Comment


                • #9
                  Originally posted by MylesC
                  I don't for one second believe that rental units are being converted to condos because they are not economical as rental units. That's pure poppycock. The owners of the apartment block simply see an opportunity for a greater amount of money with the current market.
                  It might not be uneconomical for the current owners, but what if they sell? Any new owners will be saddled with 2007-sized mortgages, and for it to be economical they will have to increase rents or convert to condos. That's exactly what's described in the Sun article.

                  If landlords shouldn't increase rents, convert their buildings into condos, or even sell their buildings to other landlords then who will actually want to be a landlord? And how will they treat the buildings that they're stuck with?

                  Comment


                  • #10
                    Originally posted by kcantor
                    [
                    Please no... they don't work.

                    Increase AISH, increase subsidies to those that need them, provide more student grant monies, implement a minimum income level tax rebate - make sure those that need our support get it. You will get no argument from me on those things.

                    (...)


                    Sorry RichardS but the biggest "control" on rents is exactly what we have experienced for the past two decades - having sufficient supply in the marketplace for the marketplace to respond. (...)

                    (...)

                    We do not have Epcor sell gas and electricity nor Telus provide cell phones based on means. (...)
                    ...but we don't have sufficient supply to date. The previous years were definitely an area of over supply, and yes, I am not the biggest fan of controls, but we are in hyperinflation now, the pendulum has swung completely to the other side. Your arguements make perfect sense in a more controled inflationary market, but here we are rapidly escalating out of the stratosphere. The jump alone is incredible and even has me shaking my head in amazement and just waiting for the son of 1982.

                    ...and I would argue the TELUS/EPCOR piece...I live that and you would be AMAZED at what we are "expected" to subsidize. You picked 2 small commodities out of our portfolios in this world....although the CRTC is starting to change this in the telecomms world thankfully.
                    President and CEO - Airshow.

                    Comment


                    • #11
                      Originally posted by RichardS
                      ...but we don't have sufficient supply to date. The previous years were definitely an area of over supply...

                      ...and I would argue the TELUS/EPCOR piece...I live that and you would be AMAZED at what we are "expected" to subsidize. You picked 2 small commodities out of our portfolios in this world....although the CRTC is starting to change this in the telecomms world thankfully.
                      RichardS,

                      On the first point, rental markets - whether office or residential - don't typically move any differently than the economy they exist in. When the overall economy is stable they will be stable, when the overall economy takes a sharp "turn" - either up or down - the rental market will follow suite. In a downturn, there is no way to reduce rental inventory so rents will fall quite drastically quite quickly and stay there. In an upturn, they will rise just as drastically and just as quickly because the lead time involved in increasing that same inventory creates additional pressure on rental demand - and rents - in the interim. Those are the very things the market always responds to and it will unless we decide to try and control it. If you do, you are removing the one thing that will increase the inventory - providing enough return on capital to warrant it being put at risk instead of staying vested in bank stocks.

                      On the second point, perhaps Telus/Epcor was not the best example or comparable but groceries sure are as they, like a place to live, are an "essential". I know we are not perfect there either or we would not have food banks etc. but that is our fault collectively to fix, not Safeway's or Superstores or IGA or WalMart (although WalMart may be able to afford it but that again should be a different thread).

                      As to MylesC's single student not "needing" a subsidized two bedroom apartment, that apartment may have been rented by two - or three or four - students pooling their resources to afford a "market" rent. If you subsequently "control" that rent because "the" renter(s) may not be able to afford to keep up with the market, who benefits and for how long before there is no market anymore? We have added hundreds of student residences over the past few years but once you are no longer a student, you are not entitled to live in one. Are we going to allow a private landlord to evict a tenant just because he/she graduated? If not...
                      "If you did not want much, there was plenty." Harper Lee

                      Comment


                      • #12
                        Originally posted by kcantor
                        On the second point, perhaps Telus/Epcor was not the best example or comparable but groceries sure are as they, like a place to live, are an "essential". I know we are not perfect there either or we would not have food banks etc. but that is our fault collectively to fix, not Safeway's or Superstores or IGA or WalMart (although WalMart may be able to afford it but that again should be a different thread).
                        Wheat board, farm subsidies.... any of this ring a bell? :P

                        Comment


                        • #13
                          Originally posted by m0nkyman
                          Originally posted by kcantor
                          On the second point, perhaps Telus/Epcor was not the best example or comparable but groceries sure are as they, like a place to live, are an "essential". I know we are not perfect there either or we would not have food banks etc. but that is our fault collectively to fix, not Safeway's or Superstores or IGA or WalMart (although WalMart may be able to afford it but that again should be a different thread).
                          Wheat board, farm subsidies.... any of this ring a bell? :P
                          hopefully all going the way of the crow's nest rate imagine paying farmers not to plant crops when large parts of the world are still starving. you would think there would be a better way (like paying a premium for those crops instead and using them as "foreign aid" instead of cash that doesn't get where it's supposed to and keeping the cash at work here...).

