This is a common question and one that is becoming increasing important to understand why there is such a shortage of affordable housing options. The answer is that it costs more than $130,000 to build a one-bedroom apartment unit or almost $225 per square foot (approximate costs to build a wood-frame, multi-family housing development with below ground parking). But that doesn’t include the price of the land or the cost to provide additional supports to residents.
So where does all the money go?
Costs are divided into two different categories: hard costs and soft costs.
Hard costs are directly related to construction such as, building material purchase and labour to build the building. Soft costs are more indirect costs such as consulting fees, architectural fees, municipal permits, finance costs and general administration costs.
Affordable housing design and construction is influenced by a number of procedures, regulations, and policies at all levels of government and each of these have an associated cost. Development costs may be influenced by site limitations, design elements, land-use and zoning regulations, building codes, development process delays, long-term borrowing costs, available rents and how much cash the developer can offer up front.
In the last 20 years there has been a significant shift in how public funds support affordable housing development as governments are under increasing pressure to reduce their annual expenditures.
Affordable housing is still being built in our region. Hope Centre is a great example of multiple organizations working together to find a solution. St. Vincent de Paul had the land and some funds, M’akola Housing had a need and some funds, and the CRD, the Province and the Federal Government came to the table with the remaining funds required to pull the project together.
*This post was originally featured in the Spring 2014 Coalition News