- by Jim Hutton

The Problem

There is no question we are facing a crisis in housing and homelessness throughout Ontario. Housing affordability is a reality facing many families. Some are forced to rent inadequate accommodations that just don’t meet their family needs while those dreaming of home ownership are just priced out of the market. Canadian Urban Institute’s report released in 2019 cited the housing supply as the main cause of the housing crisis. This was echoed by Ontario’s Affordability Task Force Report in 2022.

However, in many areas, Owen Sound for example, housing supply is not the only driving force.

Wages in general are just not keeping up with the cost of housing in most communities. However, in communities like Owen Sound low household incomes coupled with rising costs make it particularly difficult for families. Owen Sound has one of the lowest average household incomes in the province at $75,861, which makes even small cost increases nearly unbearable for many families.

It’s important to realize the significance of Owen Sound’s low household incomes. Most households have at least two wage earners which means that the average wage earner is taking home a gross income of about $38,000 which works out to be about $19 per hour. This is the average; which means that there are many families with household incomes of less than $75,861. 

Affordable Housing

In Canada, housing is considered “affordable” if it costs less than 30% of a household’s before-tax income. If we take 30% of the household incomes from the 2022 BMA Report and divide 12 to get the gross monthly income for similarly sized urban municipalities, we get the results shown below in Figure 2

This informs us that in Owen Sound the average family can afford to spend $1,892 per month on rent or on combined mortgage and property tax. The problem for renters is that the average two-bedroom apartment in Owen Sound costs $1,990.  source: All Classifieds  This means that Owen Sound families with the average household income or below, are not living in affordable housing.

For families in this situation even small increases in the cost of essentials such as food or rent become very significant. Landlords routinely pass on increases in property taxes to tenants in the form of rent increases, such as those that have been imposed annually over the last 30 years. Therefore an increase in property taxes can result in families, both homeowners and renters, paying more than 30% of their gross household incomes on housing. 

Impact of Property Taxes

If we assume a 22% income tax rate we can calculate the after tax monthly income for the average household in Owen Sound. According to the 2022 BMA Report property taxes on the average Owen Sound detached bungalow is $4210 or $351 per month. When we calculate the ratio of monthly property taxes to the monthly after tax income using the average household income we get the graph below showing what percent of after tax income that people have to pay in property taxes. 

 The result is very enlightening. A family living in Owen Sound has to use 7.22% of their after tax income for housing costs while a family living just down the street in Georgian Bluffs only needs to spend 2.21% of their after tax income on housing. There is another way of looking at this, Click here to see a comparison of:  What’s Left After Paying Property Taxes

This disparity did not come about recently. It developed over the past 30 years so as a result of two alarming trends; 

1. the loss of high paying jobs, and 
2. unnecessarily large expense increases at city hall during a period of population shrinkage.

Those of us who were around in the 60s and 70s remember that Owen Sound once had a thriving industrial base. We can see some of the remnants of these industries today in the abandoned properties, like the empty lots where the Black Clawson Kennedy foundry once stood on the west and Russel-Hipwell’s on the east side. There was also the Keenan’s Toothpick factory, RCA, Goodyear and Pittsburg glass to name just a few.  

During the time when these jobs were disappearing Owen Sound’s population was at times stagnant and often shrinking. One would think that a shrinking population would result in city expenses at least remaining the same. Yet when we examine city expenses during this period and beyond we see that expenses were growing at times at twice the rate of inflation.  This link shows expense growth during a ten year period. Expense Growth.  Much of this expense growth was caused by the city’s propensity to hire more staff in spite of a stagnant population.

In Part II we will examine a very realizable solution to address this problem