Affordable Housing

Full disclosure: We do not own rental property, but we manage two apartment buildings with a total of 51 apartments for rent at market prices, which today (February 2016), in the town of Smithers BC is $775/month for a one bedroom apartment, up to $900/month for a two bedroom with a den.

I have been recently challenged by people in our town because of a perception that the rents we charge are not affordable, and that affordable housing is necessary for society to thrive. The properties we manage are, as stated above, at market rates. Anybody with a first year course in Economics, Sociology, or Business will tell you that market rates are momentary and somewhat fleeting – being the price somebody is willing to pay for a particular product or service, at a particular point in time and location. 

Market rates are decided by the seller based on the actions of the buyer. Very simple basic stuff most people need to know before they finish grade eight,

Affordable housing in BC is not cheap.  There is a difference between affordable and cheap.

AFFORDABLE is defined as 30% of the provincial average wage for a single employable person working full time at 37.5 hours/week. Three years ago, (2013) the average hourly wage for full-time employees in the province of BC was $25.73, or $4,181.13 per month, 30% of which means the definition of AFFORDABLE housing for a one bedroom apartment in BC is $1,254.33 (not including utilities). Any rent under $1,254/month for a one bedroom is a gift and is more dependent on market rates than affordability.

In our experience, people do not want affordable housing, they want cheap housing – something that they can afford on welfare ($375/month).

Market prices today (February 2016), in the town of Smithers BC is $775/month for a one bedroom apartment, up to $900/month for a two bedroom with a den, which means we are charging 62% of the AFFORDABLE rates for BC for a one bedroom apartment. For those who want us to change our rents to be ‘affordable’ we could oblige, but it would mean INCREASING our rent for a one bedroom by $621/month (plus utilities).

Anybody who wants to build affordable housing is free to do so, noting you will need 30% to 60% CASH equity then take into consideration that your payments for principle, interest, taxes and insurance will run you $300 - $500 per month, per apartment before putting anything aside for repairs, renovations, vacancies, emergencies, maintenance, or management costs. If you expect to recover the cash equity or even consider making a profit from your investment, this margin will need to be added to the mix.