As housing costs surge across Canada, more individuals and families are facing a growing risk of homelessness. This often happens long before policymakers even realize the possibility of that risk. In our recent report, we introduced a groundbreaking tool to measure the depth of that issue: the Homelessness Income Cut-Off (HICO). This new benchmark redefines how we identify and respond to housing vulnerability, shifting our focus from poverty in general to the specific point at which people become homeless.
What Makes HICO Different?
Canada’s poverty line, based on the Market Basket Measure (MBM), defines a level of income required to afford a “modest and basic standard of living.” The level of income defined by the poverty line is sufficient to afford secure, uncrowded housing priced at the median of the local rental market and typically occupied by families with a low income. The poverty line defines an income that enables families to be independent and not have to rely on charities, poor diet, or life in crowded conditions to stay housed.
The poverty line, therefore, does not identify a level of income that puts people at risk of homelessness. On the contrary, people with an income at the poverty line are, by definition, securely housed in uncrowded conditions. Individuals and families at risk of homelessness must have incomes below that poverty line. But how much below? That is what the HICO determines.
The HICO accounts for how individuals and families respond to the growing risk of homelessness. One way to lower rental costs is to move into a unit that rents for less than the median price. They can also move to more crowded accommodations by having children share bedrooms or by finding roommates. Threatened with the possibility of losing their home, people can also conserve income for the payment of rent. For example, saving on food expenditures by using a food bank or relying on charities for clothing, furniture and other goods.
Efforts like these maximize the budget required to remain housed. The HICO defines the minimum income individuals and families need to maintain their housing, after exhausting all other forms of responses to the housing crisis. This way the HICO tells us the income level below which people are likely to lose their home, despite their best efforts to avoid homelessness. Most importantly, the HICO provides a gauge against which policymakers can measure the adequacy of policy initiatives, meant to keep people housed.
“The HICO gives us a more precise picture of economic vulnerability. It’s not about who’s poor—it’s about who’s priced out of housing.” — Kneebone & Wilkins, The Homelessness Income Cut-Off
How It Works: A Data-Driven Threshold
To develop the HICO, we used data on the distribution of rents in each city. This enabled us to determine how much can be saved by moving to a lower quality (cheaper) rental, and how much can be saved by living in more crowded conditions. Based on information gathered from food bank data, we estimated how much expenditure could realistically be reduced by increasing one’s use of a food bank. Finally, we made assumptions about the savings possible from relying on clothing charities, reducing transportation costs and by reducing other expenditures.
The table below shows how a family of four (2 adults, 2 children) in Vancouver could lower their spending in 2019 to keep their housing. That year in Vancouver, the HICO for a family of this make up was $16,272 below the poverty line (when food bank use was at 25% of the family food budget, clothing through charities at 40% use, transportation costs reduced by 10%, while other expenditures reduced by 40%). To put it differently, this hypothetical family might have been able to hold on to housing in 2019, if their income was $33,782, but only if that family took these extraordinary budget adjustment measures to reduce their expenditures. Any income below this amount would have exposed the family to a very certain risk of homelessness.
- Poverty Line (MBM) in Vancouver, 2019: $50,055
- Savings from Reduced Expenditure due to:
- Moving to cheaper and more crowded accommodation: $7,271
- Food bank use (25% of food budget use): $3,021
- Clothing charities (40% of clothing budget): $848
- Adjusting Transportation costs (10% of transportation budget): $460
- Other expenditure reductions (40% reduction in other budget needs): $4,673
- Homelessness Income Cut Off (subtract Savings from the Poverty Line): $33,782
In our research paper, the budget implications of lower and higher dependence on charities are presented.
In the report, we show that while our calculations change with changes in assumptions regarding the ability of a family to rely on charities to reduce spending, our key conclusion remains that the HICO is much lower than the poverty line. We show that this is also true of other family sizes and compositions and in various cities.
Using the HICO Measure
The HICO is a useful measuring tool, because it provides a gauge against which we can measure the effectiveness of public policies intended to prevent homelessness. The poverty line cannot play that role because, by design, it does not calculate an income that puts someone at risk of homelessness.
In our recent report, we show that the HICO is an income that is significantly larger than the incomes governments provide to individuals and families, reliant on social assistance. This means that retaining housing when relying on social assistance requires even greater dependence on charities and deprivation than we assume, in arriving at our estimate of the HICO.
Preventing Homelessness before it Starts
One of HICO’s greatest strengths is its focus on prevention. Rather than reacting to homelessness after the fact, policymakers can use these data to intervene at an earlier stage – when someone’s income drops below the HICO.
This approach aligns with broader shifts in the sector that emphasize upstream solutions. It also has practical advantages: preventing homelessness is far less costly—both economically and socially—than managing homelessness.
Real-World Applications: From Prevention to Policy
HICO is more than a statistical tool—it’s a call to action. Here are a few key ways that it could support housing policy:
- Identifying at-risk populations: HICO provides a locally grounded threshold for determining who is most vulnerable to losing their housing.
- Targeting benefits more effectively: Rent supplements, income supports, and housing programs could use HICO as a baseline to ensure no one falls through the cracks.
- Tracking policy outcomes: By monitoring how many people fall below the HICO over time, and those who climb back up above the HICO, governments can better evaluate the success of prevention strategies.
- Targeting policy responses: Because it’s locally calculated, HICO reflects differences in housing costs across cities, making it a more targeted tool for national or provincial policy decisions.
Why It Matters Now
Across Canada, people receiving social assistance often live below the HICO threshold. Referring to our example of the calculation of the HICO for Vancouver in 2019, in that year in British Columbia, a family of two adults and two young children received a total of $28,162 in social assistance income. That is $5,620 below the 2019 HICO value for Vancouver. For that family, retaining housing required a noticeably greater dependence on charities and deprivation than assumed in the HICO calculated above.
We believe that if governments are serious about preventing homelessness, then social assistance and other homeless-prevention policies must be calibrated to match the real cost of housing. HICO makes this possible by offering a credible, evidence-based benchmark to guide these decisions.