The City of Langford’s recently announced Attainable Home Ownership Program boasts a new and innovative way to give potential homebuyers a “boost and jump-start,” but experts say the program will subsidize housing mainly for households making well above median incomes.
Those who qualify could benefit significantly. The city will offer grants of $5,625 to $16,875 towards the down payment on certain two-bedroom condominium units. And, the purchasers will benefit from a set purchase price of $450,000, which is significantly less than comparable units now on the market.
However, according to one economist’s calculation, a household would need to make at least $109,517 annually to qualify for the mortgage. That’s significantly more than the median household income in Langford, which was $80,331 in 2016. That year, nearly two thirds of Langford households made less than $100,000.
“It’s not that it’s not beneficial, but you have to think about what the opportunity cost of this program is,” says Leo Spalteholz, a realtor and housing expert who runs the website House Hunt Victoria. “Is this the best use of the money? Is this the area of greatest housing need?”
To qualify for the program, applicants must have a gross annual household income of $125,000 or less, a minimum of two people in the household and cannot currently own any real estate. Applicants must have lived in Langford for the past two years and the value of their family assets cannot exceed $50,000. They also cannot have access to down payment assistance from family, friends or other sources.
But applicants also have to qualify for a pre-mortgage approval of $450,000 — something Keith Yacucha, a Camosun College economics instructor, says is likely only possible for those making more than $109,517 in a year.
Yacucha has also worked in the banking sector specializing in mortgages, investments, mutual funds and more. When he started looking into Langford’s attainable housing initiative, he says he realized it may not actually be attainable for many people.
In addition to all the other stipulations, “you’re potentially siloing into a really small income band,” Yacucha says.
Where does the money come from?
Langford’s Attainable Housing Program is being funded through the city’s Affordable Housing Reserve Fund, which was created in 2012. Developers must either make a $1,000 contribution to the fund for every single-family unit created by rezoning, or construct one new affordable home for every 15 single-family lots created through subdivision, according to the city’s website.
Since this option was introduced, all developers have opted to contribute to the fund, rather than building affordable housing. The fund now holds about $3 million, according to information provided at a recent council meeting.
Money from the fund is used “strategically to provide grants to new non-profit housing projects within the City,” Langford’s website says. While the website isn’t clear on what housing projects the fund has supported to date, a 2019 article from the Goldstream News Gazette cites Mayor Stew Young using examples like “the 73-unit apartment on the 600-block of Goldstream Avenue, the 100-unit building coming to 731 Station Ave. and the 132-unit development at 713 and 715 Treanor Ave.” as developments that received money from the fund.
The Discourse has reached out to the City of Langford multiple times for an interview or email statement to answer several questions regarding affordable housing and the attainable housing program and has not yet received an interview or answers to many of the questions.
What happened to the Affordable Housing Program?
Before developers had the option to contribute to the Affordable Housing Reserve Fund, building new affordable housing was mandatory in some new developments.
Langford launched its Affordable Housing Program in 2004. Developers building any new single-family home subdivision would have to provide one affordable home — with a maximum selling price of $165,000 — out of every 10 new homes built. This was later changed to one home for every 15 homes built as house prices increased.
To qualify for the Affordable Housing Program, applicants need a maximum household income of $60,000, with two or more people living in the household. In 2006, the median household income in Langford was $64,199, according to the city’s website, meaning this Affordable Housing Program targeted people making below the median income at the time.
The program won a Canada Mortgage and Housing Commission award in 2008 for its use of “inclusionary zoning,” meaning zoning policy that incentivizes affordable housing construction. But it has changed significantly since then.
The biggest change to the program was in 2012, when Langford introduced the option to contribute to the Affordable Housing Reserve Fund instead. This immediately ended the addition of new units into the Affordable Housing Program, since the required contribution to the fund was far less than the cost to developers of contributing new affordable housing.
A 2016 report from the CMHC National Office says, “since this program is now not capable of directly producing affordable housing, it no longer can be considered to be an inclusionary housing program,” the very thing Langford won an award for in 2008.
The city continues to maintain the program with the houses and units added before the change. The stock includes 39 single family homes and eight condo units. Reporting by the Goldstream News Gazette from 2019 says Langford processes around one or two housing resales in the program per year and receives about five applicants per year. There were 21 families on the waitlist in 2019.
Why the shift away from support for lower-income households?
While the Affordable Housing Program supported households making below the median income in Langford, the new Attainable Housing Program is most likely to assist residents making close to $125,000 — significantly more than the median household income of $80,331.
At an Oct. 18 council meeting, Mayor Stew Young defended the new program, saying it will help more families enter the housing market at a lower cost since it is subsidizing condominiums instead of houses.
Young said with the stark increase in housing costs over the years, the $3 million in the fund would only be able to subsidize “maybe 30 to 40 houses” compared to 250 condos with the Attainable Home Ownership Program.
“I think we have to be innovating in Langford when we do this stuff because the old ways aren’t working right now,” Young said at the meeting.
Realtor and housing expert Leo Spalteholz says being able to help more families is likely part of the attraction of this program to Langford.
“They can say ‘we helped 250 families rather than spending $3 million and helping much fewer,’” Spalteholz says.
Comments from staff and Mayor Young from the Oct. 18 meeting suggest that the city is willing to put the whole Affordable Housing Reserve Fund behind its Attainable Home Ownership program. The city did not answer The Discourse’s questions about if it has plans to support families beyond those that qualify for this program.
If there’s little else to offer those most in need, “from an equity perspective, that gets pretty problematic,” Spalteholz says. “But I think from a dollars-per-family-helped perspective it’s going to be hard to beat this.”
Who is left behind?
According to the 2020 Langford Housing Needs Report, 12 per cent of Langford households are in core housing need and five per cent are in extreme core housing need.
It defines core housing need as spending more than 30 per cent of income on housing or living in substandard housing, meaning housing that is overcrowded, unsafe or otherwise inadequate.
Those in extreme core housing need spend more than half their income on shelter costs.
According to the Housing Needs Report, lone parent and senior-led renter households are most likely to be in core housing need in Langford. Young adults, Indigenous people, people with disabilities, people dealing with mental health and addiction issues, recent immigrants and more are also disproportionately likely to be in core housing need.
In addition, the report says there are 34 households on the BC Housing waitlist looking for below-market housing in Langford as of 2020.
“If the affordable housing fund is going to be spent anywhere, wouldn’t it be better to spend it on those that are in greatest need right now that are really struggling, you know, spending 50 per cent of their income on housing?” Spalteholz asks. “And, you know, is there a way to devise a program to address that need?”
Will the program make a dent in the housing crisis?
Yachuca says that the program should be part of a larger plan in Langford to create more housing supply in order to really make a difference, across the housing spectrum.
“All we’re building is either more condos or more luxury homes and there appears to be this missing middle, which a lot of families are looking for,” Yachuca says.
The “missing middle” refers to housing options that fall between single-detached houses and condominiums, such as townhouses and buildings with two-to-four housing units.
Spalteholz, too, says that this program alone is unlikely to “move the needle” on the housing crisis.
“As a pilot it’s great, you know, we’ll see how it goes,” Spalteholz says. “If this was the main program … I would be concerned about, is this really where most of the affordable housing funds should be spent?”