Just over a year ago, Prime Minister Mark Carney announced the introduction of Build Canada Homes in Ottawa, surrounded by a backdrop of partially constructed, prefabricated homes. This federal initiative is designed to address the housing crisis and accelerate the construction of residential properties.
The agency aims to enhance the provision of affordable housing at a time when industry experts are expressing concerns about the sluggish rate of housing development nationwide.
To date, Build Canada Homes has pledged to assist in the construction of approximately 19,000 affordable units throughout the country, with only about 2,000 currently under construction.
“I believe we can always increase our speed,” Dave Wilkes, president and CEO of the Building Industry and Land Development Association in Toronto, remarked during an interview. “I like to say that I represent an industry that measures patience in seconds.”
Dave Wilkes serves as the president and CEO of the Building Industry and Land Development Association, representing over 1,000 home builders, land developers, trade contractors, and renovation firms throughout the Greater Toronto Area. (Philippe de Montigny/CBC)
It is important to note that the federal housing agency only became a Crown corporation in July, shortly after the Build Canada Homes Act received royal assent. Much of the past year has been devoted to overcoming bureaucratic obstacles, securing land transfers, and finalizing intergovernmental agreements.
“This is merely the beginning,” stated Joshua Coke, spokesperson for Build Canada Homes, in an email response to CBC News. “Canada’s housing sector is facing unprecedented challenges, with demand for affordable homes greatly surpassing the current supply.”
The housing agency mainly concentrates on developing non-market housing, where rents are generally linked to income rather than market rates. However, it is also collaborating with developers to create affordable housing options for Canada’s middle class.
“Addressing this housing affordability issue necessitates constructing more homes at a quicker pace and on a larger scale,” Coke continued.
Ottawa’s prolonged absence from the housing market
Kevin Fettig, president of CMI Financial, a mortgage lending and investment firm, highlights that the Canadian government has effectively ceased funding and constructing new affordable housing for around thirty years, under both Conservative and Liberal administrations.
During the late 1980s and early 1990s, federal debt escalated as governments consistently ran deficits. Fettig, who was involved in monetary policy at the Bank of Canada during that period, notes that home prices soared, prompting the central bank to hike interest rates. “We witnessed mortgage rates at 14 percent, leading to significant defaults during that time.”
Changing fiscal priorities led Ottawa to decrease funding for housing programs, eliminate the federal co-operative housing initiative, and eventually stop the construction of new affordable housing units altogether.
“They effectively decided to withdraw financial support from that sector,” Fettig remarked. “There hasn’t been much emphasis on affordability, and it has gradually become a pressing issue.”
Federal Housing Minister Gregor Robertson acknowledges that Ottawa has long been absent from the housing affordability landscape.
“Leadership was lacking. We are working to change that now,” Robertson stated in an interview.
The Toronto Region Board of Trade released a report on Thursday urging the province to amend zoning and building code as Ontario falls short of its housing goal. CBC Talia Ricci breaks down why finding a solution is necessary for affordability.
Fettig is optimistic that the strategy employed by Build Canada Homes, which provides resources to builders, developers, and community partners to expedite residential projects, will lead to positive outcomes in the long run.
“Bridging that gap quickly is challenging. We are moving in the right direction, but it will ultimately depend on time, effort, and financing to achieve our goals,” Fettig commented.
Significant supply deficiency
Even the market-priced segment is experiencing delays.
According to the Canada Mortgage and Housing Corporation (CMHC), housing starts have remained around 250,000 annually over the past two years. “We still need to double the current pace of housing starts if we hope to restore affordability levels seen in 2019 across the country,” stated CMHC chief economist Mathieu Laberge.
In its latest report, CMHC indicates that approximately 417,000 to 469,000 units need to be constructed each year by 2036 to meet that goal.
This supply deficiency is “putting future affordability at risk,” Laberge warns. He points out a significant “pent-up demand” from younger Canadians and newcomers to the country.
Although non-market housing constitutes about five percent of total residential construction, Laberge emphasizes that addressing the ongoing affordability challenges requires a comprehensive approach across the entire housing spectrum.
“In this case, there is no wrong type of supply.”
Mathieu Laberge, chief economist at the Canada Mortgage and Housing Corporation, asserts that both market and non-market housing are essential to enhance affordability nationwide. (Benoit Roussel/CBC)
Wilkes from the Building Industry and Land Development Association notes that the HST rebate and reduction in development fees in Ontario have contributed to recalibrating some of the most overheated housing markets in the country, particularly in Toronto and its suburbs.
“The combination of reduced costs due to the HST [rebate on new homes] and builders being able to manage their finances more effectively is resulting in an increase in supply,” he explained.
Recently, Ottawa announced a collaboration with Alberta’s government to construct at least 1,460 affordable apartments and townhouses through Build Canada Homes — a vital addition in a province undergoing rapid growth, according to the federal housing minister.
When inquired about the developments planned in Alberta, Build Canada Homes stated that “it is unable to disclose details regarding specific projects currently under consideration,” including information on locations, affordability mix, or timelines.
Part of the new Crown corporation’s mission is to advocate for modern construction techniques, such as modular, factory-built, panelized, and prefabricated housing, which can help reduce construction durations.
“We are doing everything possible to modernize the industry and ensure we can build more swiftly and affordably,” Robertson stated.