How to address the housing shortage

There is a shortage of housing in Canada. This has contributed to soaring prices, multiple offers and disheartened consumers in real estate markets from Maple Ridge to Moncton. Our most recent forecast, which we believe is conservative, predicts an average price increase of 9.1 per cent for 2021, based on continued tight supply and strong demand for housing. Like politics, real estate markets are local. The supply and demand dynamics are unique to each area, but housing shortages are universal. In fact, very few jurisdictions in the world have tackled this problem successfully. Many are trying, including the U.K., where a federal government white paper released in 2020 titled “Planning for the future” acknowledged that persisting undersupply is resulting in increasingly expensive housing, underlying their goal of completely revamping their planning processes. Our supply shortage has created an urgent situation impacting the most vulnerable in our society, renters, new immigrants, and aspiring home buyers across the price spectrum. There are too many Canadians, including families, who are homeless or living in inadequate housing. Millennials, young families, and new Canadians need more housing choice, not further restrictions on financing or new taxes. The focus should be on reducing the significant impediments to timely, affordable and sustainable home building. Governments in Canada have already spent billions of dollars dealing with the pandemic and some will argue that new investments are not affordable. Heading into a spring budget and a vigorous debate about policy options, we are proposing a new approach that will spur development of all housing types. This approach takes a long view of the work that needs to be done, so that any investments, public policy or action is sustainable, laying a foundation for more efficient processes going forward. For too long, municipal leaders have been incentivized to block new residential housing projects, infill housing or higher density developments such as high rises. They have put into place a variety of barriers including by-laws, taxes, fees, review committees and other impediments that grind progress to a halt. The simple reason for this is nimbyism. “Support new development in my neighborhood and I’m voting you out”. The resulting supply shortage has become a national problem. Predictably, there are now calls to add more regulatory barriers at a federal level to curb demand. This includes the latest idea to reduce the capital gains exemption on primary residences. But this would only exacerbate the situation by creating a disincentive to move, which would further reduce housing supply while decreasing household wealth. Curbing demand has proven to be ineffective, but there are actions the federal government can take. The federal government already spends some $15-billion per year on infrastructure, often in response to applications from municipalities. However, there are few conditions attached to those investments when it comes to housing. It’s not enough to simply invest in infrastructure. Impediments such as red tape, taxes, charges and nimbyism are deeply entrenched obstacles. Federal funds must come with incentives or conditions to make them effective in addressing housing shortages and affordability. In exchange for the city offering up land, permitting improvements, rezoning to enable more housing, or a combination thereof, the federal government would invest into the infrastructure needed to build housing units including telecommunications, roads, sewers and water. The result is new housing and better processes for approving and building homes as well as new infrastructure that is needed to improve business productivity more broadly. We also have a productivity challenge. There have only been 1.1 million housing completions since 2015, which falls far short of Statistics Canada’s estimated population growth of 2.4 million over the same period. The federal government should prioritize R&D into residential construction productivity and innovation. Homes should be built like automobiles, not constructed like cabins. Canadian builders are building at a furious pace, as evidenced by housing starts, sales of lumber and other materials. However, many residential building sites still use traditional construction materials and methods. We can help them build faster, more affordably and more efficiently. Another tactic is the redevelopment of existing assets, including office buildings, hotels and storefronts. There are significant opportunities to create new housing in downtown neighborhoods that were once unaffordable. Previously inaccessible areas would provide many Canadians with greater resources and opportunities to be involved in society, a pillar of CMHC’s Social Inclusion Index. Finally, we cannot ignore that Canadians are moving out of cities, out of province and into smaller and more remote communities. They are taking their jobs with them and need reliable high-speed internet to remain there long-term. Telecommunications investments, such as those announced in the Ontario budget, will help with housing affordability. This new approach would be a significant driver of economic growth. It would also address the long-term balance between housing supply and demand, while tackling urgent social and human needs across the housing spectrum. Michael Bourque is the CEO of the Canadian Real Estate Association. The Hill Times

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How to address the housing shortage

Canadians are moving out of cities, out of province and into smaller and more remote communities. They are taking their jobs with them and need reliable high-speed internet to remain there, long term.

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