                          having said that, those contols/subsidies were at least imposed/exercised on/for the intended benefactor or recipient - they did not legislate a third party to pay those subsidies from their earnings and restrict their selling prices at the same time (at least not intentionally in the beginning a la crow's nest rates ).

                          even then, as to whether these things manage or distort the marketplace over the long term, one need look no further than the maple syrup fiasco (although global warming will ostensibly cure that as there will be no more maple syrup crops to add to the current glut)...
                          "If you did not want much, there was plenty." Harper Lee

                          Comment


                          • #14
                            MMMM, maple syrup...

                            OK, rent controls is probably not the best term to use as I re-read my posts. Yes, they do bring up Manhattan-style arguments that do border on ridiculous and do hurt the market more than they help. Just because you could afford the rent at one time does nto mean that you will be able to forever, nor that your costs should not change with the economy. You are a renter after all, and things change.

                            I guess I was looking for more of a judicious application of rate hikes should be in place - especially in residential. I am not worried about commercial as that rather quickly takes care of itself, but the delay in market corrections in the residential world seems to be more lengthy. Rates that far far far far exceed the rate of total inflation are akin to price gouging - especially in our undersupplied market. I know that even Ken can cite examples of outright profiteering in the hot real estate markets.
                            President and CEO - Airshow.

                            Comment


                            • #15
                              Rent crisis bites as Premier urges patience

                              Thu, April 12, 2007

                              Rent crisis bites
                              Premier urges patience as housing review seeks solutions


                              By JEREMY LOOME, SUN MEDIA
                              Thursday, April 12, 2007

                              If you're looking for somewhere affordable to live, please be patient.

                              That was the message from Premier Ed Stelmach after opponents demanded in the legislature yesterday that he institute controls to prevent rent gouging.

                              The demands came during question period, after New Democrat Leader Brian Mason noted Boardwalk Properties, the province's largest single landlord, stated it won't build any new units in Calgary until average rents reach $1,600 per month; the company also said it won't build any if the province caps rents.

                              Boardwalk spokesman Madeleine Baerg told Sun Media rents would likely also have to reach about $1,600 in Edmonton for new apartment construction to be viable.

                              "Labour costs and supply costs are similar (in the two cities)," she said.

                              Letting landlords set the terms for rents as the province faces a housing crisis is unacceptable, Mason suggested.

                              Ben Suetter, president of the Edmonton Apartment Association, a group of landlords, said rent control won't help build any new apartment suites.

                              He said rising rents are the result of rising building costs, and said complainers don't understand the principle of return on investment.

                              "No one is going to build an apartment building to lose money. Construction costs are so high that they warrant rents upwards of $1,000 and $1,500, it's just the way it is.

                              "You don't see people calling for caps on rising home prices, do you?

                              "This is simple economics - people will not invest money to build a property that will not be profitable."

                              But Mason said lots of people can't afford $1,600 a month for rent and asked the premier to commit to ending "rent gouging."

                              Stelmach said a pending report on the housing crisis in Alberta will offer potential solutions and is under review.

                              "These are all issues that are under discussion and we will have a plan to accommodate these issues," he said.

                              "Some will come forward in the budget and others are working on in partnership with the various municipalities."

                              It's an unacceptable delay given that the all-party committee was only given 45 days to develop (the report), said Liberal critic Bruce Miller.

                              "Does the minister not recognize that the longer we drag our feet on this, the worse the housing crisis gets?"

                              But the government can't rush such an important issue, suggested Municipal Affairs Minister Ray Danyluk.

                              "It's so important that what we do and the direction we go in is right, and I want to commend the task force for the work they've done," he said.

                              Baerg said rent controls are bad news for both landlords and tenants.

                              Capping rent hikes would create "slum dwellings," she said.

                              --30--

                              Comment

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