Thank you for having me here today.
The federal government has set an ambitious target of reaching 500,000 annual housing starts by the year 2035. An ambitious target is admirable, but it's no substitute for a goal, because a housing target is a means. It's not an end. It's not a goal. A young family in search of a home does not care how many housing starts there were last year. They care about finding a home that they can afford in their community and that meets their needs.
Canada's lack of a middle-class housing goal creates a policy vacuum that the Office of the Federal Housing Advocate has attempted to fill with a recent report advocating a 2060 target to address the middle-class housing crisis. That goal or target, if adopted, would cement a future of intergenerational inequality for generations Z, alpha and beta, threatening to tear apart the country's social and economic fabric.
The federal government needs a housing plan with a clear goal, a reasonable time frame and a set of quantifiable objectives, such as that every middle-class dual-earner couple in their thirties should be able to afford to purchase or rent a new entry-level home in any community in the country suitable for a household of five by 2035. That's just one example.
There are many goals that the federal government could come up with, but it needs to have one, and we should be clear that the purpose of such a goal is not for the federal government to engage in central planning and deciding where homes are built and at what price. Rather, it is to set up the conditions for success: to understand what is working well in the current housing system and what requires improvements. Defining a clear goal clarifies the trade-offs in public policy, ensuring optimal value for money.
Most importantly, clear goals should be based on the attainability of new housing, with an emphasis on “new”. Governments should not be in the business of trying to manipulate resale home prices. Rather, they should be ensuring that builders can create suitable options that families can afford and that the market can respond to changing conditions, such as unexpected population increases. Then government can fill in the gaps with below market rate housing where necessary.
Multiple objectives with intermediate targets are needed. A simple target of 500,000 homes by 2035 says nothing about the size of those homes or, as Mr. Lee pointed out, whether or not they're owned or rented, where they are located, how attainable they are and what the policy path to get there will be.
That path is important. Achieving that simple 500,000-start target is becoming increasingly out of reach, as the CMHC projects that housing starts will decline over the next three years, falling below 220,000 units by 2028.
Now, this decline can be reversed, but only if the federal government develops a clear plan of how it will achieve that target and links policy reforms to policy outcomes. Take Build Canada Homes, for example. The federal government's flagship program lacks key performance indicators and accountability measures. We do not know or have not been told how many housing starts this program will contribute to each year.
Finally, I want to say a word of caution about the housing start metric. Unlike our global counterparts, the CMHC does not record a project in its housing start data until the foundation meets grade, meets ground level. It is a poor real-time indicator of the health of the housing construction sector, as it fails to reflect investment decisions made anywhere from one to three years before the CMHC records it as a housing start. At the Missing Middle, we've been suggesting that the CMHC should also consider tracking excavations, as the U.S. and Australia do, to provide a better real-time indicator of new construction activity.
Thank you for your time. I look forward to your questions.