Human Resources Committee on May 25th, 2026

[Brad Jones]

Thank you for clarifying.

I believe it's a combination of factors.

The first one is this: Compare it with housing that was built, let's say, in the 1970s, 1980s or before—which, in most large cities, is predominantly the affordable stock. The code under which we build today is so different now. Municipal policies often have requirements for indoor and outdoor amenity space, as well as sustainability requirements. We're building far more expensive buildings than those built at that time, suited to today's conditions.

Part of it, as well, is that, for these projects to achieve targeted returns in order to attract capital or equity investment, they need to be viable and cover the costs of building that housing. You end up in a place in which—I'm speaking predominantly about large urban centres in Canada—you have a rental rate of, say, five dollars a square foot, which is quite high for the average middle-class family. Those renters are probably also able to get into the condo market. The difference between renting and being in the condo market is just the down payment.

There is also an escalation of quality expectations in urban housing, because you are sacrificing. You have a bit less space, so you're looking for a more highly amenitized lifestyle in these buildings.

[Andréanne Larouche, Bloc, Shefford, QC]

I'm going to ask you to keep your answer brief, because I have questions for other witnesses.

The Bloc Québécois has called for more support for community and co-op housing. In your view, how can that type of housing complement the housing available through the private sector?

Please keep your answer to 30 seconds. I'd like to keep the last minute for more questions.

[Brad Jones]

The private sector builds 95% of all housing in Canada. If you look at the stats on the ACLP or MLI, for example, that is the private sector collaborating with public investment to deliver rental housing in this country on a scale that it hasn't been delivered on in decades. Paired with that, it delivers housing at high levels of sustainability, as required by the program.

It is leveraging private capital and risk-taking to deliver affordable and below-market housing.

[Andréanne Larouche, Bloc, Shefford, QC]

Thank you very much.

Mr. Baird, I'm going to ask you a quick question, and I'd like you to answer in 30 seconds.

Since the cost of living began to rise, what have you seen in terms of how homelessness, evictions and housing insecurity are affecting the demand for housing?

[Sean Baird]

Daily at the TCHC we see both of those issues affecting tenants within our communities. The cost of living crisis is also affecting many people within our communities. If you want to have an impact on moderate-income and low-income Canadians, it's doubly important that government is properly incenting folks to build in ways that support rent geared to income and homes that are attainable by low-income earners within Canada.

You mentioned seniors. Almost 40% of our tenants are seniors, and over 40% are living with a disability. Those are folks who struggle to find opportunities within market-based housing, which underscores the importance of continued investment in social and community housing.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Ms. Larouche.

Mr. Reynolds, you have five minutes.

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

Thank you, Mr. Chair.

Thank you, witnesses, for coming here today. I really appreciate your taking the time.

My first question is for Mr. Jones.

There's a lot of discussion about an undersupply of homes, but then we also have a lot of witnesses saying that we now have an oversupply of homes. Do we have an oversupply or an undersupply? I'm looking for your opinion on that.

[Brad Jones]

That is a great question. Unfortunately, the answer is both. What we're seeing right now is the reaction to record-breaking immigration levels for a period of time, nearly shutting that off completely and then, as another speaker said, moving to potentially negative population growth. What we're seeing right now is that, in the short term, we have an oversupply of homes in certain areas, in certain urban regions, as a result of that massive immigration drive and then targeted programs to deliver rental housing.

Over the longer period of time, I'm quite concerned about an undersupply of homes when we see the condo market being down 90-plus per cent in new home sales and projecting British Columbia going from 44,000 housing starts to maybe 20,000 or 25,000 housing starts. We cannot catch up and redeliver that baseline level of housing in future years.

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

Thank you.

You were talking about measuring housing starts. Currently, the CMHC considers a start at the point of getting above grade.

I've personally seen projects get to the point at which a hole has been dug and a foundation has been started, but then funding collapses, the contractors run out of money or the client runs out of money. What, in your opinion, would be an accurate measure for housing starts? When it's coming up out of the ground, it's well under way, but that's not an accurate measure. In your opinion, what would be a good way to measure starts?

[Brad Jones]

I believe we need to go from one tool to a few different tools. To me, it would be a combination of things. Number one would be tracking pre-sales of new apartment projects, and number two would be tracking rental projects. If CMHC is 80-plus per cent of the new rental financing market, that's a great place to track those stats of what's intended to move forward. Then it would be tracking excavations—what is getting into the ground—and then, I would say, tracking completion. You would end up seeing those projects that stop fall off, but that's a valuable part of the data. If there's a project that stops halfway through, something was fundamentally wrong with those economics.

