Housing Challenges and Potential Solutions
As realtors, we have a vested interest in the success of the Canadian housing market. Finding effective solutions to the current housing challenges, however, remains complex. A key element of the proposed strategy is the plan outlined by the Carney Liberals, which aims to construct 500,000 housing units per year over the next decade. Let’s start with - I will believe it when I see it.
As we’ve mentioned in previous newsletters, this would nearly double Canada’s highest-ever annual housing starts of 274,000 units recorded in 1974. It’s an ambitious target that would require substantial structural and policy changes.A major component of the plan involves creating a new federal crown corporation, Build Canada Homes, tasked with developing housing across the country. While the establishment of a new development company is one approach, there are additional options to consider:
- Development and Permit Fees:
Many fees associated with development are charged at the municipal level, outside of federal jurisdiction. Reviewing development fees, permit fees, and local water utility charges could be crucial. If these fees are acting as barriers to new construction, options such as capping fees or allowing payment upon final mortgage takeout, rather than upfront, could be explored. - Approval Timelines:
While municipalities like HRM (Halifax Regional Municipality) have made improvements, many developers still experience lengthy approval processes — some projects have been in the queue for over five years. Streamlining approval timelines could help accelerate new housing starts. - Policy Coordination:
Current federal initiatives prioritize facilitating the construction of fourplexes, supported through programs like the CMHC design catalogue, and requirements under the Housing Accelerator Fund. However, challenges remain: for example, CMHC’s MLI Select mortgage insurance program and the Apartment Loan Construction Program (ACLP) require a minimum of five units, creating a gap for fourplex projects, despite many municipalities, including HRM, making zoning allowances for four-unit residential lots. - Incentivizing Private Investment:
Doubling annual housing starts will require significant private investment. Programs similar to the Multi-Unit Residential Building (MURB) programs of the 1970s and 1980s could be reintroduced, allowing individuals to write off development and building costs against other income sources, incentivizing participation in housing development. - Tax Incentives:
Reducing costs at the federal level could also help. For example, eliminating the federal sales tax on new residential construction — without allowing provinces to reintroduce a similar tax — could reduce costs. Additional incentives could be provided to provinces that also eliminate their portion of sales tax on new builds.
- Current Property Owners – A significant increase in supply, to record levels, could dampen price growth and potentially cause prices to decline.
- Buyers – See above. A surge in supply means more choice. Have you seen the year-to-date stats in this newsletter? There simply aren’t enough listings right now.
- Renters – Rents are already showing signs of softening. A rise in available rental units could further slow the sharp increases we’ve seen over the past five years.
- Landlords – Did you catch the note to renters? A potential flood of new units could bring a level of competition you haven’t seen before when it comes to attracting tenants.
That’s a conversation worth having—maybe even over a coffee.
We’d love to chat! Give us a shout at 902.221.4880 or send an email to jburt@avalonrealty.ca.
