Feds make $1.5-bn bet on co-op housing
The Canadian government has rolled out a $1.5-billion program to build more co-operative housing, fulfilling a promise made in the federal government's 2022 budget.
Housing Minister Sean Fraser announced the launch of the program in Winnipeg, highlighting it as the largest federal investment in co-op housing in 30 years. The program is expected to build thousands of new homes by 2028, with the exact number depending on the location of the homes.
“The real reason that we want to invest in co-operative housing is not only so we can create a lower cost of rent today, but that affordability will be preserved for the long-term when profit is not entered into the equation,” Fraser told The Canadian Press.
Unlike traditional rentals, co-op housing is managed by residents without the involvement of an external landlord and typically operates on a break-even basis, making it a sustainable solution for affordable housing.
Co-op collab
The federal government worked closely with the Co-operative Housing Federation of Canada, which represents over 900 co-ops, and other key stakeholders to design the program.
This initiative is part of a broader strategy released this spring to address housing affordability issues. Prime Minister Justin Trudeau's administration is also leveraging this program to connect with younger voters, addressing economic issues such as housing affordability.
Recent polls indicate that housing affordability is a significant concern for this demographic, causing many to reconsider their support for the Liberal Party.
Fraser said the program will prioritize projects that support women and Indigenous communities, aiming to create a more inclusive housing landscape.
“Canada used to have a much healthier proportion of its housing stock exist outside of the market,” the minister said, acknowledging decades of insufficient funding in non-market housing by both Conservative and Liberal governments. “My view is that Canada needs a much healthier housing mix if we’re going to reflect the needs of the Canadian population.”
According to the Organization for Economic Co-operation and Development (OECD), only 4% of Canada’s housing stock was social rental housing in 2020, compared to an OECD average of 7%.
Funding and application details
The program will provide $1 billion in loans and $500 million in grants administered by the Canada Mortgage and Housing Corporation (CMHC). Co-op housing providers can apply for the first round of funding from July 15 to September 15.
The announcement follows the Bank of Canada's recent interest rate cut, a move expected to reduce building and borrowing costs. While acknowledging that this alone won't solve the housing crisis, Fraser expressed optimism about moving in the right direction.
Read next: How many more times will the Bank of Canada cut rates in 2024?
“I don’t want to suggest that 25 basis points is suddenly going to cure the housing crisis,” said Fraser. “But it’s very clear with the Bank of Canada’s decision that we have turned an important corner and are moving in the right direction, despite the fact that we have significant work to do in the months ahead.”
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