For more than a year, Brianne Zimmerman has been experiencing the downside of living in a city with an overactive housing market and a province with no rent controls.

The 34-year-old Alberta photographer’s journey began in June 2022, when she was renovicted from her two-bedroom apartment in Sunnyside, a gentrifying neighbourhood in Calgary’s inner city. Zimmerman’s eviction was stressful, so when her friends offered their spare bedroom for $900 a month, she jumped at the opportunity. The catch? Her friends live in Black Diamond, a quaint town 77 kilometres south of Calgary.

“The rental market was overwhelming,” Zimmerman says. “And I was lucky enough that a couple of friends of mine that live in Black Diamond and had been thinking about possibly renting out their spare bedroom. So it fell into my lap.”

Despite a record number of purpose-built rental units completed in Calgary since Zimmerman’s renoviction, she hasn’t been able to find an apartment she can afford, even accounting for the additional cost commuting represents.

“I’m currently trying to find a new place to live back in Calgary, because the commute is expensive,” she says, noting that she spends roughly $200 a month in gas. “As an environmentalist, driving constantly isn’t really aligned with my values.”

But as average rental rates for available units continue to skyrocket in Calgary, reaching a record high of $2,091 in September, Zimmerman is now considering homeownership. “I am in a privileged place, because I never thought my parents would be able to help me out with the down payment,” she says. “But I’m just tired of not having a stable space to land in.”

Is building more homes the answer to the housing crisis?

As the housing crisis in Canada gets worse by the day, many experts have argued recently that skyrocketing rental rates are simply due to a lack of housing supply relative to demand, and that reducing the barriers developers face to build a range of housing types will stabilize prices.

They say that building more homes would increase the chances that renters like Zimmerman find a well-priced apartment in the neighbourhood of their choice.

But in reality it’s more complex than that.

As local markets are increasingly influenced by the pressures of a globalized system, building more homes alone is not enough. To protect the right to housing of all Canadians, experts say decision-makers should look beyond market solutions, and expand the supply of co-operative housing.

But in a country where homeownership is king, doing this is a challenge.

“We’ve had constant support and promotion of homeownership as the ideal for decades,” says Ren Thomas, an associate professor of urban planning at Dalhousie University noting that homeownership was presented in the 1930s as a means to stability, community life, and retirement security. “This ideology was created to sell a product, and people still buy into it.”

Why doesn’t Canada build co-ops anymore?

Once the target of generous federal programs, non-equity co-op housing was touted as the “third force in the housing market” in the 1970s. But despite a proven record of long-term sustainability, only 17,000 units have been completed in Canada over the last two decades.

They were part of the postwar boom — between 1964 and 1995, about 10 per cent of all homes built were social housing. Then things started to change.

In the 90s, successive Liberal and Conservative governments built less and less non-market housing, including the Brian Mulroney Conservatives axing its co-operative housing program in its 1992 budget. As a result, the options available to Canadians dwindled, and are now mostly limited to the precariousness of renting or the stability of owning.

Despite this, co-ops have remained popular. Originally envisioned as a more socially diverse alternative to public housing — co-op members are neither homeowners nor tenants, but enjoy the benefits of both.

“Members have a say in how the decisions are made about maintenance and capital repairs, monthly housing charges,” says Courtney Lockhart, a spokesperson for the Canadian Co-op Housing Federation (CHF). “This gives members more control than a tenant would have versus the traditional landlord.”

The collectivist model of co-op housing not only facilitates the provision of perpetually low-cost shelter, it also supports capacity building amongst members, and bolsters social capital. “Co-ops collectively own their housing together, and make decisions democratically,” Lockhart says. “That enables people to take care of each other, rely on each other, and build a sense of community.”

With roughly 91,000 units nationwide, co-op housing currently represents less than one per cent of Canada’s housing stock, and a majority of these units were built between 1973 and 1993.

Moreover, the Canada Mortgage and Housing Corporation (CMHC) didn’t just provide direct, low-cost loans to build social housing, the corporation also created programs to acquire newly-built and older units, effectively adding roughly 150,000 homes to the non-market stock.

According to Sarah Cooper, an assistant professor of city planning at the University of Manitoba, the programs that funded co-operative housing in the 70s and 80s were part of the federal government’s efforts to bolster Canada’s non-market stock, which included transforming market into non-market units.

Only Ontario, Quebec and B.C. have continued to fund provincial co-op programs, albeit in insufficient numbers. Since 1990, roughly 17,000 units have been completed in these provinces.

But provincial support alone won’t create the momentum needed to give Canadians a much-needed third alternative.

Decade-long waiting lists for co-ops

The limited number of existing units, combined with low turnover rates, make co-op housing an unviable option for most Canadians, despite being so in-demand.

