How do we as a province define success? It’s an intentionally loaded question; there are as many solutions as people with an opinion.
For some it’s big picture data, like Gross Domestic Product. If exports increase, the theory goes, the Island will prosper. (The problem is the benefit does not flow downstream equally to all.) For others it’s our social safety net. How do we treat the lowest earners in society and the most vulnerable? For some it’s not an economic equation at all, but a happy metre. Are residents content with the quality of life this Island affords us?
Ultimately it is a personal decision. But we all share responsibility for dealing with change that comes with both positive and negative impacts. Housing is on top of this list. For many Islanders the dream of home ownership, like their parents, is becoming more of a dream as the cost of housing soars.
Owning a home is foundational to the success of any community. Communities thrive when people can live and work in the same town or city. They volunteer at churches and community groups rather than commuting after a long day of work. Their children attend local schools and participate in dance, music, and minor league sports. They are connected. Local business and industry cannot survive without employees, but potential employees will move elsewhere if affordable housing is unavailable.
Prince Edward Island is in the midst of a housing crisis. Some blame New Canadians. It’s a contention not supported by fact. Diversity is positive for both our culture and economy. The housing crisis is a result of many factors: government ignoring public housing for 30-plus years, a growing gap between the income of ordinary Islanders and the wealthy, desire of former Islanders to return home, city dwellers now working remotely from the relative safety and security of PEI, fewer homes available for sale, and immigration.
The MacLauchlan government was the first to respond. Both it and the King administration have focused on ‘affordable housing’, as defined by subsidized rental units, as a primary solution. It’s certainly an important piece of the puzzle, but it is not a total solution. In many ways it simply punts the issue down the road.
Apartment buildings are built, usually in highly populated areas, with a formula that sees a percentage of units subsidized by government for a given number of years. It works for developers who are able to cover the cost of construction. But what happens in 10 or 15 years when the subsidy expires? What impact will it have on the rental price if subsidies are not extended?
We don’t know the answer to that, but we do know living in rental units does not build equity - a key wealth benefit of home ownership and one particularly rewarding for those who bought low and are selling high. No one should begrudge another for making money on the sale of their home. The issue our province must face is how to help those who can’t afford either the down payment or homes now priced out of reach.
Here’s the rub. Island salaries have not kept pace with the increase in housing prices, an issue felt in every Island community. The issue has become even more exacerbated in the past two years. The Prince Edward Island Real Estate Association reports the average price paid for an Island home in June was $332,000, a staggering increase of 27 per cent over June 2020. This is on top of similar increases in recent years.
Without some form of government intervention, the crisis will continue to compound and the dream of home ownership will slip further away for too many Islanders. If people want to create a life in a rural community but can’t afford a down payment we need to help them.
The Irish government plans to build 25,000 homes a year to deal with its housing crisis. It’s the type of aggressive action the Island needs. Apartments are wonderful, but they don’t build wealth, they suck wealth.
Is there an opportunity for government to help finance ownership or down payments? Can it support developers with one of their major costs, installation of essential services. It’s a cost that drives the price of a lot or subdivision development up. Can we look at expanding the use of co-operative housing? There are many ways government can support Islanders. So far the support has not focused on the notion of building community by helping to build equity.
Until we do, PEI’s efforts will only be a half-measure and our communities will not grow to their full potential.
Paul MacNeill is Publisher of Island Press Limited. He can be contacted at email@example.com