Evidence of meeting #110 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was need.
A video is available from Parliament.
4:50 p.m.
Liberal
Patrick Weiler Liberal West Vancouver—Sunshine Coast—Sea to Sky Country, BC
Thanks for that.
Are there any federal policies, or maybe a lack thereof, that led to that type of loss in deeply affordable housing as well?
4:50 p.m.
Industry Professor, McMaster University and Executive Advisor, Canadian Housing Evidence Collaborative, As an Individual
Not really. It's really a provincial jurisdiction.
4:50 p.m.
Liberal
Patrick Weiler Liberal West Vancouver—Sunshine Coast—Sea to Sky Country, BC
Thank you.
I want to turn next to Mayor Guthrie.
One of the measures we've tabled through legislation, through Bill C-56, is eliminating the GST on purpose-built rentals.
I was hoping you could explain to this committee the feedback you've heard in Guelph from developers on what that might do for getting new apartments built.
4:55 p.m.
Mayor, City of Guelph
Thank you for the question.
The feedback has been nothing but positive. I know of some developers who have basically taken their projects that were shelved because of the fiscal arena we're in right now and have started to move forward with those projects.
I know of one in particular just outside my city, in another city, that I was talking to the developer about. It will be an instant 300 homes for people, just like that, as purpose-built rentals. It's been received very well. We need more of that.
4:55 p.m.
Liberal
Patrick Weiler Liberal West Vancouver—Sunshine Coast—Sea to Sky Country, BC
Thank you.
My last question is to Mr. Bourque.
One of the measures we've brought in this year is the first home savings account. I was hoping you could explain to this committee what impact you've seen with that for first-time homebuyers.
4:55 p.m.
Chief Executive Officer, Canadian Real Estate Association
I think the take-up on it has been very slow because financial institutions were not prepared to offer it right away. That said, I have two boys who are of the age that would be targeted by such a program. I told them they'd be crazy not to take advantage of it. It's an excellent program for saving money toward a first home. I've more recently seen that more financial institutions are offering it and promoting it, and I hope people take advantage of it. It's an excellent program.
4:55 p.m.
Liberal
4:55 p.m.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
Thank you, Mr. Chair.
If Mr. Pomeroy is still with us, I'd like to ask him one last question.
TD Bank estimates that, between 2023 and 2025, Canada may be 215,000 housing units short of meeting demand due to demographic growth. The shortage could be as high as 500,000 units if very high growth persists.
The number of new immigrants and non-permanent residents recently hit record highs. What impact do you thing that has on Canada's housing market, especially the rental market? What difficulties do these people run into when they need to find adequate housing?
4:55 p.m.
Industry Professor, McMaster University and Executive Advisor, Canadian Housing Evidence Collaborative, As an Individual
That speaks to the presentations you had in previous weeks, particularly from CMHC, on the amount of supply we actually require in the country.
I think it is important to clarify the nature of the CMHC report alongside the TD projections of supply requirements. There are two elements to supply requirements. The basic requirement is related to population growth—how many people are coming and the household formation rates, both as a result of immigration and of kids leaving the family home and creating their own households. For that, CMHC has estimated we need, give or take, 240,000 to 250,000 new homes a year. On top of that, they've estimated we need to build an extra 3.5 million homes, essentially to flood the market and drive down prices.
It's an empirical, econometric, theoretical study that says that if we were to do that, this would be the outcome, but the reality is that the market doesn't really work that way. Builders won't build if they can't sell. CMHC itself won't provide mortgage insurance for pre-sales until they reach a certain level, and if there aren't ultimate buyers there, achieving that objective is unrealistic.
I think we do need to recalibrate those estimates in a more realistic way to say, “Now that we've seen this significant level of population growth, let's update those estimates of how much housing we actually need for household growth,” and it's probably somewhere between 240,000 and 500,000. That work hasn't been done, and I think it really does need to be done so that they have a better idea.
It's not just the absolute number of homes we need to be creating, but also the types of homes, as Mr. Bourque mentioned. We have to make sure we are creating the right type of supply and not just building small closets in apartment towers for investors to buy and rent out in the short-term rental market. We need to be building homes for Canadians, so we need to recalibrate those estimates.
I'm not sure if that entirely answers your question, but I think that's the....
4:55 p.m.
Bloc
Gabriel Ste-Marie Bloc Joliette, QC
Yes, that's very interesting. Thank you very much.
Thank you, Mr. Chair.
4:55 p.m.
Liberal
The Chair Liberal Peter Fonseca
Thank you, MP Ste-Marie.
Thank you, Mr. Pomeroy. Your students are lucky to have you. Thank you very much for the testimony you've provided this committee.
Now we are going to MP Blaikie.
