Housing affordability has been a major concern for many Canadians in recent years, with many observers noting that the rate of new construction has not kept up with population growth. (Photo by Artur Widak/NurPhoto via Getty Images) · NurPhoto via Getty Images
Newly released details about the federal government’s Build Canada Homes (BCH) agency reveal “troubling limitations,” with key housing shortages and regulatory barriers remaining unaddressed, according to a housing policy think tank.
A document outlining the government’s priorities and criteria for the program to address Canada’s housing crisis does offer “one of the clearest income-based affordability definitions in federal housing policy,” wrote Mike Moffatt, founding director of the University of Ottawa’s Missing Middle Initiative (MMI).
But in other areas, the program falls short, and “still lacks clear federal objectives,” Moffatt says, increasing the chances that the funds will be spent without adequate focus.
BCH was announced in September as a key pillar of the government’s project to address Canada’s housing crisis. Housing affordability has been a major concern for many Canadians in recent years, with experts noting that the rate of new construction has not kept up with population growth. The investment policy framework for BCH was released Saturday, defining the agency’s objectives and partnership and investment criteria.
BCH will work alongside the Canada Mortgage and Housing Corporation’s (CMHC’s) Affordable Housing Fund to channel federal dollars into affordable and mixed-income housing, especially on federal lands. The program will rely heavily on partnerships with non-profits, municipalities, and Indigenous organizations to identify and build priority projects. The framework limits eligibility to “shovel-ready” projects that can commence construction within 12 months.
A potentially major flaw in the framework, Moffatt argues, is the prioritization of “small, low-density homes,” with the document trumpeting standardized building designs featured in the CMHC’s catalogue — which consists almost entirely of one- to three-storey buildings.
“Given that Canada has a substantial shortage of three-bedroom and larger homes, and the need for our cities to densify, BCH’s prioritization of small, low-rise homes is a peculiar choice,” Moffatt wrote.
Ottawa has frequently stated that it will encourage innovation and modern methods of construction (MMC), such as factory-built housing. But the framework is short on detail in some areas, Moffatt says, and what detail there is suggests gaps that will limit any program’s effectiveness. In the early stages, innovation tends to come at a cost premium, the MMI critique notes.
“For BCH, that means the more they focus on innovation, the fewer units they can acquire per million dollars,” Moffatt wrote. “It is still unclear how BCH will navigate this trade-off.”
The framework also highlights procurement as a key lever for MMC, explicitly excludes funding for business development or R&D — a set-up that Moffatt argues “condemns new technologies and companies to a ‘valley of death.’” Furthermore, the federal framework doesn’t address the fact “that zoning and building codes often make the most promising innovations illegal to build,” he writes.
Nonetheless, MMI had high praise for the nuanced and detailed definition of affordability in the framework, which declares that “housing is affordable when rents are no more than 30 per cent of before-tax income (based on median household income of an area).”
With that said, Moffatt notes that BCH is explicitly designed for social housing and is not intended to solve many of the housing problems faced by the middle class.
“It is not a program designed to directly accelerate market-rate rental construction or ownership opportunities for middle-class families, though it may have some positive indirect effects on those markets by accelerating the use of new technologies.”
John MacFarlane is a senior reporter at Yahoo Finance Canada. Follow him on X @jmacf.
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