Solving the Housing Crisis: A Commentary on the Federal Government’s National Housing Plan
“All young Canadians are asking for is a fair shot. They deserve the same opportunity to rent or own a place of their own as every other generation that came before them. We need to restore that dream. Canada has extraordinary potential, but to fully realize it we must get housing right.”
This simple but profound statement lies at the heart of Solving the Housing Crisis — Canada’s Housing Plan, released April 12, 2024, by the federal government. It is a statement that arguably every Canadian can agree on.
We must get housing right — for young Canadians and for every other person struggling to find an affordable and decent place to live in our country.
Solving the Housing Crisis is perhaps the most plain-speaking description yet of Canada’s housing affordability crisis. The Plan sets out a commendably clear set of actions through which we can, in the words of the writers, “restore the promise of Canada, where every generation can afford a place to call home.”
There is a lot to like in this plan. The imperative now is to bring it to life and for our governments to step up with fast and collaborative actions. Moreover, governments must make further commitments to bridge the chasm between rental and homeownership.
Diagnosing the Problem
Housing affordability has been in the media headlines and talking points of all elected leaders for well over two years. Hence, most of the Plan’s themes are now familiar and include:
· Making public land and underused private buildings available for housing
· Changing zoning to increase density
· Decreasing times to approve new home construction
· Improving access to low-cost financing
· Driving construction innovation and technology
· Reining in government fees
· Expanding the skilled trade workforce
· Removing barriers to homeownership
The Solution
No one can criticize the Plan for being too timid or narrow in its scope. It frames an appropriately ambitious agenda around three pillars:
1. Building more homes
2. Making it easier to rent or own a home
3. Helping Canadians who can’t afford a home
Many of the Plan’s initiatives are repackaged or amplified versions of initiatives already underway or recently announced, including in the 2024 federal budget. Others are aspirational concepts yet to be translated into workable solutions. In all, there is much more to like than to criticize. Some notable standouts:
· Injecting more cash into the Affordable Housing Fund. The Affordable Housing Fund is the re-incarnation of the Co-Investment Fund announced back in 2017 when the federal government first returned to the housing space. The Fund’s renewal and expansion reflect a recognition of the hard reality that more Canadians than ever need access to below-market housing — and it won’t come cheap. Budget 2024 promises to add $1 billion to the Fund between 2024 and 2029, expanding it to $15 billion. Will it be enough? No. Does it keep us moving in the right direction? Absolutely.
· Time-limited incentives. During a crisis, we must act like we are in a crisis. This means modifying rules to reflect the needs of the crisis. The accelerated capital cost allowance for new apartments is a useful example. Increasing capital cost allowance on rental apartments from four to 10% changes the economics by improving the return on investment. The Plan promises this change for projects completed through to 2036 — providing a 12-year run to get from crisis to a steady state. Governments at all levels would be well served to identify other time-limited initiatives and rule changes to put in place over these next several years to make it easier and more likely that the housing we need gets built.
· Doubling down on homelessness. The Plan is 26 pages long, with two full pages devoted to strategies to reduce homelessness. It asserts, “We will not have solved the housing crisis while there are people living in tents in communities across Canada.” Amen to that. The plan lists initiatives addressing encampments, asylum seekers, veterans experiencing homelessness, and the need for culturally relevant responses to homelessness.
· Enabling homeowners to be part of the solution. Fourplexes and secondary suites on existing residential lots can only address a fraction of our housing problem, but they are not nothing. Making fourplexes as-of-right will shift the sense of entitlement among the established homeowner class, particularly those of our generation born in the 1960s and earlier. Beyond this, Budget 2024 has introduced a “Canada Secondary Suite Loan Program” to give homeowners up to $40,000 in low-interest loans to add secondary suites to their homes. While $40,000 is a pretty low ceiling given the price of renovations, this program serves up both a monetary incentive and a symbolic nudge toward what future homes and communities must look like.
