 |
| Source: https://blog.vantagecircle.com/gender-pay-gap/ |
Time to
be a little bit of a nerd and get excited about census data release day.
Unfortunately, other than the data being released, there is little to get
excited about. In the below image we can
see the income profile for men and women in Langford. What we see is,
unfortunately, reminiscent of what is seen in many communities around Canada,
Women tend to be over-represented in the lower incomes, while men tend to be over-represented in the higher incomes. Without getting into the causes, or some of
the (terrible) justifications for a gender wage gap, I want to take a look at
the impact this has on the security of housing.
With highly inflated house prices and interest rates on the rise, I wanted to take a step away from the ownership discussion because i) the current carrying costs of qualifying for a new mortgage are so ridiculous that very few people possibly could unless they already have a sizeable amount of equity and ii) because the recent census release also included the housing tenure information which showed that, at just over 35%, an increasing number of Langford residents are renters.
With
ownership, the majority of owners are shielded by wild swings in the valuation
of their property, and with most Canadians utilizing fixed-rate mortgages, many
will continue to be shielded from interest rate fluctuations for up to the next
5 years.
The same
is not true for renters. Renters typically face annual rent increases up to the
maximum as set by the provincial government. But as renters move due to
changing housing needs, or to be closer to work, or due to eviction, their rent
is re-negotiated at market prices. This means that renters are far more
susceptible to paying the current market rent than homeowners are to the
current market payment for housing. That is, Renters are more likely to be
paying the current, high, market price of rent, well homeowners are more
likely to be locked into a constant, lower, payment for their home.
Thus, if
we look at current market rents, versus current incomes, what we find is that
only the top 19.85% of income earners are able to afford an average 1-bedroom
rental at an affordable rate in Langford.
Note: Affordability is determined as 30% or less
of your before-tax income going towards shelter.
What is
exceptionally troubling is if you break this down by gender. Amongst those
identified in the census as male, the top 26% of income earners are able to
obtain the average 1-bedroom at an affordable rate. While only the top 13.7% of female earners
are able to obtain a 1 bedroom at an affordable rate.
It is
often presented that renting is a stage of life that you get through until you
can obtain high enough income and wealth levels to afford to buy. What we are
finding is that this is untrue, with all but the highest income earners being unable
to rent a 1-bedroom in an affordable fashion.
Many
argue that this is an unfair verdict. The average household in Langford is 2.4
people, after all, thus most of the time these shelter costs are split between
two income earners. We can similarly look to see what percentage of households
are able to afford a 1-bedroom. The issue that then arises is that a 1-bedroom
may not be suitable for a 2.4-person household – but we will overlook this to
maintain a constant comparison.
The
further issue is social in nature and is that as housing becomes increasingly
unaffordable for a single individual it encourages individuals to remain in
relationships they may not otherwise remain in out of economic necessity. This
creates understandable problems that I will not go into here.
Just the
same, we can see in the image below the distribution of household incomes, and
from this determine that only the top earning 31.25% of households would be
able to afford a 1-bedroom rental at an affordable rate. While this is better,
it still signifies a huge problem in that only the top-income earners can
afford to rent at an affordable rate.
With homeownership becoming increasingly out of reach resulting in an increasing percentage of our residents being renters – we cannot afford to overlook this segment of the population. As a city, we need to ensure that rentals are being built and provided to residents at an affordable rate. It is through the initial years of renting that a household can build up the wealth needed to enter the housing market. If the rental market itself is closed off to all but the highest income earners then how can this happen?
This is clearly an issue that affects all members of society, even those in the top income brackets. What do you see as a potential solution?
Feel free to comment below.
