New housing minister should work with provincial and municipal partners to ease supply shortage, says executive
Canada has a new federal housing minister – and his first priority should be coordinating with other levels of government to devise a unified approach to tackling the housing crisis, according to the president of real estate giant RE/MAX Canada.
Christopher Alexander (pictured) told Canadian Mortgage Professional that the chronic inventory shortage at play in the housing market could only be solved by a cohesive strategy involving each jurisdiction – federal, provincial, and municipal – and that new housing minister Sean Fraser needed to tackle that challenge head-on.
“Cooperate with the other levels of government to create a [joint] housing strategy,” Alexander said when asked what Fraser should immediately focus on. “I’ve been in a lot of meetings with every level of government and the private sector, and these guys point fingers at each other.
“Until they start working together and share the same common goal and interest, we’re going to continue to have challenges with inventory. So we need a three-level government housing strategy for the country. That’s what I’d be encouraging.”
Calgary-based broker Max Singh highlights the ongoing challenge of prospective homebuyers being outbid due to fierce competition and rising prices. https://t.co/GPIX714Dok#mortgagenews #mortgageindustry #mortgagebroker #housingmarket
— Canadian Mortgage Professional Magazine (@CMPmagazine) August 11, 2023
Steep challenge ahead to restore housing affordability in Canada
Fraser inherits a daunting file, with Canada currently failing gravely in its efforts to build enough homes to ensure housing affordability for all Canadians by 2030.
Canada Mortgage and Housing Corporation (CMHC), the country’s national housing agency, has indicated an additional 3.5 million homes need to be tacked onto its yearly targets for the next six and a half years, with the annual pace of home construction currently well below what’s required.
Housing starts fell last year compared with 2021, from 271,000 to 260,000, and are expected to further plummet in 2023 with between 210,000 and 220,000 units expected.
Speaking in Hamilton at the end of July, prime minister Justin Trudeau said housing was not a “primary” federal responsibility. “It’s not something that we have direct carriage of,” he said.
However, Alexander called on policymakers at every level to work together to help haul Canadian housing out of its current morass.
A modest recent increase in available supply in the Ontario and British Columbia housing markets, he said, would do little to improve matters.
“I am not encouraged by anything I’m seeing right now, unfortunately. It’s a major issue,” he said. “Like I said, everybody’s pointing fingers at each other, but until they’re all working together – municipal, provincial, and the federal government – I just don’t see how we’re going to meet our targets. I really don’t.”
The government has introduced a range of measures aimed at easing the path to homeownership for would-be buyers, including the First Home Savings Account and First-Time Homebuyer Incentive, although critics charge the latter with being an inadequate policy in pricier markets.
How can a faster pace of home construction in Canada be achieved?
High interest rates, surging costs and ample red tape have all presented significant barriers for home construction, issues that Alexander said need to be front and centre for authorities at all levels in their housing policies.
“Development costs, especially in Ontario, are absurd,” he said. “And so it’s hard to be profitable as a developer. They’re building these super-small units because they’re trying to squeeze the [highest] amount of profit they can, because they’re businesses.
“To me, it’s a whole reorg, rethink [needed] to find a way to stimulate supply. We need tax incentives for purpose-built housing and affordable housing as well, and I’m not seeing any of that.”
Inventory shortages have only been compounded by the fact that the housing market, despite cooling substantially over the past 16 or so months, is still seeing plenty of demand, even though many sellers ae unwilling to list their homes because of the near certainty of higher interest rates if they move to a new property.
“There’s still a lot of demand, and again, people really want to own real estate in Canada,” Alexander said. “We’ve seen some pullback in the recreational markets, and certain price points under $1 million in Ontario, BC [are] really, really good.
“So I think the demand picture is still there. It’s not like people don’t want to buy – it’s just there’s a bit of a standoff between buyers and sellers still.”
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