Finance Committee on Jan. 21st, 2022

[Adam Chambers, Conservative, Simcoe North, ON]

I mean not the traditional bank lenders.

[Peter Routledge]

Thank you.

Mr. Chair, the size of residential mortgage credit outstanding is $1.9 trillion currently. About $1.5 trillion is provided by OSFI-supervised institutions. The remaining $400 billion comes from non-banks or credit unions.

If by “shadow bank” you mean what the Bank of Canada classifies as a shadow bank, most of that involves mortgages originated by non-bank players and then sold on into our FRFI space. So the banks ultimately hold the risk, but these are originated by non-banks. That fits the Bank of Canada definition.

Within that there is a small segment that folks might more commonly associate with shadow banking, which includes riskier mortgage investment corporations and the like, and that remains growing but small.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

I have just one quick question now.

[The Chair, Liberal, Peter Fonseca]

That's five and a half minutes. Thank you, Mr. Chambers.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

[The Chair, Liberal, Peter Fonseca]

We are moving to the Liberals.

Madame Chatel, go ahead for five minutes.

[Sophie Chatel, Liberal, Pontiac, QC]

Thank you, Mr. Chair.

The Minister of Housing met with provincial ministers yesterday. Some of the things they concluded are of particular interest to me.

Mr. Dugan and Ms. Bowers, you spoke earlier of supply and demand issues. We need to focus on increasing the supply of housing. That's the root of the problem. We have less housing available per 1,000 people than many other countries. So we need to increase the supply.

I've spoken to building contractors in my constituency, and they have confirmed that one of the biggest barriers to development in urban and rural areas—we mustn't forget rural communities—are municipal issues. In small communities, very often it's hard to get permission to build housing. The process is often highly politicized in small communities. There's a “not in my backyard” syndrome. These folks do not want to see new construction in their neighbourhood. So it's a huge challenge.

They met to discuss how to use the housing acceleration fund to break down municipal barriers and get more housing built. It's a key issue.

What barriers exist and how can we work with our provincial partners to address these issues?

You spoke earlier of densification in our cities. Can you tell me more about how you perceive the barriers and how we can discuss this with our provincial colleagues?

[Romy Bowers]

Mr. Chair, I believe Ms. Chatel has done a good job of summarizing issues that can often exist at the local level. I think that CMHC is not in a position to resolve them, but I think we can provide support by working with municipalities and provinces to make the development process more efficient.

I want to say also that not all municipalities are the same. Some municipalities have taken big steps to improve the development process, but I think that by all levels of government working together, we can work together on it. Some of the barriers could be very simple. In some small municipalities, they may not have enough staff in their planning offices to approve applications. In other communities, there may be a lot of opposition to certain types of development, so there may have to be more educational outreach to community groups.

There are many different issues that can slow down the development process, and I think the solution has to be customized to the situation that exists in each municipality.

[Sophie Chatel, Liberal, Pontiac, QC]

For the more rural areas in particular, what are the biggest housing challenges?

[Romy Bowers]

In terms of rural areas, I think that currently there is a shortage. We have a bit of a supply chain disruption because of the pandemic and, in addition to that, in many rural areas—and actually in cities as well—there's a shortage of the skilled labour required in the construction process. It has been our experience that sometimes that can hold up the development process.

[Sophie Chatel, Liberal, Pontiac, QC]

Exactly, I was in a rural community and I heard that even if people get a building permit and the financing, the labour shortage is still more widespread in rural areas.

In addition, it's kind of a vicious circle, because they also don't have housing for people who would come in and work on a project for a year, for example. So it's a big problem.

We've seen the problems worsen during the pandemic, but they are nothing new. Housing pressure had been on the rise since late 2014. Without the national housing strategy and the federal government's support, where would we be today?

[The Chair, Liberal, Peter Fonseca]

Madame Chatel, we are way over time, so we are going to have to move on.

It's the Bloc next, although the time has been ceded by Monsieur Ste-Marie to Ms. May.

Ms. May, you have two and a half minutes.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Thank you.

