Housing affordability: Why is a program that offers new condos to public housing residents with no down payment struggling to find takers?
When a flyer turned up at Noorjahan Chowdhury’s doorstep earlier this year, advertising a rare shot at home ownership in her downtown Toronto neighbourhood at an affordable price, it seemed like a lucky break.
The program was framed as a unique chance to build wealth in a low-income community and gain a foothold in Toronto’s expensive real estate market. Six condos in a brand-new building were offered to residents of Alexandra Park’s public and co-op housing, requiring no down payment and with monthly bills adjusted to roughly a third of their household income.
Chowdhury, 63, has long rented one of the area’s subsidized townhomes. She shared the flyer with her grown children, keen to hear their thoughts. But they shot it down. This wasn’t a good idea, the kids said — just look at the details.
This is how an affordable home ownership program — which, in theory, should be a golden ticket in a city battling an affordability crisis — has found itself straining to fill spots. More than seven months after bids opened, only three households were approved for six available homes.
Initially envisioned as a targeted program for Alexandra Park tenants, the search for prospective homeowners has been widened twice, at first to public housing tenants elsewhere in Spadina—Fort York, and now to public housing tenants citywide.
The idea isn’t the issue. Residents and community players in Alexandra Park stress the concept was welcome as a way the existing low-income community could benefit from its sweeping rebuild into a mixed-income neighbourhood.
Toronto officials have zeroed in on affordable home ownership as a critical way to level the housing playing field, with a review of the city’s policies and programs underway — recognizing that home equity is a way of creating generational wealth as well as better health, shelter and education outcomes.
But for all the enthusiasm about pathways into ownership, in Alexandra Park, critics say the good intentions of the program are being roadblocked by its design. Buyers would need, for example, a minimum household income of $63,000 — well above the roughly $19,200 average income in 2023 among Toronto’s subsidized tenants.
Buyers would have to sell their units again in 25 years. And when they did, they wouldn’t see the same financial benefits as other homeowners, with the program prohibiting them from listing the condos at market price.
That lack of equity is why Noorjahan’s kids urged her to stay put — planting her feet as long as she can in the rental where she tends to a bursting garden of overhead vines, plump red peppers and dainty purple blooms.
“It just doesn’t make sense,” her son Jakir said of the offer. “Most of the people living in these situations can’t afford it, and it doesn’t financially make sense for them to leave subsidized housing and go into home ownership where they’re not even making any money.”
How the program works
While the affordable ownership program promises more attainable bills than traditional Toronto ownership, the tradeoff is home equity.
In Toronto, it isn’t uncommon for a home’s value to rise by hundreds of thousands of dollars over several decades. But the Alexandra Park program promises instead a return of whatever amount the owner paid, plus two per cent interest per year.
Eligible applicants must meet requirements including having a full-time job and three years of Canadian work history, a good credit rating and “reasonable debt,” and no bankruptcies or past property ownership.
Those rules would bar residents like Abdul Abdul, who has been working part-time at his cleaning job since the pandemic. With the offer requiring a $63,000 minimum income, he suggested few others would make the cut.
“Most of the people, they don’t have that kind of job.”
Widening the net and still few takers
During the months where applications were only open to Alexandra Park residents, uptake data shows 25 families filed a pre-application to determine their eligibility. Ten households submitted a full application. Officials then widened the pool to any public housing tenant in the ward; that yielded seven bids. Out of the 17 full applications received, three households have been approved, all from Alexandra Park.
As of November, the offer is now open to any public housing tenant in Toronto — a decision made in order to find three more eligible households by the time the condos are move-in ready in 2025, said Ene Underwood, CEO of Habitat for Humanity, which is running the program. Otherwise, the organization says it will have to cover the costs.
“Going into it, we didn’t have a clear line of sight into the household composition or the income profiles of people in Alexandra Park and Atkinson (co-op),” Underwood said — while agreeing her understanding was “most” subsidized housing tenants in Toronto would not be eligible. Habitat added that their lenders needed assurance that participants had “sufficient income to pay their mortgage.”
While acknowledging those barriers were often “frustrating and disappointing” for those hoping to apply, Underwood suggested rejection could be productive.
“It may be because of their income, it may be because they have too much debt or their credit score isn’t healthy enough, but going through the experience of applying is what informs them, and then enables them to say, ‘gee, if I could just work on getting my credit score to be different, getting my income to be different.’ In our program more broadly … we have a number of families that were not accepted on their first try,” Underwood said.
She said the reason the program can’t offer the same financial returns as regular ownership is because when a family wants to sell, it would be too expensive for the organization to buy the unit back at market price. By asking owners to accept lower appreciation, the unit could be re-offered to other families.
“We are trying to create opportunities for families to have some of the benefits of home ownership. The only benefit we’re not fully making available is that equity, is that full market appreciation,” she said, adding that buyers were also protected from “market downturn” by the two per cent annual interest.
Despite the hurdles, Underwood believes affordable ownership is essential in a city with few pathways out of subsidized housing. If even a few households qualified, she noted it would free up their subsidized rental units for other families — as the city wait-list nears 93,000 households.
She’s hoping city hall’s affordable ownership review triggers more support and resources toward programs like theirs. “It generates that hopefulness in the city,” she said, “and that capacity for people to be able to move past publicly funded housing.”
Benefits fall short, says longtime resident
Mohsin Khattak, who grew up in Alexandra Park and is now the interim director of the local community centre, believes the program design risks creating a divide — where owners of Alexandra Park’s new market condos can sell down the road and walk away with a hefty profit, while longtime community members in the Habitat program don’t get to see the same return.
“You’ve got families who’ve been here four decades and financially, they’re not really getting a benefit. But folks that have the financial means, they’re walking out of here a few hundred dollars richer,” he said. “That’s where some of the reluctancy is for folks: It’s ‘this really sounds good, but I’m really not benefitting financially as much as I would if I tried to do this on my own.’”
For Jakir, the idea of owning a home in Alexandra Park is heavy. He is deeply grateful for the stability the community offered his family as refugees from Bangladesh. But he believes public housing areas like theirs still carry a kind of baggage, stubbornly linked to systemic issues like gun violence. For many younger residents, he believes their hope as adults was to move elsewhere.
Noorjahan is happy to stay in Alexandra Park as she gets older, as it’s close to her family doctor and she’s formed ties with her neighbours. But, given the lack of equity incentive and at her age, she says she’s content to stick with her subsidized rental setup and the stability it offers.
This article was first reported by The Star
