Human Resources Committee on Dec. 5th, 2022

[Romy Bowers]

We are doing work to make the definitions more aligned with and readily understandable to Canadians. I think there is definitely work that CMHC can do. I think having different affordability definitions has created confusion, and I definitely take that feedback.

However, in terms of keeping track of affordable units, we keep track of the units that are being created, the target populations and the level of rents that are being achieved. Many of the units are still under construction, so it takes time between funding and the actual move-in date. That creates a delay in our reporting, but we're working really hard to make that delay as short as possible.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Aitchison, I'm sure you will get back in the rounds; we have almost two hours.

Mr. Collins for six minutes, please.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Thanks, Mr. Chairman, and through you, thanks to the representatives for attending this afternoon.

I have a very basic question. How does CMHC measure success as it relates to all the programs you have? What data or what information are you using to determine whether the programs are working or not from your perspective as an organization?

[Romy Bowers]

For each program, there are defined program unit limits, populations that are being served, and levels of affordability. We make a concerted effort to collect that information on an ongoing basis. There are some targets at the top level for the NHS as a whole, for example, number of units created, number of households that are taken out of household needs, and number of women who are being served by the housing unit. All that information is available on our website, www.placetocallhome.ca. We try to update it as frequently as we can to create as much transparency as we can about the investments being made and the impact they are having in the communities.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

As a long-time city councillor in Hamilton, I think everyone on my council, irrespective of their political stripe, celebrated the national housing strategy and the investments that came with it. I think if you were to poll those people, not just in Hamilton but, I think, across the country, most people—to the member's point prior to mine—expected more for those who are in core housing need. We expected more on the subsidy side of things, addressing housing needs for seniors, those who are disabled, veterans. You have the list of the vulnerable populations that the national housing strategy seeks to assist, and I think we expected more there and less on the market side. I agree with your opening comments when you said there's room for the private sector, and I'll have questions about that later today.

On the issue of subsidy and deeply affordable units, to your words with the previous members, how do we change the policy direction? When do we look at the national housing strategy and say, look, the pandemic's changed a lot of things; it's time to maybe push a reset button; we need deeply affordable units and less support for market rents? Can you help me with that in terms of how we can assist you in that regard?

[Romy Bowers]

Mr. Chair, I view the national housing strategy as an evergreen strategy. It started out as a $40-billion investment in housing, and it's grown to a $72-billion investment over the last five years based on the response to the changing housing needs of Canadians.

One of the most recent successes of the national housing strategy has been the rapid housing initiative. It started out as a $2.5-billion initiative during the pandemic to address the housing needs of those most in need. It was $2.5 billion, 100% grant and no loans. We recently launched round three of that initiative, which provides another $1.5 billion in grant funding to create another 4,500 units of housing. That's an example of the flexibility of the housing strategy and how it changes as the circumstances change.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

I agree with you. Rapid housing—through you, Mr. Chair—is the most successful program we have under the strategy. We need to model some of the other programs after it in terms of providing more affordable units to the vulnerable population across the country.

On the issue of the financialization of housing, we're going to study that next, and maybe you will be a part of that study as well. We've seen a lot of information out in the public as it relates to the loss of affordable units. They've been scooped up by the private sector. Some of those units have been scooped up by private individuals who are tinkering as landlords in the market, and others are larger companies like REITs, which have scooped up hundreds, if not thousands of units, in all areas across the country. In some areas, those REITs almost have a monopoly: Depending on the size of the community, they almost have a monopoly on the rental market, and we've seen an escalation of rents as a result of those purchases.

Can I ask, does CMHC disclose the supports that it provides to REITs, whether it be through mortgages or applications through some of the programs you've already highlighted this afternoon?

[Romy Bowers]

Mr. Chair, one point I'd like to highlight is that through the national housing strategy we support all types of housing developers. We provide grants only to non-profit housing providers and the government. We provide loans in some cases to private developers. I don't have the exact numbers of the breakdown you're talking about, but we can certainly provide that.

With respect, on the subject of the financialization of housing and the role of private sector actors, especially in the rental sector, if we have time, I would like to give the floor to our chief economist, who might be able to provide a little more insight here, if you're agreeable.

Bob, do you mind talking about your observations about the financialization of housing and the dynamics of the housing sector?

[Bob Dugan, Chief Economist, Canada Mortgage and Housing Corporation]

Absolutely.

Thanks for the opportunity, Mr. Chair.

The “financialization” of housing is a word we hear a lot. The reality in Canada is that about 95% of the rental market is provided by the private sector, so financialization is something that exists by design in our rental market. In an environment of a growing population and more demand for more rental units, we need more financialization in order to get more supply to meet the needs of a growing population.

We've done some work in our rental market survey to try to measure the extent to which REITs and other types of investors are present in the market. Our best estimate is that REITs account for about 10% to 15% of landlords in the rental market. They're not a monopoly; they're a smallish player. They're a player amongst other private investors, which make up, as I said, the ownership of most of the rental units in the rental markets across the country.

To the extent that units are being scooped up, I don't think they're being scooped up from private sector investors buying them away from the government. It is maybe private sector owners selling to other private sector owners.

The market is overwhelmingly privately owned in Canada. There is a role for the government, of course, as well. That's just the way our system is designed and how we supply housing. We could always entertain ways of changing those proportions, but that's how it is right now.