4:55 p.m.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
My question was for Mr. Pomeroy, but I think he has two and a half minutes and then he has to run.
5 p.m.
Liberal
5 p.m.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
I know you've done some good work on the loss of affordable and social housing units in Canada and I just want to ask if you have some policy recommendations around the need not just to build new social and affordable housing but also to help preserve existing affordable social stock.
5 p.m.
Industry Professor, McMaster University and Executive Advisor, Canadian Housing Evidence Collaborative, As an Individual
Certainly, I do. That's a good question.
The national housing strategy does set out to try to do that. There are two elements of the national housing strategy: One is to preserve what we have and the other is to add new stock. Even at $20,000, $30,000 or $40,000 of retrofit per existing social housing unit, it's a heck of a lot cheaper than $400,000 of subsidy for new stuff, so absolutely, we should be doing that.
I think we need to look at the quantum of funding that's currently flowed through the bilateral agreements with the provinces and territories specifically to provide funding to existing non-profit and co-op operators so that, first of all, they're able to maintain the low rents they currently have as the subsidy agreements expire, which they've been doing over the last number of years.
Second, many of these are now 35- to 40-year-old buildings with significant capital expenditure requirements. They need to know they have enough capital funding to upgrade the buildings. I think the program is there; we just need to make sure the quantum of resourcing that's there is sufficient as the units expire incrementally.
5 p.m.
NDP
Daniel Blaikie NDP Elmwood—Transcona, MB
In a case of a non-profit trying to reconfigure their business model—because of the loss of a federal subsidy, say—and they're not quite sure how to do it, but there's another non-profit organization with housing experience that would be interested in acquiring their building and trying to make a go of it, is access to capital for those non-profits an issue? Is there a role for government, somewhat like what we've seen B.C. recently with the announcement of a non-profit acquisition fund, to provide readier access to capital for organizations that want to make a go of it?
5 p.m.
Industry Professor, McMaster University and Executive Advisor, Canadian Housing Evidence Collaborative, As an Individual
Some of the bigger organizations have the capacity to do that, and we certainly have seen takeovers, for a dollar, to take over the asset, maintain it and utilize it. Some of the bigger organizations are able to borrow against their balance sheet to facilitate that.
I think the bigger issue is creating an investment fund that allows non-profits to buy the private rental stock that I mentioned with rents that are going up. If we can get non-profits to emulate the behaviour of asset managers and REITs, buy existing moderate-rent properties at 60% to 70% of the cost of building new and operate them in a non-profit model, they're essentially decommodifying that asset and keeping the rents relatively affordable. Certainly I'm doing a lot of work at the moment with a number of local foundations to actually create that kind of investment fund. I think that would have a big impact.
5 p.m.
NDP
5 p.m.
Industry Professor, McMaster University and Executive Advisor, Canadian Housing Evidence Collaborative, As an Individual
I'm sorry to leave you all.
5 p.m.
Liberal
The Chair Liberal Peter Fonseca
Thank you, Mr. Blaikie. Thank you, Mr. Pomeroy, for the extra time.
Now we'll go to MP Lawrence.
5 p.m.
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
Thank you, Mr. Chair.
Mr. Dufort, thank you for coming today. I hope you'll be able to comment on the Quebec market specifically.
Is there a housing crisis in Quebec?
5 p.m.
President and Chief Executive Officer, Montreal Economic Institute
If we look at the evolution of prices in Montreal in particular, we have observed upward pressure on prices since the start of the pandemic. The market in Quebec may have been a bit of an outlier when prices were lower than elsewhere. However, low supply produced the only possible effect, which was a considerable price increase over the past few years.
5 p.m.
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
Are there any problems that are unique to Quebec?
5 p.m.
President and Chief Executive Officer, Montreal Economic Institute
Definitely. Since 2018, the City of Montreal has prevented or delayed the construction of about 24,000 housing units, and those are only the projects that made headlines. That is equivalent to the number of units typically built on the Island of Montreal in a single year. It's like we missed out on one of the five past years because of bureaucratic control over housing construction. It's measures like that that drive prices up.
5 p.m.
Conservative
Philip Lawrence Conservative Northumberland—Peterborough South, ON
Merci. I don't know the words in French for gatekeeper, but it sounds like a grand gatekeeper to me in la ville de Montréal.
Thanks very much.
Just changing the subject a little bit, one of my concerns is that we are going to be putting capital.... We have to; don't get me wrong. We have to put capital into homebuilding. Housing is essential, but Canada is, of course, also in a capital crisis. Our manufacturing, our equipment.... In many cases, we are in the lowest renewal rate in the OECD for many capital purchases.
Do you have any concerns with respect to the diversion of capital away from manufacturing and other areas of our economy? What impact that will have on our economy?