The housing divide shown by EI/CERB - Denny Scott editorial

During two recent North Huron Township Council meetings, councillors raised two intertwined issues: the fact that Employment Insurance for people whose jobs were lost due to COVID-19 (formerly the Canada Emergency Responses Benefit) pays more than some people would  potentially get from a part-time job and the fact that housing prices, or even the price of building materials, has become so high that building affordable units is impossible without government support.

 

Councillors who brought up these issues took different sides of each argument. For example, with the EI, Deputy-Reeve Trevor Seip said that taking $500 a week from EI just makes sense for a person who would only make $300 from their part-time job. Councillor Chris Palmer, however, said there was no “integrity” in benefitting from federal funding if they could be working.
Both of these issues are leading us to some dangerous potholes ahead that could have dire impacts on Canadian society.
While there were a number of issues with the EI that could be addressed, the biggest one wasn’t a problem with the program, but the fact that it showed us the dangerous divide between the classes in our country.

 

At $2,000 a month, the EI was supposed to be enough to survive on for those who couldn’t go to work. However, even here in Huron County, that’s not enough to pay for a median home’s mortgage payments.

 

Those who are still on the EI because it’s the best financial decision, may find it difficult to continue paying for their home, especially because real estate seems to be among the few markets that weren’t slowed by the pandemic. House prices continue to rise and that’s despite the fact that the Municipal Property Assessment Corporation’s (MPAC) updated property values have been frozen since the pandemic struck.

 

Those looking to buy or even rent now may be facing prices that, plain and simple, are unaffordable by the average wage earner in Huron County. According to the Royal Bank of Canada, no more than 30 per cent of annual income should be spent on a mortgage.

 

Using Brussels as an example, the average sale price, as of Monday, for a home in the village was $553,000 (I’d like to tell you what it was in Blyth, but there were no properties for sale in the community as they get snatched up quickly). That means that, using a 2.49 per cent rate and no down payment (as suggested by several institutes) over 25 years with a five-year fixed closed mortgage, payments would be around $2,474.50 per month for that average Brussels home.

 

A family would need to make nearly $100,000 as a household, after taxes, for $2,474.50 per month, or $29,694 per year, to be 30 per cent of its household income. That’s significantly higher than the average and median household incomes for families across the province (Stratford, the closest example I could find, for example, has a median post-tax household income of $56,643 according to Canada Mortgage and Housing Corporation).

 

Now, to help frame this discussion: those still on the EI because it pays more than their wages or because they can’t get back to work, are being given a grand total of $28,000 per year. That’s less than the mortgage payments on the median house for sale in Brussels, and certainly a far cry from the 30 per cent that the Royal Bank of Canada suggests. (At that rate, an individual on EI could only afford a $170,000 home, which doesn't really seem to exist in the current market.)

 

Heck, let’s throw government assistance out the window here and just look at the minimum wage. Someone working 35 hours a week at minimum wage, before taxes, makes $28,126 per year. If you have a spouse or a partner in the same boat, that’s $56,252 annually. After taxes, they would make about $47,814.20

 

That means that, per year, that couple should be paying no more than $14,344.26 for a mortgage, meaning they could afford (at the rates above) a house just above $300,000 (which is pretty hard to find in our area).

 

Over the last seven years, according to the Statista Research Department, the average price of a home in Ontario has increased by nearly 50 per cent (from $423,300 to $625,100). Wages certainly haven’t followed, and, unless something is done about the inflation of the housing market, we’re going to price people out of living in Huron County. And, in my opinion, the people likely to be priced out will be the people we need most: young families with children.

 

I know, it’s been a long journey to get here but, $2,000 a month for the EI might have been enough in the early days of the pandemic, but it won’t be for the next pandemic unless something is done to help control the cost of keeping a roof over our heads.