Consequently, since market landlords aren’t competing against the affordability of co-op housing, they are free to jack rents as high as the market will bear, Thomas said. She points to pressure from industry lobbying the government against investing in non-market housing.

Geordie Dent, executive director of the Federation of Metro Tenants’ Associations in Toronto, told Ricochet that’s an accurate assessment of what happened behind the scenes, that lobbying by landlords certainly played a key role.

“I don’t think anyone ever came out publicly and said that,” he said. “It was always pitched as ‘market efficiency’ to the public, while I think privately, a bunch of landlords realized they were going to make a ton of money down the road. The government just swallowed everything they said and they didn’t care if it was true or not.”

Today, without a range of stable tenure choices, Canadian workers and households have come to bear a lot.

Since 2020, renting has become as costly as buying, sometimes even moreso. And while house prices have kept rising at an accelerated pace for nearly a decade, wages remain stagnant, making Canada the G7 country with the highest price-to-income ratio, trailing behind Portugal and Luxemburg.

The ascent of rental rates has been attributed to high inflation, rising interest rates, an increasing demand for rental units, as well as the financialization of housing and years of austerity by all levels of government. This situation, combined with weak (or nonexistent) rent controls, is at the core of Canada’s housing crisis.

But despite the whims of an overheated market, co-ops have managed to continue to provide stability to residents.

Last year, CHF reported that rental rates of market units grew faster than housing charges (rents) in co-op housing between 2006 and 2021, which tended to remain below market rates. This is possible not because of operating subsidies (the study excluded subsidized units), but because co-ops operate in a break-even model, where rents rise according to capital and operational needs. But more importantly, unlike market landlords, co-ops don’t seek to profit — and for these reasons most have years-long waitlists.

“Co-ops operate very successfully,” Lockhart says. “But they’re small scale, and lack of available funding for new supply are really our key barriers.”

Waiting on the federal government

Despite the advantages of co-op housing, Canada’s National Housing Strategy, implemented in 2017, hasn’t done much to strengthen the sector, and the stable funding programs created in the ‘70s haven’t been restored. Instead, incentives have remained focused on bolstering the supply of market housing, as evidenced by a recent enhancement to the federal government’s GST rebate program, which waives this ‘cost’ from developers with the aim to incentivize market rental construction.

However, this program explicitly excludes co-op housing, limiting the options available to the 1.6 million renter households that already spend more than 30 per cent of their income in shelter costs.

“We are calling on the federal government to clarify this exemption, and ensure the eligibility of non-profit housing co-ops as soon as possible,” Lockhart says. “It is our position that non-profit co-ops should be included in this tax measure.”

“We are really eager to see this program launch as soon as possible,” Lockhart says. “So it can enable more housing developments.”

In a statement, an official at the Department of Finance told Ricochet that the enhanced GST rebate “is one measure among many that the government is putting forward.” They did not explain the rationale behind the exclusion of co-op housing from this incentive.

The sector, however, remains hopeful.

In 2022, the federal budget earmarked $500 million to fund the development of new co-op housing as part of the National Housing Co-Investment Fund, a federal program that provides low-interest loans to provincial and municipal governments, non-profit and co-operative housing providers, Indigenous governments, as well as the private sector.

According to Lockhart, this would be the first federal investment in new co-op housing in 30 years. It will be two years in April since the 2022 budget was released, but no details have been made available about the disbursement of this funding.

“We are really eager to see this program launch as soon as possible,” Lockhart says. “So it can enable more housing developments.”

In a statement, a spokesperson from the Office of the Minister of Housing, Infrastructure and Communities told Ricochet that the new program is still in the works, but declined to elaborate further or answer questions. “We will be sure to share additional details as they become available.”

Co-ops cut into landlord profits

After more than four decades of underfunding, existing co-ops also face important challenges that undermine the model’s viability and long-term affordability. Without continued government support, some non-equity co-ops are finding it difficult to provide affordable housing to very low income members.

As the operating agreements of existing co-ops end, some of them have created internal subsidies where higher income members pay more in housing charges to subsidize lower income members, but according to Cooper, of the University of Manitoba, this isn’t always feasible — or fair. “You’re asking neighbours to [provide] a direct subsidy to their neighbours; instead of it being a subsidy that comes from everybody across the country through taxes.”

But in a country where the economic regime requires governments to prioritize private property rights over the collective good, providing housing subsidies is a last resort, especially when these could undermine the bottom line of landlords and homeowners.

“If you have 40 per cent of your market that’s somehow able to keep prices really low, you’re not going to be able to keep your prices really high, because people are going to have this other option,” she says. “That’s precisely why people don’t want [the co-op] sector to grow.”

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