How many politicians does it take to fix Canada’s housing shortage? The answer, apparently, is all of them.
Liberal leader Mark Carney has
an ambitious plan
to double the annual housing output to 500,000 homes a year. Conservative leader Pierre Poilievre
is promising
460,000 homes a year and big tax breaks for home buyers. Ontario Premier Doug Ford has pushed hard for more housing with limited results. Now, the City of Ottawa has launched a housing innovation task force.
Everyone wants to be seen to do something, and yet the mismatch between housing demand, housing supply and housing affordability remains.
The city’s new task force, which is expected to deliver a report in late summer or early fall, has two things to recommend it in this crowded field. First, the group consists mostly of Ottawa home builders and others from their industry. In other words, people who know something about actual house building.
Second, it’s at the municipal level, the one most familiar with development. As a general rule, the farther a government is from city government, the less useful is its approach for housing.
In a
Citizen article
earlier this week, Mayor Mark Sutcliffe explained the rationale behind the task force. Ottawa has to do its bit to help get housing built faster.
The new city task force will look for solutions others haven’t been able to find, but “cutting red tape” and “streamlining processes” are unlikely to make much difference. Municipal politicians have been talking about this for 20 years.
Every level of government will tell you that building houses faster is important, but Sutcliffe raises an interesting point in his article. While its processes might be considered slow, the city has approved 53,000 units for construction over the last two years, but only 10,500 have advanced to the building permit stage.
Which brings us to the heart of the matter. Housing starts are slow, but not because builders can’t build more houses. The problem is that there aren’t enough people who can afford to buy houses at today’s prices. That’s something a municipal government can do little to change.
The Canada Mortgage and Housing Corporation’s 2025 forecast says that Ottawa’s new home starts will be flat this year and for the next two years, settling in at about two-thirds of the number of starts the city had in 2022. Nationally, starts are expected to modestly decline over the same time period.
For real change to take place in the housing market, demand, supply and affordability all need to be in alignment. Demand is certainly there and both Liberals and the Conservatives are focusing on supply and affordability. Each party promises dramatic results, but has a different approach.
Carney’s plan would create a new government agency to organize giant subsidies for modular home companies and for social housing, rather than an affordability increase in the broader market. The Liberal plan rests on the notion that the federal government and subsidized modular home companies would be the most cost-effective supplier of new housing.
Polievre’s plan to eliminate sales on new homes under $1.3 billion and reduce development charges is broader and more direct. He estimates it would save the buyer of a new home $115,000. Poilievre’s tax cuts would help lower prices, but he wants to do it partly by making municipalities absorb the costs of new development. He wants a financial penalty for city governments that fall short of his housing goals.
Both of these approaches share the same flaw. They would either reduce government revenue or increase government spending. That means a new government of either party would have to find offsetting cost reductions elsewhere or, more likely, borrow more money to maintain existing levels of service. Either way, new home owners would be subsidized at the expense of everyone else.
Here’s a different thought. Maybe politicians at all levels could focus their attention on developing a robust economy so that people could buy and pay for houses with their own money, as they’ve traditionally done.
Randall Denley is an Ottawa journalist and author. Contact him at [email protected].
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