CMHC warns of a ‘very significant barrier’ to fixing the housing crisis

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Housing industry officials have said there’s been growing awareness in recent months of the link between development charges — and other rising costs — and the lack of building. 

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Whitzman said development charges, while important, are only one hurdle in the housing crisis. Other challenges include the need to reduce unnecessary regulations and other red tape, increase the use of AI and other technology in an industry dominated by small companies, and boost efficiency through greater scale within the sector. The costs of land, materials, and workers have also gone up.  

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“It’s hard to find construction workers if there are no houses affordable for construction workers,” Whitzman said. 

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Governments at all three levels, meanwhile, have in recent years also been paying more attention to the lack of homes. During last year’s federal election campaign, the Liberals promised that 500,000 homes would be built annually over the next 10 years, triggering a level of residential construction not seen since the years following World War II. 

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Prime Minister Mark Carney has since promised a new Crown corporation called Build Canada Homes to provide about $25 billion in public financing for prefab and “affordable” housing, plus $10 billion in low-rate capital.  

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The federal government also launched the Build Communities Strong Fund, a 10-year, $51-billion program to help support the construction of water, sewage, transit and road infrastructure. Carney also promised to eliminate the GST on new homes that sell for less than $1 million to first-time buyers.  

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Economists say an increase in housing construction is important beyond filling a critical social need. It means downward pressure on housing prices, economic activity and jobs through construction and the related purchases of appliances, paint and other items that new homeowners typically make. New buildings also mean a windfall for government coffers at all three levels. 

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Laberge said an increase in new home construction of course means a greater take from property taxes for any municipality that cuts development charges, but it’s not clear how much.  

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Despite all the new policies and programs, housing construction has yet to take off. Less than a year ago, the CMHC admitted that the crisis might get worse because housing starts were expected to fall in 2025, 2026 and 2027, leaving production at less than half the 480,000 that the CMHC says Canada needs to add each year over the next decade. 

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Analysts say it takes years to build homes and that there’s sometimes a lag of as much as a dozen years from when a plot of land has been identified for a new home, subdivision or apartment building to when people are able to move in. It can take even longer when roads and key services — sewer, water, electricity — need to be added. 

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National Post 

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