Time for concrete action to unlock homeownership for Canadians

We need more housing in Canada. No matter where you live in the country, Canadians are struggling with housing affordability and choice. Canada is in a tough spot. Decades of underbuilding have led to a lack of supply, limiting choice and driving up prices. And now rising interest rates have made access to homeownership even harder, which is crippling new construction home sales, challenging the industry, and slowing housing starts. With interest rates rising steadily in 2022, new construction housing sales slowed to a trickle. As a result, housing starts have slowed dramatically, and we could see as much as a 30 per cent drop this year—not good news for much-needed housing supply and housing affordability. There are, however, policy moves the federal government could make today to bring a more holistic approach to housing affordability and improve the outlook for families and our economy. Residential construction drives economic activity right across the country, creating 1.5 million jobs and flowing more than $211-billion dollars into communities every year. Whether you own or rent your own home, the hard-working people in our industry build, manufacture, renovate, and retrofit single-family homes, high-rises, and everything in between, developing the communities Canadians call (or want to call) home. For the industry, construction costs increased substantially throughout the COVID-19 pandemic and have not receded. While lumber prices have come down from record highs, other materials are still much more expensive and supply chain challenges continue. According to the Canadian Home Builders’ Association (CHBA) Housing Market Index, labour costs are up 28 per cent and the construction material costs for a typical 2,400-square foot home are still up $70,000. All of these factors, combined with red tape delays and expensive changes to codes and standards, are making it tougher for those looking for homes. Kevin Lee is the CEO of the Canadian Home Builders’ Association. Photograph courtesy of the CHBA Over the next decade, under normal circumstances, we would build about 2.3 million homes. But we have a chronic housing shortage in Canada, so on top of that, federal policymakers have rightly identified that we need an additional 3.5 million homes over the next decade to make up our housing deficit. Currently, we’re not making progress against either the annual or the long-term housing supply targets. The government needs to make sure that it takes concrete steps to support more housing starts, and that its own actions do not get in the way of increasing housing production and improving affordability. One important step would be to recognize the specific challenges for first-time homebuyers. Lower interest rates would certainly help; but we need more to enable buyers to get into the market on a go-forward basis, through lowering the stress test to qualify for a mortgage, returning to 30-year amortization periods for first-time buyers, and avoiding more mortgage rule tightening (given the already very strong profile of borrowers). We need to give new buyers a better chance of overcoming the initial hurdles to owning a home. We have done our homework to uncover ways that the federal government could address costs that impact affordability. One simple move would be to lower GST on new homes. When the GST was introduced in 1991, there was a commitment to adjust the New Housing Rebate every two years. That has not happened, and housing prices have more than doubled since, leaving these rebates way out of line with current home prices. With the stroke of a pen, the government could increase the thresholds for the GST/HST New Housing Rebate, taking thousands of dollars off the price of a new home for Canadians. We are also looking for a collaborative approach to ensure that building codes do not add unnecessary barriers and costs to the home building process, taking an innovation-first approach to regulation. To build more houses, we need more people. The government needs to help to ensure we have the labour force needed to increase housing supply, from support for skilled workers and apprenticeship programs in our domestic construction industry, to improvements to immigration to bring in the right workers. And even with those actions, there won’t be enough people to double housing starts, so increasing productivity in the industry is one of the necessary solutions. We need to be able to build more homes with fewer workers, so we are proposing an industry transition strategy that will do just that, by seeking support for investment in modular and factory-built technologies through tax credits, an innovation fund, and strategic financing. And we need to support renovation. There are many measures the government should implement to support upgrading our housing stock while meeting other policy goals: from first-time homebuyer renovation tax credits, to enabling the GST rebate to apply to Net Zero renovations, to supporting the valuation of energy retrofits through EnerGuide Rating System labelling. CHBA members have travelled to Ottawa this week to meet with decision-makers to help address affordability challenges and build more homes for Canadians, to ensure we can meet Canada’s housing demand today and over the next decade. We are ready to work together with the federal government to unlock homeownership for Canadians. Kevin Lee is the CEO of the Canadian Home Builders’ Association. The Hill Times

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Time for concrete action to unlock homeownership for Canadians

There are policy moves the federal government could make today to bring a more holistic approach to housing affordability and improve the outlook for families and our economy.

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