Missing Pieces and Imperatives to Success
The Plan is not the first attempt at a comprehensive diagnostic and prescription for addressing the housing affordability crisis. The February 2022 report by the Ontario Housing Affordability Task Force, of which Ene was a member, was also commended by many as providing one of the most far-reaching roadmaps to date for addressing housing affordability, at least in Ontario.
Yet, two years later, the housing affordability crisis has deepened. Increasing numbers of developers are having to delay or abandon new builds due to negative economics. Local Habitat organizations across the country have more opportunities to deliver affordable ownership than ever before, but at higher costs than we could ever have imagined. Habitat for Humanity Canada’s Affordable Housing Survey and other polls demonstrate that the level of despair, particularly among young people, has increased and that growing numbers of immigrants are considering leaving or not coming to Canada at all.
Against this backdrop, some important pieces and prerequisites remain to realize the Plan’s ambitions and deliver the urgently needed housing solutions for the Canadians who need them most.
· Do it faster. Making government land available for housing, reducing approval times, and making lower-cost financing available have been recurring promises for the last several years. There has been limited progress. Organizations like Habitat for Humanity continue to navigate cumbersome processes to access land and funding and then to get to shovels in the ground. Good intentions must be replaced with bold and purposeful action and we, the public, must tolerate and encourage greater risk-taking by our politicians and public servants. This is the formula for progress during a crisis.
· Make inter-governmental collaboration real. The Plan pleads for inter-governmental (and multi-party) collaboration and sets out a fine summary of who is responsible for what and what a collaborative approach needs to look like. Indeed, the Plan’s very existence is a testament to the pressure from all — including the official opposition and many of the provinces — for the federal government to take more purposeful action. Now, the question is whether all these players can reconcile the public’s need for collaborative and urgent action to respond to their housing needs with the political parties’ ambitions inherent in election cycles. It may seem naïve to suggest that less politics and more collaboration is possible — but this country has demonstrated its capability for such an approach during a crisis, and we must do so again.
· Move past rhetoric and window-dressing on homeownership. Homeownership remains deeply embedded in the psyche of Canadians — both those born here and those who arrive with dreams of building a better future. And well it should. Homeownership is a proven pathway for building generational advancement and strong communities. Like most housing reports and statements, the Plan speaks to restoring the dream of homeownership. With average home prices over $700,000, however, the partial antidotes it offers — including 30-year amortizations, the previously introduced First Home Savings Account (a paltry $40,000), and increased withdrawal limits from RRSPs for home-buying — will only benefit a fraction of the households the federal government seeks to help.
In focusing on accelerating much-needed purpose-built rental housing without also creating meaningful pathways to homeownership, our governments risk dividing Canadians into a rental class and an ownership class. This would lead to a Canada in which ownership becomes a function of the home you are born into and is virtually out of reach for all but the most wealthy newcomers. This is not the formula for a prosperous and inclusive future.
Programs like Habitat for Humanity’s deliver a middle ground between rental housing and market ownership. We provide a viable avenue for working families with modest incomes to access the benefits of homeownership. Homeowners in programs like ours overcome barriers of large downpayments and large mortgages and start building equity in a home they own. As they move into owned homes, they create a ripple effect of vacancies, allowing other families to move along the housing system from homelessness to shelter to rental and on. And as the new homeowners build equity and incomes in programs like ours, they have the chance to move on to market ownership, freeing up affordable ownership homes for the cycle to be repeated.
There is so much to like in the federal government’s new Solving the Housing Crisis plan, but it awaits actions to meaningfully bridge the gap between rental and ownership. Low-cost financing, relief from HST/GST, access to government surplus land, and incentives for investors are all strategies in place to propel rental housing that should also be available for non-profit affordable ownership homes. This would round out the federal government’s Plan and increase the chances of realizing the dreams of Canadians that it promises to restore.
Let’s not let Solving the Housing Crisis be another political platform to discard or derail. Let us all, as Canadians, rise to the challenge with purpose and solidarity. Let us deliver to all Canadians the Canada — and the homes — they deserve.
Julia Deans is President and CEO of Habitat for Humanity Canada.
Ene Underwood is CEO of Habitat for Humanity Greater Toronto Area
