DYK with Jeff Bell

Talent Attraction and Housing Affordability

Sector
Published On
May 26, 2022

The Edmonton region leads in housing affordability.  

Talent makes the world go-round. The key to retaining talent goes well beyond competitive wages. Other important drivers include team dynamics, alignment of values between employees and their employer, the ability to make a difference and quality of living/work life balance. A key driver of quality of life is affordability of housing and in this area the Edmonton region is a clear leader in North America. 

Having housing that is both high quality and affordable can be an important tool for helping companies attract and retain highly skilled staff. 

 

Housing Affordability 

Housing affordability is a hot topic and also a very personal one. There are many associated terms which can cause confusion- even the order of words can change the meaning. For example, “affordable housing” often means “non-market, social housing”, whereas “housing affordability” can mean the ability for individuals to afford housing. I’m focusing on the latter. There are various ways of defining housing affordability.  

A common way of measuring housing affordability is to look at the proportion of income that is used for housing. The United States-based, Urban Reform Institute measures affordability using a version of this method, with a ratio of median income and median housing price. Although imperfect, the methodology provides a high-level indication of where citizens can and cannot afford housing. According to their latest research (2022 edition) the Edmonton region’s housing is the most affordable in Canada and the third most affordable housing in the world (of the 92 major markets considered)1. The first table (Figure. 1) below shows the North American cities that were analysed; and the second also includes the international cities they considered.

 

Figure 1. Affordability Index for Housing by North American City
(Median House Price Divided by Gross Median Pre-tax Household Income)

Affordability Index for Housing by North American City 

Source: Urban Reform Institute, 2022 

 

Figure 2. Affordability Index for Housing by Global City
(Median House Price Divided by Gross Median Pre-tax Household Income)

Affordability Index for Housing by Global City 
Source: Urban Reform Institute, 2022

 

Data from the Canadian Real Estate Association shows that the Edmonton region also has among the lowest housing costs in Canada based on price alone (Figure 3). 

 

Figure 3. Benchmark Housing Prices by Canadian City
(CAD- January 2022)

Benchmark Housing Prices by Canadian City  
Source: Canadian Real Estate Association

 

Another way of looking at housing affordability is as a percentage of income required for housing- with 33% of income being considered the maximum for housing to be affordable. Data for 2022 from RBC Research shows that the Edmonton region is a leader using this metric both in th most recent year (Figure 4) and over time (Figure 5):2 

 

Figure 4. Percentage of total Household Income needed to cover Ownership costs of Housing by Canadian City (2022)

Percentage of total Household Income needed to cover Ownership costs of Housing by Canadian City (2022)
Source: RBC Research 

 

Figure 5. Average Percent of Income Required For Housing by Major Canadian City Over Time

Average Percent of Income Required For Housing by Major Canadian City Over Time 
Source: RBC Research 

 

The region’s housing affordability advantage also holds true in the rental market. According to the Canadian Center for Policy Alternatives, the Edmonton region is second after Montreal for rental affordability among Canada’s major cities (Figure 6). 

 

Figure 6. Hours per Week to Afford a 2 Bedroom Apartment at Minimum Wage

Average Percent of Income Required For Housing by Major Canadian City Over Time
Source: Canadian Centre for Policy Alternatives, 2022 

 

Data from the CMHC shows that the Edmonton region is second (after Montreal) for Median rent across unit types (Figure 7). 

 

Figure 7. Median Rent by Canadian City and Rental Unit Over Time (CAD/Month)

Median Rent by Canadian City and Rental Unit Over Time (CAD/Month) 
Source: Canadian Housing and Mortgage Corporation, 2022

 

Housing Supply 

Undoubtedly one of the reasons homes in the Edmonton region are affordable is because the region punches above its weight when it comes to the construction of housing. If we look at data from the Canadian Housing and Mortgage Corporation, we can see the region consistently ranks well on a per capita basis with the construction of housing units compared to its peers, as measured by housing starts (Figure 8). 

 

Figure 8. Per Capita Housing Starts by Canadian City Over Time

Per Capita Housing Starts by Canadian City Over Time
Source: Canadian Housing and Mortgage Corporation, 2022 

 

This consistent construction of homes is certainly one of the factors that Edmonton’s housing is so affordable.  

The number of housing starts may in turn be driven by the region’s efficient permitting process relative to other jurisdictions. The Canadian Home Builders’ Association commissioned a report in 2020 which concluded that the City of Edmonton is number two in Canada for the efficiency of its permitting process (Figure 9). 

 

Figure 9. Overall Rank of Canadian Cities by Development Approval Processing Efficiency (2020)

Overall Rank of Canadian Cities by Development Approval Processing Efficiency (2020)
Source: Canada Home Builder’s Association, 2020 

 

Type of Housing 

Also interesting to me is that, although there is still a long way to go towards densification (Edmonton is still the second least dense major city in Canada) we can see based on CMHC data a trend of increased densification over time. Figure 10 shows that between 2016 and 2020 multiunit housing increased from 57% of new units to 64% of new units. 

 

Figure 10. Total Housing Starts by Type in the Edmonton Region Over Time

Total Housing Starts by Type in the Edmonton Region Over Time
Source: Canadian Housing and Mortgage Corporation, 2022 

 

This trend is also born out by another data set from the Canadian Housing and Mortgage Corporation released in April 2022 which shows the Edmonton region leads the country in the rate of increase of construction of non-single detached housing as measured in year over year percent change. 

 

Figure 11. Percent Change in Non-Single Detached Housing Starts March 2021 to March 2022 by Major City

Percent Change in Non-Single Detached Housing Starts March 2021 to March 2022 by Major City
Source: Canadian Mortgage and Housing Corporation, 2022

 

This trend of increased densification is interesting to me for a few reasons: 

  1. There is a correlation between increasing density and walkability, including access to cultural amenities. Condominiums are also often more accessible to first time homebuyers. These factors mean that increased density is likely to be an important tool for attracting international talent to the region. 
  2. Increased urban density is good news for preserving the rich agricultural land and wildlife habitat in the larger area. 

Conclusion 

The costs of housing in many jurisdictions remains a huge obstacle in the attraction and retainment of top talent. Even in the Edmonton region, housing is not accessible to all, however, if you are a business trying to attract talent you will find the Edmonton region has a competitive advantage in housing affordability.