Human Resources Committee on May 4th, 2026

[Caroline Desrochers, Liberal, Trois-Rivières, QC]

Thank you.

My last question is for both of you. Really, it's about the coordination between federal, provincial and municipal, and the $64,000 question of harmonizing building codes. In your opinion, is there a path to get there, to do that? Perhaps you could offer your thoughts on this.

[Kevin Lee]

I can say that the idea of harmonizing building codes is good, if you're harmonizing to a good building code.

We have major challenges right now with the way the building code is being developed, the costs that are implicated. In terms of the 2025 building code, we estimate that the cost for a 2,500-square-foot house will be about $56,000 or more, and that's not including the energy numbers.

If we're going to move to harmonization, which would be great, and if we could also get harmonization right down to the municipal level, because municipalities have all kinds of regulations and zoning and bylaws that prevent us from building the same house twice.... That pursuit is very important, but we have to get what we're harmonizing to right; otherwise, we're not going to get harmonization. You're seeing provinces pull back right now. They're recognizing the costs and implications of a more expensive, complex code.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Ms. Desrochers.

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

[Andréanne Larouche, Bloc, Shefford, QC]

Thank you very much, Mr. Chair.

Mr. Lee and Mr. Moffatt, thank you for being here today for this study on housing starts.

Mr. Moffatt, towards the end of your opening remarks, you started listing certain international examples. I believe you were going to talk about Australia. Since that was at the end of your remarks and you had to wrap up very quickly, I'd like to give you a few moments to revisit what we might learn from certain international examples.

[Mike Moffatt]

The only three I had memorized.... I'd have to go back and look.

Every country defines a housing start differently. Australia and the United States define it as when the excavation starts on site. That counts as a housing start. In the U.K., it is when they start pouring the foundation. It's in between. In Canada, we define it as when that foundation reaches ground level.

These distinctions didn't used to matter all that much back when Canada was mostly building single detached homes, because the timeline from when you started digging the hole to when you poured the foundation and the foundation reached grade was usually a matter of weeks. Oftentimes, that was all happening in the same month anyway.

Now we're moving to more complex high-rise apartments, most of which have underground parking. The timeline from when you start digging the hole to when the foundation reaches grade can be up to about 18 months or so different.

[Andréanne Larouche, Bloc, Shefford, QC]

I understand that this makes it difficult to calculate housing starts to determine where we stand with these construction projects.

Mr. Lee, what I gather from your remarks and those of Mr. Moffatt is that several developers are saying that the programs exist, but that construction projects aren't starting quickly enough. Is the main problem funding or red tape?

[Kevin Lee]

It depends on what you're talking about.

If you're talking about purpose-built rental programs that are using CMHC programming, those can often get oversubscribed. Some of the requirements, too, that are getting more and more stringent are making some of the projects less viable.

That being said, we've had quite a bit of purpose-built rental construction over the past few years. As Mr. Moffatt said, we're probably going to see a bit of a slowdown on that right now, in many cases.

When it comes to units for home ownership, that's an entirely different situation. Certainly in our more expensive provinces, such as Ontario and B.C., it becomes so cost prohibitive to buy. There are so many affordability challenges right now that we're seeing a complete absence, in many ways, of sales. That's resulting in a lot fewer starts. It's back to this: If buyers can't buy, builders can't build.

[Andréanne Larouche, Bloc, Shefford, QC]

Perfect.

We can see that there's another challenge related to these housing starts, namely predictability, which we've discussed.

Mr. Moffatt, I believe it was you who mentioned the number of people and immigration policies. What I take away from your comments is the issue of predictability. Is that lacking for businesses and contractors?

[Mike Moffatt]

That's correct, particularly for high-rise, purpose-built rental, because newcomers to Canada disproportionately end up in that kind of housing, so it's particularly sensitive to immigration rights. Because we don't have a line of sight to either permanent or non-permanent residents past 2027, builders and developers are basically, in making their investments, having to make a bet on the future of immigration policy.

That certainty is important, as well as certainty on other issues, like taxes, development charges and so on. The more uncertainty there is, the higher the returns have to be on building a new home, because the project is inherently riskier.

[Andréanne Larouche, Bloc, Shefford, QC]

Thank you.

Mr. Lee, the federal government has announced a lot of investments, but families on the ground are still waiting. How can we ensure that every dollar announced quickly leads to a shovel hitting the ground?

[Kevin Lee]

We can start with a couple of examples of partnerships that were announced with the Province of Ontario that are going to very directly deal with taxes, one with development taxes and the other with the HST. As the government looks to roll out partnerships with the other provinces, it's going to be really important that they be done in a very similar way, because it's not clear that that will be the case.

