Core Housing Need Concept, Implementation, and Availability December 2, 2014 Roger Lewis Housing Research Division Canada Mortgage and Housing Corporation Presentation to 2014 OMSSA Policy and Research Conference
Introduction History and sample estimates Conceptual basis of indicator Availability of housing need estimates CANADA MORTGAGE AND HOUSING CORPORATION 2
History Work on the concepts underlying core housing need date back to joint Canada/U.S. research in the late 1970s. The core housing need definition used today was developed through federalprovincial discussion in the 1980s. 2011 housing need estimates derived from the National Household Survey (NHS) were released by CMHC in October. Census-based estimates of core housing need are available for 1991, 1996, 2001, and 2006. Less-detailed annual estimates of core housing need in urban areas are also available: 2002-2011 - derived from the Survey of Labour and Income Dynamics (SLID) CANADA MORTGAGE AND HOUSING CORPORATION 3
2011Core Housing Need - Geography Incidence of Core Housing Need, Canada, Ontario, and Ontario CMAs, 2011 Canada Ontario Toronto Barrie Brantford Peterborough London Kingston St. Catharines-Niagara Hamilton Windsor Ottawa* Oshawa Thunder Bay Guelph Kitchener-Cambridge-Waterloo Greater Sudbury 0 5 10 15 20 % of households in core housing need Includes only private, non-farm, non-band, non-reserve households with incomes greater than zero and shelter-cost-to-income ratios (STIRs) less than 100%. * Ontario portion of Ottawa-Gatineau. Source: CMHC (NHS-based housing indicators and data) CANADA MORTGAGE AND HOUSING CORPORATION 4
2011 Core Housing Need - Characteristics % of households in core housing need Recent immigrants landed in Canada between January 1, 2006 and May 10, 2011. Recent-immigrant households are households with primary maintainers who are recent immigrants. Includes only private, non-farm, non-band, non-reserve households with incomes greater than zero and shelter-cost-to-income ratios (STIRs) less than 100%. Source: CMHC (NHS-based housing indicators and data) CANADA MORTGAGE AND HOUSING CORPORATION 5
Acceptable Housing & Core Housing Need Acceptable Housing Acceptable housing is adequate in condition, suitable in size, and affordable. Core Housing Need A household is in core housing need if its housing is not acceptable (does not meet one or more of the adequacy, suitability or affordability standards) and it would have to spend 30% or more of its before-tax income to access acceptable local housing. CANADA MORTGAGE AND HOUSING CORPORATION 6
Core Housing Need 2 step process Does the household live in acceptable (adequate, suitable, and affordable) housing? STEP 1 YES NO Does the household have sufficient income to access acceptable local housing? STEP 2 YES NO Household is NOT in core housing need Household is in core housing need CANADA MORTGAGE AND HOUSING CORPORATION 7
Step 1 - Housing Adequacy (Repair) Adequate housing does not require any major repairs, according to residents. Major repairs include those to defective plumbing or electrical wiring, or structural repairs to walls, floors or ceilings. Adequacy is assessed based on responses to the following NHS question (or comparable questions on SLID and CIS): CANADA MORTGAGE AND HOUSING CORPORATION 8
Step 1 - Housing Suitability (Crowding) Suitable housing has enough bedrooms for the size and make-up of resident households, according to National Occupancy Standard (NOS) requirements. Enough bedrooms based on NOS requirements means one bedroom for each cohabiting couple; lone parent; unattached household member age 18 or older; same-sex pair of children under age 18; and additional boy or girl in the family, unless there are two opposite sex children under 5 years of age, in which case they are expected to share a bedroom. A household of one individual can occupy a bachelor unit (i.e., a unit with no bedroom). Crowded households have fewer bedrooms than required under the NOS. CANADA MORTGAGE AND HOUSING CORPORATION 9
Step 1 - Housing Affordability Affordable housing costs less than 30% of before-tax household income. For renters, shelter costs include, as applicable, rent and payments for electricity, fuel, water and other municipal services. For owners, shelter costs include, as applicable, mortgage payments (principal and interest), property taxes, condominium fees, and payments for electricity, fuel, water and other municipal services. CANADA MORTGAGE AND HOUSING CORPORATION 10