My question is going to Ms. Bowers again.

Yesterday—I think the press release is actually dated with today's date—there was an announcement of a rapid housing initiative through CMHC. One of the many projects that's going to get fast-tracked is housing on Salt Spring Island in my riding. A lot of people may assume that Salt Spring Island, most people.... Let's just say for everyone in this room that you can nod if you agree that you think Salt Spring Island is all older hippies and they're all rich, but we have a huge problem of a lack of adequate housing, and we have a huge problem of people who are living rough, so I'm really grateful that this is happening.

Do you have any idea, Ms. Bowers, if this rapid housing initiative will be expanded? I can tell you that on Galiano Island we have a housing group that is putting in front of every home that supports it signs saying, “Yes, in my backyard”, because we have really acute housing shortages throughout Saanich—Gulf Islands.

[The Chair, Liberal, Peter Fonseca]

I'm sorry, Ms. Bowers. You're on mute.

[Romy Bowers]

My apologies, Mr. Chair.

I can't comment on whether the program would be extended or expanded, but I can comment on the level of demand. We have had two rounds of the rapid housing initiative through the pandemic. It is targeted to homes for the homeless or people at risk of homelessness, as Ms. May mentioned, and the demand for the funding way outstripped the funding that was available.

As many of you are aware, there definitely is a real need for housing that caters to those populations at risk.

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

You don't know how many rounds may still be coming, but again, we have mentioned in this discussion that a lot of the delays and difficulties come from local decision-making and local approvals. Does CMHC have any ongoing consultative mechanisms to assist local municipalities?

I'm thinking, for instance, of the Federation of Canadian Municipalities. By the way, I defer to the FCM on almost everything as one of the great brain trusts in Ottawa, where you can go to get good data information and, for instance, through their rural caucus of mayors, to get really good information on the struggles that local municipalities, particularly small ones, face in being able to handle challenges like the housing crisis.

[The Chair, Liberal, Peter Fonseca]

Give a short answer, please. You have 20 seconds.

[Romy Bowers]

The answer is no. We don't have a specific mechanism built into CMHC, but we have done a lot of research and we have staff who are very knowledgeable about local issues.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, Ms. May.

We're moving to the NDP and Mr. Blaikie for two and a half minutes.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

I'm curious to know if one of our witnesses wishes to comment on the role of real estate investment trusts in the current Canadian real estate market. To what extent are they contributing to upward pressure on housing prices? What are some of the things the government might consider doing to curb whatever upward pressure REITs might be causing in the Canadian housing market?

[Romy Bowers]

If I may, I would ask my colleague, Mr. Dugan, to respond to the subject of investors in the real estate market, and real estate investment trusts in particular.

[Bob Dugan]

We've tried to take a look at this question using our rental market survey data and looking at the average rents by ownership type. We haven't been able to identify any significant difference between REITs, corporate ownership versus individual investors, or other investors in the rental market. It's not clear to us that the average rents are trending very differently for REITs versus other kinds of owners. In fact, when you think about the rental market, it's very difficult for that to happen, because if one person tries to charge more than someone else, there's competition in the market.

There's not a lot of evidence there. We continue to look at the question to see if we can unearth anything, looking at different data sources. We don't have results yet, but we've taken an initial stab at trying to look at that with our rental market survey results.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Do you have any numbers that would let us know the extent to which REITs might be predominantly causing new housing construction, or if they tend to bid on existing housing?

[Bob Dugan]

That's a good question. We don't collect that in the rental market survey, because it's not a starts and completion survey. What we have is the rental market universe and we survey from that.

I could see if there's a way for us to answer that, but I don't have it at the tip of my fingers. We just look at the distribution.

What I do know—I don't have the exact number off the top of my head—is that the REITs account for a fairly small percentage of overall landlords in Canada. They aren't big enough to have much pricing power, because they're small players relative to other owners or landlords.

[The Chair, Liberal, Peter Fonseca]

We've just reached the end of your time, Mr. Blaikie. Thank you.

Now we have Mr. Poilievre up for five minutes.