Evidence of meeting #35 for Human Resources, Skills and Social Development and the Status of Persons with Disabilities in the 45th Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was federal.
A recording is available from Parliament.
Founding Director, Missing Middle Initiative
I think we would get fewer rental starts and continued downward pressure on prices, simply because there wouldn't be as much demand there.
To be clear, at the Missing Middle, we're not calling for any particular immigration target. What we're suggesting is that having more certainty around the future path of both permanent and non-permanent residency would allow for builders and developers to make more informed plans, because they wouldn't be guessing at the future level of demand.
Liberal
Natilien Joseph Liberal Longueuil—Saint-Hubert, QC
Thank you.
In your opinion, what are the main factors currently hindering housing construction and slowing the growth of housing supply in Canada?
Founding Director, Missing Middle Initiative
There are a number of factors.
Clearly, economic conditions play a role. Builders and developers won't build things unless it's sufficiently profitable and they can obtain financing. The approvals process matters quite a bit, and this can vary substantially depending on the jurisdiction, what's involved and the types of processes they have.
It also depends on the types of homes being built. Historically, the high-rise condo market, as Mr. Lee has pointed out, is highly reliant on having 70% to 80% or more of the homes sold in pre-sale. In a hot housing market, those pre-sales can happen very quickly, but at a time when home prices are flat or falling and investors are not interested in providing the preconstruction capital, it can take a long time to hit that 70% to 80% target, so that slows the process as well.
It's a combination of both economic and regulatory factors.
Liberal
Natilien Joseph Liberal Longueuil—Saint-Hubert, QC
Thank you.
I'll continue along the same lines. You've listed a number of things. Which of these have the greatest impact on current markets?
Founding Director, Missing Middle Initiative
It really depends on the type of market.
For low rise, it's particularly development charges, land prices and land use. For purpose-built rental, the federal government has enacted a number of helpful policies over the last decade, particularly through the CMHC, with programs like ACLP and MLI Select and increasing the accelerated capital cost allowance on new apartment construction. All that's been very helpful.
Now we're going to start to see a slowdown in rental apartment construction because of concerns that we may have overbuilt. In the condo market, the biggest challenge is that builders and developers are really struggling to sell preconstruction units. There is such an available inventory right now that if somebody wants a new condo, there are a lot for sale out there, so instead of buying a preconstruction unit and waiting a few years, they can take possession of a more affordable unit today.
Liberal
Natilien Joseph Liberal Longueuil—Saint-Hubert, QC
Mr. Lee mentioned federal lands. What role do you think they can play in all this?
Founding Director, Missing Middle Initiative
I think it could be quite important. There can be challenges in where that land is located relative to where new housing is needed.
If the federal government has land in an area that has a housing shortage and is ripe to build on, then I think it absolutely makes sense for the federal government to use that land, retain ownership of that land and use it to build new homes.
Liberal
The Chair Liberal Bobby Morrissey
Thank you, Mr. Joseph.
Ms. Larouche, you have the floor for two and a half minutes.
Bloc
Andréanne Larouche Bloc Shefford, QC
Thank you, Mr. Chair.
Once again, thank you to the witnesses for being with us this afternoon.
For this second round, I'll start with you, Mr. Lee.
In Quebec, the needs are different from those in Toronto or Vancouver. Should the federal government let Quebec and the provinces set their own housing policies?
Chief Executive Officer, Canadian Home Builders' Association
That's the great federation question.
One of the things we've looked for from the federal government is some leadership on all of these files. That's really important. The conversation around development taxes, development charges and delays at the municipal level are not things that are typically in the purview of the federal government, but because of the way things have gone, we'd need that kind of leadership at the federal level to get everybody headed in the right direction.
The same goes for the building code. There needs to be a good collaboration between the provinces and the federal government to get that national building code right. We need to harmonize, but we need to harmonize on something that actually makes sense. Housing is one of those things that are a provincial domain but can really benefit from some collaboration between all levels of government.
The only way we're going to solve the housing crisis is by getting the federal government, the provincial governments and the municipal governments all rolling in the same direction to address a lot of these issues.
