The Housing Accelerator Fund was announced a couple of years ago, but we are only seeing it come into effect now. Let’s take a closer look at it and why London, Ontario got it first.
What Is The Housing Accelerator Fund?
As the name suggests, the Housing Accelerator Fund aims to encourage cities to build more homes. It was first introduced a couple of years ago during the 2021 federal election. The federal Liberals made good on the election promise by introducing it in the 2022 federal budget. The Liberals have committed to allocating $4 billion in funding up to 2026-2027 to get more houses built in cities.
The Housing Accelerator Fund isn’t to be confused with the More Homes Built Fast Act. The More Homes Built Fast Act was introduced by the Government of Ontario and is targeted at Ontario, while the Housing Accelerator Fund is available across the country.
Prime Minister Justin Trudeau and the Liberals introduced this fund after mounting pressure to offer affordable housing across Canada. The pressure only increased after a cabinet retreat in August when nothing new was announced to make housing more affordable.
Housing affordability is no longer just an issue for low-income households. It’s affecting the middle class as well these days. This is a major shift from 2015 when it was predominantly a low-income issue. Many with variable rate mortgages are experiencing a cash flow crunch, as prime rate went up a whopping four percent just last year alone.
To address this challenge, the Housing Accelerator Fund is looking to build homes across the housing spectrum.
A Gap In Homes
The Canada Mortgage and Housing Corporation (CMHC) put out a report in September estimating how many housing units would need to be built to make housing more affordable.
The crown corporation estimated that another 3.5 million housing units would be needed by 2030 to make housing affordable like it was in 2004. That’s 3.5 million housing units above and beyond what is already expected to be built by then. This is only slightly down from the estimate of 3.52 million housing units the CMHC said was needed in its June 2022 report.
The report compared how much more households are spending on housing these days compared to a couple of decades ago. In 2003-2004, households in Ontario spent on average 40 percent of their disposable income on housing. In 2021 that figure had become 60 percent. That represents an increase of 20 percent of disposable income spent on housing.
Why Did London, Ontario Get The Housing Accelerator Fund First?
Although no official answer was given of why London Ontario, was chosen as the first city to receive the Housing Accelerator Fund, we can make some assumptions.
London, Ontario is a good city to test out the Housing Accelerator Fund. It’s not too big and it’s not too small. It’s a medium-sized city to test it out to see how things go. Once the federal government can see what works and what doesn’t work, it can start rolling it out to the rest of the country. This includes Canada’s biggest and most expensive cities like Toronto and Vancouver.
The mayor of London Josh Morgan also got elected on a mandate of making housing more affordable. This follows through on one of the promises and priorities that his municipal city council set.