Canada's Ambitious Housing Plan: A Multifaceted Strategy to Boost Construction and Affordability

Strategic Insights -

Prime Minister Mark Carney's vow to double Canadian housing construction to 500,000 units a year is an industrial strategy aimed at kick-starting a nascent factory-built housing industry, rejuvenating Canada's ailing forest products sector, and restoring 2019-level affordability within a decade. The plan involves a $26 billion Build Canada Homes (BCH) agency, which goes into operation this fall, and a $1.2 billion federal funding package to ensure Canadian wood products are used in BCH initiative. This multifaceted housing strategy will have a wide impact, affecting most Canadians, and create an entirely new Canadian housing industry.

Key Takeaways:

  • The Build Canada Homes agency will produce innovative housing types, including prefabricated, modular, panelized, and mass timber housing, which can be 50% faster to build and 20% cheaper.
  • The $1.2 billion federal funding package will ensure Canadian wood products are used in the BCH initiative and include R&D funding to develop new products, such as mass timber structures and insulation made from wood fibre.
  • The plan aims to create an enormous coalition of players, including all orders of government, municipalities, hundreds of private-sector builders, and scores of banks and other lenders and insurers, to do their part in building a bigger workforce for the Canadian industry.
  • A report by the C.D. Howe Institute suggests that Canada's housing market is gradually adapting and embracing innovative technologies at a faster pace, but high municipal development fees, cumbersome regulations, and lack of economies of scale restrict the supply of new homes.
  • To accelerate the supply of new housing, the feds and provinces need to place big orders with makers of innovative housing types, municipalities need to standardize building codes and reduce wait times for building permit approvals, and municipalities must consider a moratorium on development charges and other fees that can account for as much as 25% of new-house prices.
  • Ottawa needs to eradicate the bureaucratic inertia that delays or blocks funding for innovative-housing projects by the Canada Mortgage and Housing Corp. (CMHC) and the federal Housing Accelerator Fund.
  • With the introduction of construction financing insurance by the CMHC, lenders would be more confident in funding new innovative housing developments, and the market will naturally shift toward innovative home-building technologies.

Statistics:

  • The Build Canada Homes agency aims to produce 500,000 homes per year.
  • The $26 billion BCH agency will be used to develop innovative housing types.
  • The $1.2 billion federal funding package will ensure Canadian wood products are used in the BCH initiative.
  • The C.D. Howe Institute report cites several examples of successful Canadian projects, including the City of Toronto's 216 modular homes and the 18-storey Tallwood House at the University of British Columbia.
  • Approvals in Canada take an average of almost 250 days, compared to 90 days in the U.S.
  • Development charges and other fees can account for as much as 25% of new-house prices.

Sources:

  • "Build Canada Homes" article by David Olive, The Star
  • C.D. Howe Institute report, "Innovative Housing Types in Canada"
  • Canadian Construction Association
  • Canadian Mortgage and Housing Corp.
  • Prime Minister Mark Carney's speech on housing strategy