Bloc
Andréanne Larouche Bloc Shefford, QC
Yes, we must establish co-operation and respect for areas of jurisdiction.
Mr. Moffatt, Quebec already has its own housing tools. Should the federal government transfer more funds to it with no strings attached, instead of putting in place more parallel structures in the construction and housing sectors?
Founding Director, Missing Middle Initiative
When there is equivalency, I think it's absolutely useful to do that. One example is that there are provinces that have very low or no development charges. They should not be penalized by the federal government and not get access to similar payments, like Ontario, simply because they're not overly reliant on development charges.
I do think the federal government, when looking at these deals, has to consider what provinces have already done. If provinces are performing particularly well in an area, they shouldn't get access to reduced funding for that.
Liberal
Conservative
Laila Goodridge Conservative Fort McMurray—Cold Lake, AB
Thank you, Mr. Chair.
Thank you to our witnesses for being here.
I found it really interesting. Specifically, Mr. Lee, I found the statistic you quoted of how 88% of people under 45 want to buy a home one day unique. We've been sitting here through this committee, and it's become so clear that the Liberal Government of Canada's plan is to try to get as many rental homes as possible, and that's not taking into account the 88% who want to buy a home.
Could you touch on what impacts the ongoing tariffs are having on increased homebuilding costs in Canada?
Chief Executive Officer, Canadian Home Builders' Association
It's interesting. There's been a lot of concern over the tariffs, and rightly so when it comes to construction costs, but we have to remember that, other than a few countervailing tariffs that Canada's kept in place, most of those tariffs are on [Technical difficulty—Editor] goods going into the United States, so American construction costs and homebuyers are affected much more than we are here.
The biggest challenge we have with the trade war is actually consumer confidence. That's the huge issue, and there's so much uncertainty. You see people not wanting to make the big investments. Couple that with some areas that have been more strongly hit by the trade war, where you're seeing job losses, and of course you're going to have a lot less housing activity.
Yes, it has impacts in some ways on construction costs, but really, the big impact we've seen with the trade war is on the market. It's completely freezing up in many ways, because people don't want to move on these types of big purchases when there's so much uncertainty.
Conservative
Laila Goodridge Conservative Fort McMurray—Cold Lake, AB
I have the absolute privilege of representing Fort McMurray, which is the town I grew up in. What we've seen for the last 10 years, minus the houses that were rebuilt after the fire, is effectively no homes being built.
What was really interesting in the postfire piece was that one of the biggest challenges some of the people had was that their homes were built in a different era, and rebuilding them to that code was no longer legal. It was a very interesting space. They were trying to figure out how they could rebuild when they were having these struggles between their insurance company, which didn't want to pay for them to rebuild, and the code preventing certain things, which was driving up the costs.
In your comments, you mentioned the building codes and the importance of having the right building code. What would your recommendation be on the current 2025 building code? Would you recommend that the government pause this and relook at some of these things that are, perhaps, just excessive red tape and not necessarily geared towards safety?
Chief Executive Officer, Canadian Home Builders' Association
Yes, absolutely. That's exactly what we're calling for. We're calling for a pause on building codes, and we're not alone in this. We were talking about international examples earlier. Australia has already done it. Australia has already said, “We need a pause on changes to the building code as it affects housing in particular, because things are getting too expensive, and we're going too far, too fast.”
When we look at the 2025 code, we think it's really important that we take a pause, look at it and say there are some important things in that code around health, safety, corrections and those sorts of things that need to be done, but there are a bunch of other things that are adding a lot of cost for not a lot of return right now. Those things should be put on hold. Let's find better ways to do them and then put in place a code that isn't going to drive up the cost of housing at a time when we can't afford it.
Conservative
Laila Goodridge Conservative Fort McMurray—Cold Lake, AB
Mr. Lee, could you give an example of something that is adding costs but doesn't impact safety? A lot of people are very concerned about safety, and that's critical—I'm extremely concerned about making sure that the homes we're building are safe—but if it's just because someone managed to lobby the government to get this code changed....