The $1.7 billion that gets allocated to the other provinces should really be going to the sales tax side of things and offsetting those. When it's the build communities strong fund, again, there's an emphasis on direct results, dealing with DCs and dealing with the infrastructure-freezing DCs. Those are all really important things that have a big impact on affordability and can lead directly to starts.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Ms. Larouche.

Next is Mr. Reynolds.

You have five minutes. Please go ahead.

[Colin Reynolds, Conservative, Elmwood—Transcona, MB]

Thank you, Mr. Chair.

Thank you, witnesses, for coming here today. We really appreciate your time.

My first question is for Mr. Lee.

You mentioned that we need about 480,000 to 500,000 starts per year. Are we anywhere near that right now?

[Kevin Lee]

No. Those are numbers that CMHC has put forward in order to close the affordability gap. It's an important aspirational target. We have so many things to get out of the way to be able to do that, so we're quite a ways from being able to achieve that.

[Colin Reynolds, Conservative, Elmwood—Transcona, MB]

My background is that before I was elected here, I spent 20 years in construction. I was the electrical foreman on a high-rise with residential units.

Contractors and developers are in the business of actively seeking projects to build. What would you say is the biggest barrier right now holding back private developers from moving forward on projects, especially since there seems to be a high demand for housing right now?

[Kevin Lee]

We would be in high demand based on that gap analysis that CMHC is talking about. When you look at household formation that should be happening, in many cases, it isn't happening because of affordability issues. The big challenge we're facing right now is that affordability crunch. When you look at developers building residential, they have to sell 70% to 80% of the units before they can get started and get their construction financing, so when you're getting very few sales, you can't proceed.

Even with low-rise, there's a lot less spec building going on in these times of uncertainty. Again, builders are waiting to be able to make sales. That has been a big crunch. We keep talking about Ontario and B.C., but that's where we have the biggest challenges. Things have been going okay in Atlantic Canada, although they're starting to slow down now. It's the same with the Prairies. Alberta is coming off two record years of starts, but again, with all the consumer confidence issues, we're seeing slowdowns right across the board right now.

[Colin Reynolds, Conservative, Elmwood—Transcona, MB]

In your opening statement, you mentioned that the housing starts have shifted from market more towards non-market. What do you think the reason for that is?

[Kevin Lee]

Just to be clear, I was saying they've shifted from units for ownership to purpose-built rental.

[Colin Reynolds, Conservative, Elmwood—Transcona, MB]

That's correct.

[Kevin Lee]

There are a couple of reasons for that. One is affordability. People can't afford to buy homes, whether they're ground-oriented or in a high rise, so they're moving towards rental.

The other thing is that the rental market has been helped quite a bit by changes in taxation policy and other financing that has been necessary to better equip industry to make projects pencil out. For the longest time they weren't. Therefore, industry was building condos and selling those units into the secondary market.

The changes that have been made to make purpose-built rental more viable have been important and good to help that out, but again, we can't be trading off purpose-built rental and building a lot more of that and fewer units for ownership. We need more units for ownership as well.

[Colin Reynolds, Conservative, Elmwood—Transcona, MB]

You also mentioned municipal taxes and development charges being pretty significant costs, obviously, to the homeowner and the builder. Has Build Canada Homes done anything to address that issue? Obviously, those are different depending on the jurisdiction, but is there anything in Build Canada Homes that has addressed that issue?

[Kevin Lee]

There is nothing that I'm aware of. Again, Build Canada Homes is really looking at non-market housing on public lands. That's a different issue from dealing with the development taxes. They might end up with deals where they get development taxes waived, which is pretty common for different types of subsidized housing.

When you talk about development taxes and development charges across the country, the build communities strong fund is talking about giving out money for infrastructure dollars, but we need to see DCs rolled back, or at least frozen, where they're really expensive.

We also need to recognize that municipalities have come to rely on development charges to fund a lot of things beyond what they're supposed to be funding, and that's where they've become trapped. It's really important, moving forward, that the feds and provinces work with municipalities to find other funding mechanisms, so that they're not putting this tax burden on the backs of new homebuyers.

To be clear, builders and developers are the financiers of development taxes only until the homeowners ultimately pay for them. It's the homebuyer who ultimately pays all of these taxes.

[Colin Reynolds, Conservative, Elmwood—Transcona, MB]

Okay, thank you.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Reynolds. You were right on time.

Mr. Joseph, you now have the floor for five minutes.

[Natilien Joseph, Liberal, Longueuil—Saint-Hubert, QC]

Thank you, Mr. Chair.

Thank you to the witnesses for being here.

Mr. Moffatt, our government is currently reducing immigration thresholds. What effect do you think this decrease could have on the rental markets?