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

In one of your answers, you talked about building codes. I've been a construction electrician for 20 years, and I've worked on many projects, including high-rise and residential construction.

Are changes to building codes adding significant cost for the end-users and purchasers of residential homes?

[Brad Jones]

Yes, the changes to building codes are significant as they move from the national building code into the provincial codes and then, in a few examples across the country, into municipal building codes as well. We looked at the last 10 years of building code updates, and it's hard to track, but we think that there have been over 2,000 individual changes in building codes when you filter through all the local sustainability codes built into that. I want to clarify that these are not core life-safety changes. These are predominantly social policies that have made their way into building codes.

With this cycle of building code updates every few years, it's been rare in the last decade at our organization that we've actually built two buildings under the same set of codes. When we talk about modernizing housing construction, it's really hard to get into a manufacturing mindset when the codes change every project cycle.

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

In your opinion, are buildings being overbuilt right now?

[Brad Jones]

I believe so, yes, in just about every facet of the code.

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

Has the building code contributed to significant pricing, essentially pricing middle-class families out of purchasing homes?

[Brad Jones]

It is a major component. The cost increase is driven by baseline code increases, and factoring in sustainability increases, yes it has. When you get to the upper ends of sustainability targets, we're no longer even supporting Canadian businesses. We're importing construction materials, predominantly from Europe, to build Canadian homes.

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

That's interesting.

[The Chair, Liberal, Bobby Morrissey]

Thank you, Mr. Reynolds.

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

Thank you.

[The Chair, Liberal, Bobby Morrissey]

That was a very interesting line of questioning.

Mr. Saini, you have the floor for five minutes.

[Gurbux Saini, Liberal, Fleetwood—Port Kells, BC]

Thank you to the witnesses.

CIBC economists in 2026 say that the price of housing is too high for buyers but too low for the construction industry to make any profit.

What can the federal government do to balance this, Mr. Brooks?

[Michael Brooks]

I know that article, and I know the economist who said that. I think it was a bit tongue-in-cheek.

There are segments of the population that can't afford the rents that are on offer and can't afford the housing that's on offer, but not enough.... There are projects still proceeding in this country, and some are for rental projects in certain markets in which the fundamentals are strong.

Mr. Jones and I certainly focus on the larger metropolitan markets, in which it's a bit of a challenge. I think the expression was a bit tongue-in-cheek, and I will leave it at that.

[Gurbux Saini, Liberal, Fleetwood—Port Kells, BC]

Thank you.

Mr. Jones, I live in Surrey, and I hear a lot of people talking about the foreign buyer tax being removed, the stress test being removed, and longer amortization.

Can you give your viewpoint on those three issues? What impact would there be if government removed those three barriers?

[Brad Jones]

Thank you for the question.

Regarding the foreign buyers tax, that is an overly punitive policy measure. What we should be looking at, if we're interested in that type of a control, is what is often referred to as the Australia model. Australia has implemented a policy in which foreign purchasers can participate in buying new housing but not housing already existing in the market, so that they're helping stimulate the construction of that new housing.

This is not asking for rampant foreign speculation to participate in the market, but there are professionals, even in our office, who have moved here from another country to work—to try to build housing in Canada—and who cannot purchase housing in Canada or cannot do so without paying a supplementary tax on it. I think that's strictly uncompetitive for attracting talent to our country.

Moving on to the stress test, it could be phased in and out based on what market interest rates are doing. Other countries have done this as well. It was a very different environment when the stress test was put in place from the environment we're in today or 12 months ago. Having a flexible stress test that doesn't make people qualify at 7%, 8%, 9% interest rates would be quite a smart policy. It's something that other countries have done with their stress tests so that when interest rates rise, you're not shutting the market off entirely.

On amortization, that's something for buyers and banks to work out. We have a banking sector that has been the envy of the world for its ability to protect against downside risk. Rather than having a one-size-fits-all approach, it would be prudent to open up flexibility for the banks, who are really the ones underwriting these clients, underwriting these projects, to make more informed decisions on those key things. The housing market challenges in Canada vary greatly across the country. There may be more acute issues in your riding of Surrey than in other parts of the country.

[Gurbux Saini, Liberal, Fleetwood—Port Kells, BC]

Thank you.

Housing starts play a major role in the economy because they create high-paying jobs. They also create a lot of revenue for the government in taxes. What can we do to make sure that the economy stays strong and we still have those factors in play?

I'll ask Mr. Baird his opinion on that.