Step 2 - Access to Acceptable Housing Step 2 (means test) assesses whether households living in unacceptable housing have sufficient income to access acceptable local housing. A household living in unacceptable housing is in core housing need only if acceptable local housing would cost 30% or more of its before-tax income. In communities where market rents can be estimated, the cost of acceptable local housing is calculated using the median rent (including utilities) of rental units with the number of bedrooms the household requires (from CMHC s Rental Market Survey). Elsewhere (remote communities), the cost of acceptable local housing is based on the estimated monthly carrying cost of a newly constructed home with the number of bedrooms the household requires. In 2011, municipalities (Census Subdivisions) in which market rents were the basis for estimating the cost of acceptable housing accounted for 98% of households in Ontario. CANADA MORTGAGE AND HOUSING CORPORATION 11
Step 2 - Access to Acceptable Housing (CNITS) Households with incomes above the appropriate Core Need Income Threshold (CNIT) are deemed able to afford acceptable housing and hence are not in core housing need. CNITs are community-specific and specific to the number of bedrooms households require. They are derived from shelter costs: Example - Community A Median 2-bedroom rent (including utilities) = $1,000 / month or $12,000 / year 2-bedroom CNIT = $40,000 ($12,000 / 0.3) Any household with an income before taxes above $40,000 is deemed able to afford acceptable 2-bedroom housing in Community A: it could pay for such housing without spending 30% or more its income. NOTE: In Census Metropolitan Areas (CMAs) and Census Agglomerations (CAs), CNITs are based on rents in the whole CMA or CA, rather than rents in individual municipalities. CANADA MORTGAGE AND HOUSING CORPORATION 12
Core Housing Need CNITs When rent data are unavailable from CMHC s Rental Market Survey for a given bedroom count (e.g., bachelor apartments, 4-bedroom units), rents are imputed using regression models. Certain types of communities without rent estimates have CNITs based on rents in other nearby communities: Municipalities with populations of 2,500 or more* Communities (Census Subdivisions) that share a built-up area with communities for with rents are available; and Communities within 60 km of a Census Metropolitan Area or 30 km of a Census Agglomeration. * with some exceptions (remote CSDs) CANADA MORTGAGE AND HOUSING CORPORATION 13
Step 1 and Step 2 Household Example Consider two similar households in different communities. Household 1 Household 2 Place of residence Community A Community B Household type Couple and one child Couple and one child # of bedrooms required (NOS) 2 2 # of bedrooms 2 3 Suitability (crowding) Not crowded Not crowded Adequacy (dwelling condition) No major repair needed No major repair needed % of income spent on shelter 35% (not affordable) 35% (not affordable) Housing acceptability (STEP 1) NOT acceptable NOT acceptable Median monthly 2-bedroom rent $1,000 ($12,000 / year) $750 ($9,000 / year) Core Need Income Threshold $40,000 $30,000 Household income $35,000 $35,000 Core need status (STEP 2) IN core housing need NOT in housing need CANADA MORTGAGE AND HOUSING CORPORATION 14
Core Housing Need Housing Standards Affordability is the main reason housing fails to qualify as acceptable and the main contributor to core housing need. 2011 Canada 2011 Ontario Households tested for core housing need % below affordability standard 21.7 23.5 % below suitability standard 5.8 7.2 % below adequacy standard 7.0 6.4 Households in core housing need % below affordability standard* 89.7 90.6 % below suitability standard* 13.3 16.3 % below adequacy standard* 15.1 13.3 * Percentages do not add to 100 because households can be below more than one standard. CANADA MORTGAGE AND HOUSING CORPORATION 15
