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Shelter to Income Ratio

Definition

Percent of households spending 30% or more of income on gross rent; and percent of households where owner’s major payments as a percentage of household income exceeds 30%.

Statistics Canada and the Canada Mortgage and Housing Corporation (CMHC) define housing affordability as housing that costs less than 30% of total before-tax household income. Housing that is acceptable is defined as housing that meets all three of the following criteria: Housing that is:

  1. Adequate
  2. Suitable
  3. Affordable

Why This Matters

Affordable housing is the foundation for social and economic progress. It provides the stability individuals and families need to succeed in school, to find and keep employment and to retire in dignity.

Over half of Ontario households between the ages 25 to 34 are renters. This trend may be due to the increasing cost of home-ownership, the lack of well-paid and secure jobs and the increasing number of single-person households. Renters in metropolitan areas are much more likely to be in core housing need than owners.

A healthy rental market requires a minimum vacancy rate of 3% to 5%. Peterborough’s 1-bedroom and 2-bedroom vacancy rates are 1.5% and 1.1%, respectively. In 2018, the rental vacancy rate in Peterborough (CMA) was 1.5%, the Canadian average was 2.4% and the provincial average was 1.8%.

A low vacancy rate means that renters looking for affordable rental homes have limited choices, and that rents continue to rise due to limited supply. When rent is unaffordable, it forces people to limit their spending on other life necessities such as food, medicine and transportation. Additionally, many renters find themselves unable to afford a rental home in the areas where they work – leading to displacement and longer commutes. Other households may find themselves working longer hours or taking on more than one job in order to afford paying rent.

Peterborough has the highest percentage of tenants paying unaffordable rents in all of the metropolitan areas of Canada. Fifty-four (54) percent of renting households spend over 30% of income on rent and utilities and 23% spend over 50% of their income on the same expenses. The average monthly rent and utilities is $956, with 5% of households estimated to be living in overcrowded conditions. Eighteen (18) dollars per hour is the wage needed for average rental costs to be affordable. For a minimum wage rate of$14 per hour, individuals must work 53 hours per week for average shelter costs to be affordable.

A strong argument can be made that the decreased availability of affordable and adequate housing options; combined with inadequate social assistance levels, insufficient wages and discrimination against certain groups has contributed in a very significant way to increasing homelessness in Ontario’s cities such as Peterborough.

Measurement and Limitations

Shelter-cost-to-income ratio refers to the proportion of average total income of a household which is spent on shelter costs. It is calculated for private households living in owned or rented dwellings who reported a total household income greater than zero.

The relatively high shelter-costs-to-household income ratios for some households may have resulted from the difference in the reference period for shelter costs and household total income data. The reference period for shelter cost data is 2016, while household total income is reported for the year 2015. As well, for some households, the 2015 household total income may represent income for only part of a year.

Data Source

Statistics Canada, 2016 Census of the Population

Statistics Canada, 2011 National Household Survey

Statistics Canada, 2006 Census of the Population

Statistics Canada, 2001 Census of the Population

Last update: May, 2019. Source is updated each census cycle (5 years).

References

Advocacy Centre for Tenants Ontario – Where Will We Live? Ontario’s Affordable Renting Housing Crisis. Retrieved from https://www.acto.ca/production/wp-content/uploads/2018/05/WhereWillWeLive_May2018_ACTO_Report.pdf

Canadian Rental Housing Index – Peterborough Community Profile. Retrieved from http://www.rentalhousingindex.ca/en/#comp_csd

Co-operative Housing Federation of Canada – Fix the Affordable Housing Shortage (Ontario). Retrieved from https://chfcanada.coop/advocacy/fixing-the-affordable-housing-shortage/

Ontario Human Rights Commission – The Rental Housing Landscape in Ontario. Retrieved from http://www.ohrc.on.ca/en/human-rights-and-rental-housing-ontario-background-paper/rental-housing-landscape-ontario

 
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Shelter to Income Ratio in the Sustainable Development Goals

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11. Make cities inclusive, safe, resilient and sustainable
11. Make cities inclusive, safe, resilient and sustainable

11. Make cities inclusive, safe, resilient and sustainable

Cities are hubs for ideas, commerce, culture, science, productivity, social development and much more. At their best, cities have enabled people to advance socially and economically.

However, many challenges exist to maintaining cities in a way that continues to create jobs and prosperity while not straining land and resources. Common urban challenges include congestion, lack of funds to provide basic services, a shortage of adequate housing and declining infrastructure.

The challenges cities face can be overcome in ways that allow them to continue to thrive and grow, while improving resource use and reducing pollution and poverty. The future we want includes cities of opportunities for all, with access to basic services, energy, housing, transportation and more.