If you could give any examples, that would be really helpful.
Chief Executive Officer, Canadian Home Builders' Association
I think there are a few different examples.
One that comes to mind is around safety, but it's actually doing safety properly. One of the most expensive things coming in the 2025 code is something called “lateral loads”. Lateral loads are about protecting against earthquakes, which is obviously hugely important, and against high winds. Of course, we're getting a lot of new high-wind events in this country, but we've actually had zero incidents of failure from high winds on existing housing, whether that's a hurricane hitting Atlantic Canada or a derecho blowing through Ontario and causing millions of dollars of damage in trees falling and that kind of thing. We don't need to build our houses completely differently and have all kinds of engineering requirements to do it.
It's too much under the current circumstances. It's probably too much, period. That's the kind of thing we need to revisit and ask what the smart thing is to do here. What's the right amount of dealing with lateral loads versus the excessive amounts? We're experiencing this in B.C. They've started with this ahead of the national building code and have engineering costs of $30,000 and more to do this kind of work on a house that didn't require any engineering before.
We have to get things like that correct.
Liberal
The Chair Liberal Bobby Morrissey
Thank you, Madam Goodridge.
Just to clarify, we have time to do another round after we conclude this one.
Mr. Chang, you have five minutes.
Liberal
Wade Chang Liberal Burnaby Central, BC
Thank you both for being with us this afternoon.
Mr. Lee, as the national housing strategy continues to evolve, what do you see as its most important success to date, and where do you see the best opportunities to build on the progress going forward?
Chief Executive Officer, Canadian Home Builders' Association
I think that when the national housing strategy was put together a decade ago, it was very much aimed at non-market housing and social housing, and a lot of progress has been made. Obviously, you want to continue to make that kind of progress. The one thing that was missing from the national housing strategy was dealing with the rest of the market—as we say, the 95% of the market where the rest of Canadians live and want to be able to afford a home without subsidies and that.
That's where we need to go with the next national housing strategy. We need to make sure it's comprehensive so that we continue to look at rental that is being built and is affordable, but also, affordable rent leads to affordable units for home ownership as well. People should be able to afford a home. We know the stats of what Canadians want to do.
It's also critically important, if we're going to get enough housing built, that Canadians are able to afford it and are able to use their own investments to help invest in Canada's growing housing stock, which we ultimately need. We also need to remember that when it comes to social housing and supporting those most in need of core housing, we'll never be able to support them properly if people can't afford their own homes and if we don't have affordability dealt with.
Otherwise, if you don't deal with market rate affordability, you'll be building more social housing and wondering why the lineup out the door keeps getting longer. The reason will be that people can't afford their own rent and can't afford to buy, and it messes up the whole system.
In answer to your question about where we go with the national housing strategy, it needs to be comprehensive. It needs to be that full continuum so that we can truly address all elements. Otherwise, whenever one part of the continuum fails, the others get affected very quickly.
Liberal
Wade Chang Liberal Burnaby Central, BC
Thank you.
From your perspective, have the federal programs encouraged innovation and construction methods or faster project times in any meaningful way?
Chief Executive Officer, Canadian Home Builders' Association
I think we're just getting started on that. Some of the biggest barriers to actually being able to.... Let's use the example of more factory-built, because it gets talked about so much, as well as modular construction. Although we can invest more and do that more and even more effectively to build houses faster—we have a labour shortage, so there's a lot to be said for that—there are so many barriers right now in terms of regulation, interpretation of code, etc., that we really need to go after that side of things.
If we can't build the same house twice doing stick-built, it becomes completely useless to be investing in more factory-built. We need to be able to do both. We need to be able to deal with that regulatory side of things so that we can really build at scale, because factories need to build the same thing over and over again to be really effective, and I think we need to do much more on that side to really innovate more.
Liberal
Wade Chang Liberal Burnaby Central, BC
Thank you.
My riding of Burnaby Central is one of the most expensive places to rent in Canada today. In markets like Burnaby Central, how critical has the federal support been in enabling projects that might not otherwise proceed?