Households Tested for Core Housing Need In Canada and in Ontario, 94% of all private households were tested for core housing need in 2011. Canada Ontario All private households 13.3 million 4.9 million Total exclusions* 857,000 287,000 Farm households 138,000 37,000 Households in band housing 55,000 5,000 Households on reserve 106,000 18,000 Households with incomes of $0 or less 26,000 9,000 Households with STIRs** greater than or equal to 100% 590,000 225,000 Households tested for core housing need 12.5 million 4.6 million * Because a single household can fall into more than one exclusion category, total exclusions are less than the sum of the individual exclusions. ** STIRs - shelter-cost-to-income ratios. CANADA MORTGAGE AND HOUSING CORPORATION 16
Core Housing Need Ontario Derivation Ontario 2011 All private non-farm, non-band, non-reserve households with incomes greater than zero and STIRs less than 100% (4.6 million households) STEP 1 Do households live in acceptable housing? Households falling below one or more standards (1.5 million households 32.8%) Households in housing meeting all 3 standards (3.1 million households 67.2%) STEP 2 Can households in substandard housing afford acceptable housing? Households unable to afford housing with the required number of bedrooms IN CORE HOUSING NEED (617,000 households - 13.4%) Households able to afford housing with the required number of bedrooms (891,000 households - 19.4%) CANADA MORTGAGE AND HOUSING CORPORATION 17
Availability of Housing Need Estimates Publications Research Highlight: 2011 Census/National Household Survey Housing Conditions Series: Issue 2 The Geography of Core Housing Need in 2011 https://www03.cmhc-schl.gc.ca/catalog/productdetail.cfm?lang=en&cat=187&itm=5&fr=1416425425642 2014 Canadian Housing Observer feature article on affordability http://www.cmhc-schl.gc.ca/en/corp/about/cahoob/index.cfm More 2011 NHS series Research Highlights to come On-line data and tools Housing in Canada Online (HiCO), interactive content, and Excel tables all accessible through the Canadian Housing Observer main page http://www.cmhc-schl.gc.ca/en/corp/about/cahoob/index.cfm CANADA MORTGAGE AND HOUSING CORPORATION 18
CMHC Sources for Housing Need Estimates Canadian Housing Observer data tables Excel format 1991, 1996, 2001, 2006, and 2011 census/nhs estimates Canada, provinces, territories, and CMAs Includes annual (2002-2011) SLID-based urban core housing need content Canada and provinces CANADA MORTGAGE AND HOUSING CORPORATION 19
CMHC Sources for Housing Need Estimates Interactive local data tables Housing Observer Approximately 160 municipalities cities with populations of 30,000+ Also includes Canada, provinces, territories, and CMAs 2006 & 2011 demographic, housing stock, core need data (census/nhs) 2010-2013 construction and rental market data (annual) CANADA MORTGAGE AND HOUSING CORPORATION 20
CMHC Sources for Housing Need Estimates Interactive core housing need maps Housing Observer Two interactive core housing need maps (i) 2001 & 2006, (ii) 2011 (census/nhs) Includes Canada, provinces, territories, and CMAs CANADA MORTGAGE AND HOUSING CORPORATION 21
CMHC Sources for Housing Need Estimates Housing in Canada Online (HiCO) Housing Observer An interactive tool for examining core housing need data Data derived from 1991, 1996, 2001, 2006 censuses & 2011 National Household Survey Includes Canada, provinces, territories, CMAs, Census Agglomerations, and Census Divisions (2006 & 2011 only - NEW) CANADA MORTGAGE AND HOUSING CORPORATION 22
CMHC Sources for Housing Need Estimates CMHC Housing Market Information Portal 2006 core housing need and census data, plus recent housing data from CMHC surveys (rental markets, starts, completions) Contents still being expanded, and 2011 data to be added in 2015. Estimates available down to local (Census Tract, neighbourhood) level CANADA MORTGAGE AND HOUSING CORPORATION 23
CMHC Sources for Housing Need Estimates Custom requests Clients interested in custom tabulations of core housing need can request data on a (modest) cost recovery basis from CMHC. Contact: Jeremiah Prentice (jprentic@cmhc.ca) CANADA MORTGAGE AND HOUSING CORPORATION 24
Contact Roger Lewis Senior Researcher, Housing Needs group Housing Research Division Canada Mortgage and Housing Corporation (613) 748-2797 rlewis@cmhc.ca CANADA MORTGAGE AND HOUSING CORPORATION 25