The housing canaries are singing

Richard Lyall

With Canada’s population growth setting new records, and the fact our housing supply is severely strained, to say the least, it is time to rip off the band-aids and tackle the crisis with renewed vigor.

The housing problem has been festering for decades under successive governments at all levels and political stripes. But the canaries are singing, and the effects of the calamity are now hitting home.

There is still housing and condo work ongoing, but the pipeline is emptying fast. Sales are down and many projects have been put on hold.

Housing affordability has worsened considerably over the past decade, with Vancouver, Toronto and Hamilton among the least affordable cities in North America when comparing home prices to income. An earlier report noted all three are more expensive than New York City or Los Angeles.

Young people are leaving for greener pastures elsewhere, in large part due to the fact housing is unaffordable. In Ontario, a recent survey revealed that more than 40 per cent of post-secondary graduates are considering leaving the province because of the housing affordability crisis. The survey found 75 per cent of respondents want to own a residential property, but only three in 10 are optimistic.

There is no time to waste. We can no longer afford to fiddle around the edges of the problem. Political leaders of all beliefs must work together and with the residential construction industry on solutions.

Those who build the homes – the private sector – must be included in the discussions. Recently, we learned that the City of Toronto, for one, intends to build affordable housing without private developers. This would be a colossal mistake. Private developers build more than 90 per cent of homes. Excluding developers and builders and their expertise by trying to fly solo would only lead to problems.

The federal government’s resurrection of a post-war effort to develop a catalogue of pre-approved home designs to accelerate the homebuilding process also does not commit to working with the private sector.

CMHC deputy chief economist Aled ab Iorwerth recently penned an open letter pointing out that participation of the private sector is critical.

“We need both a range of government policies and investments and increased participation from the private sector,” he wrote. “The scale of the challenge is so large that the private sector must be involved — governments cannot do this on their own.”

He also noted that achieving affordability in Canada by the next decade will require a comprehensive and co-ordinated effort that combines private investment, social responsibility and government solutions.

“The perfect storm of these three elements can bring about transformative change and improve housing affordability for everyone living in Canada now and in the future,” he stated.

Which brings me back to my point.

All levels of government must step up their efforts and work in unison with the residential construction industry to build more housing.

To accomplish that, governments must reduce taxes, fees, levies and development charges on new housing; streamline the development approvals system so housing can be approved and built faster; and embrace and invest in offsite construction methods as a means of speeding up construction of homes.

There’s a ridiculous amount of red tape that developers and builders must wade through to build housing. It can take years for a project to wind its way through the labyrinth and get approved.

Taxes, fees, levies, and development charges are also choking the market and making homes unaffordable. Presently, these add-ons account for 31 per cent of the cost of a new home. It is difficult for first-time homebuyers to get a foothold in the market when they’re paying such excessive fees.

For starters, governments must cut the GST and HST for buyers who are purchasing principal residences, similar to what they did earlier with new purpose-built rental buildings. They should also allow RRSP funds to be used by first-time buyers who are purchasing principal residences and those who are downsizing. This would free up more housing for those looking to get into the market.

We also need a modern, digitized development approvals process that would move construction of housing along more quickly. The current process in Ontario, for instance, has been marred by well-documented inefficiencies for decades.RESCON has played a pivotal role in the One Ontario research project by AECO Innovation Lab that provides a data exchange layer that connects siloed information and processes across the many authorities involved in approvals. It is now ready to deploy but requires adoption by the provincial government.

We must also look to offsite construction as a means of boosting housing supply. We are encouraging government leaders to provide financial assistance and tax breaks to incentivize companies to build more modular housing manufacturing plants in Canada and provide research and development funding so the industry can keep pace with new technology and building techniques.

Offsite construction could be one of the solutions. We would begin manufacturing new homes the same way we mass produce cars – by building them in a factory, and then trucking them to the site for assembly.

Lack of affordable housing will kill our economy. We must show companies that we have adequate and affordable housing to retain the talent they need. But we must act quickly. The clock is ticking.

Richard Lyall is president of the Residential Construction Council of Ontario (RESCON). He has represented the building industry in Ontario since 1991. Contact him at media@rescon.com.