[Chad Collins, Liberal, Hamilton East—Stoney Creek, ON]

Mr. Chair, I have a list of questions I will submit to the clerk for the committee's information.

[The Chair, Liberal, Bobby Morrissey]

Thank you.

That's a good way of using your time efficiently, by providing written questions through the clerk. It is valid.

Ms. Chabot, you have the floor for six minutes.

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

Thank you, Mr. Chair.

I'd like to thank the witnesses for being here.

The study we are conducting is an important one. The committee will also have another to do, on social housing and affordable housing. We need to find some answers. The crisis is happening everywhere, and in every riding, the issue of the availability of affordable housing and social housing tops the list of demands.

When we adopted the motion to conduct this study, we had not yet received the Auditor General of Canada's report. What the report has shown us since then is rather worrisome: CMHC does not know whether all the housing units being supported by these initiatives are really being occupied by vulnerable people. The studies have even shown that fewer than 5% of new housing units built under the two main programs of the national housing strategy are accessible to people with the greatest needs. That's very troubling.

In the questions I'm asking, I'm not trying to blame anyone, but simply looking for answers.

How can we provide better support to vulnerable people and keep data up to date to ensure that the programs for which you are responsible really meet their needs?

[Romy Bowers]

As I mentioned previously, we are very grateful to the Auditor General for her comments. We've agreed to an action plan to address the deficiencies that have been identified in the report.

On the first subject, of CMHC's not being aware of the vulnerable populations that are being served in the unit, we collect information at the application stage and prioritize applications on the vulnerable groups that are being served. There is a delay, however, between the construction of the unit and the move-in time. Sometimes we cannot provide concrete information about who is living in a specific unit, because of the nature of the construction cycle. We are trying to improve our reporting to be more timely.

In addition to that, as was mentioned in the response to the Auditor General's report, we are working with Statistics Canada to do more detailed reporting about vulnerable groups without sacrificing the privacy issues of certain populations.

With respect to social housing—

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

I understand that it can take a while to obtain data or that it isn't always available. However, there are people underlying all that, and this should not deprive them of access to affordable housing, which is the objective that must be met.

How can we meet this objective on schedule? You are responsible for ensuring that it gets done, but it's not even possible at the moment to know whether affordable housing is really affordable, based on your definitions.

You're in agreement with the Auditor General's report, which says that we are missing the target, but how do you plan to follow through on her main recommendations?

[Romy Bowers]

Mr. Chair, the national housing strategy is very significant because it reflects a return of the federal government to investing in social housing after an absence of many decades.

In answer to the question from Madame Chabot, the best way to address housing for those most in need is investing in programs like the rapid housing initiative—housing programs that are rich in grants that target vulnerable populations. For example, the rapid housing initiative has resulted in the funding of over 10,000 new housing units. Many of them are perfectly suitable for those experiencing homelessness or who are at risk of homelessness.

Those are the kinds of programs that will best address those most in need.

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

Can you tell us how many social housing units have been built, and how many are currently occupied, in Canada?

[Romy Bowers]

Mr. Chair, I'd like to pass the floor to Nadine Leblanc, who will be best positioned to answer this question.

[Nadine Leblanc, Senior Vice-President, Policy, Canada Mortgage and Housing Corporation]

I'd like to mention that under the national housing strategy, we built 47,000 affordable housing units. We have therefore achieved 50% of our goal, and are at the midpoint of implementing the strategy.

I'd also like to point out in connection with social housing units, that we have long-term agreements with the provinces and territories. We support more than 300,000 units. That in itself means that we are providing assistance to the people for whom we are doing all that, as you mentioned.

With the help of certain budgets, including 2021‑22, we increased—

[Louise Chabot, Bloc, Thérèse-De Blainville, QC]

You can't tell me that 300,000 social housing units were built and are currently occupied by people in Canada.

[Nadine Leblanc]

I should specify that we're talking here about the number of individuals, in connection with our long-term agreements.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Madame Chabot.

We'll go to Madam Kwan for six minutes, please.

[Jenny Kwan, NDP, Vancouver East, BC]

Thank you very much, Mr. Chair, and thank you to the representatives from CMHC for being here today.

My first question ties into the national housing coinvestment fund initiative. The average rental price of units approved under the national housing coinvestment fund was higher than 30% of before-tax household income in several of the provinces and territories. The Auditor General, in fact, stated, “Having affordability criteria linked to market rent will continue to produce housing that is unaffordable to many of these groups.”

My question is, why did the national housing coinvestment fund use a different affordability measure—based on 80% of the average market rent—from the criteria used by the national housing strategy overall, which uses 30% of a household's before-tax income? Who made that decision?

[Romy Bowers]

Mr. Chair, there are a number of different programs under the national housing strategy.

[Jenny Kwan, NDP, Vancouver East, BC]

Sorry, it's the national housing coinvestment fund, specifically.

[Romy Bowers]

I'm going to turn it over to Simon Lahoud, who's going to give a bit more information about the affordability.

Affordability is part of the program design that is intended to meet certain policy objectives. As I mentioned, the national coinvestment fund funds deeply affordable housing, but it also provides support for market housing, so that different levels of rent can offset each other to provide projects that are financially viable for the proponents.

Simon, I would get you to expand on that.