Canada's Condominium Magazine
November 21–25 is National Housing Week, five days during which housing advocates focus attention on the problem of the lack of affordable housing in Canada. Tomorrow, November 22, is National Housing Day, and it is expected that the federal government will release its National Housing Strategy, the fulfillment of a promise made during last year’s election campaign. One component of the strategy that housing advocates want to see strengthened is government commitment to funding the non-profit housing sector, funding that has diminished over the past two decades.
One Toronto-based non-profit group plans to participate in this week’s events in a special way. Options for Homes will host a ground-breaking ceremony at its newest condominium community in East York. The new community has 275 suites, and the organization says it is grateful to the City of Toronto and the provincial government for their ongoing support. According to a statement from Options for Homes, it has delivered over 3,000 homes so far, and there are currently over 6,000 households waiting to buy.
The City of Toronto is providing $1.93 million in funding for up to ninety down-payment assistance loans, a key component of the group’s business model. The down-payment assistance is given to qualifying homebuyers, who must be low- and moderate-income households. People earning as little as $20,000 a year could qualify, according to a report on Global News. A spokesperson for a spin-off group that operates in Montreal called Accès Condos said a person with just $1,000 down payment could buy one of their condos (which are much cheaper than in Toronto).
Referred to as “pay it forward,” this model allows the homeowner to benefit from a loan in the form of a second mortgage, held by Options for Homes. A purchaser with a minimum down payment of 5 per cent can borrow an additional 13 per cent from Options. This second mortgage, according to Canada Mortgage and Housing Corporation (CMHC), is equal to the difference between the condominium’s purchase price and its market value. There are no payments required on the loan for as long the owner lives in the condo; it is repayable only when the condo is sold. This means the owner can live in the condo for considerably less than would be possible in a conventional market condo. The repayment amount, which would be the original amount plus a share of any capital gain on the unit, is then used to assist other buyers.
That deferring of profit helps to keep costs down, as does the group’s “no frills” approach to building. While the condo homes built by Options for Homes are not to be confused with social housing, the organization does eliminate many of the high-end amenities featured in mainstream condo buildings. It also builds on less costly lands that are away from prime areas, and avoids the high expense of building underground parking. According to CMHC, cost reductions have produced savings of $40,000–$60,000 per suite to date in Toronto.
Anyone interested in getting in could face a lengthy wait, with 6,000 households already waiting. That could be reduced if the concept caught on and more units were built. This year and next will see an additional 525 homes built, including the 275 condos in East York. As well, purchasers have to be willing to take an active part in an Options for Homes project. CMHC says that purchasers form a co-operative housing corporation and are collectively responsible for organizing the financing and the construction, as well as being responsible for arranging their own individual financing.