Offline dengan aplikasi Player FM !
Episode 52: Working Together to Address Housing Supply - The Honourable Sean Fraser
Manage episode 429202325 series 2644972
It’s no secret that Canada is facing a housing crisis. The country is in need of programs and strategies to help build more homes that meet people where they are. It’s a national issue that requires collaboration from all leaders, politically and otherwise.
The Honourable Sean Fraser, Minister of Housing, Infrastructure and Communities, is our guest on this episode of REAL TIME, where we discuss Canada’s housing supply goals, where we can draw inspiration from, and how REALTORS® can be part of solutions.
Transcript
Erin Davis: Canada is in a housing crisis. The country is in need of programs and actions to help build more homes that meet people where they are. It's a national issue that requires collaboration from all leaders, politically and otherwise, to help ensure everyone has a home.
Hi, I'm Erin Davis, and this is REAL TIME, the podcast for REALTORS®, brought to you by the Canadian Real Estate Association. Today, we are joined by the Honorable Sean Fraser, Minister of Housing, Infrastructure and Communities, to talk about Canada's housing supply goals, the challenges we are facing to make them a reality, and how REALTORS® can be part of the solution. Minister Fraser, thank you for being here today.
Minister Sean Fraser: Thanks so much for the opportunity to connect. Looking forward to it.
Erin: The natural place to start is the state of the housing crisis in Canada. 5.8 million homes are needed to be built by 2030 to help restore affordability and address supply. What is currently in place to help with the development and affordability of housing in Canada, both now and in the shorter term?
Minister Fraser: Look, thanks very much for the question. Depending on who you ask, you're going to get a range of different estimates on exactly what it's going to take to cure the supply gap. The one thing I think everybody agrees on is we need to build more homes. The housing plan that we've put out just in April of this year seeks to do that in three keyways. The first is to reduce the cost of building homes. The second is to make it easier to build homes. The third is to adopt new strategies when it comes to the way that we actually build them. Let's dig in a little bit on what that means.
To reduce the cost, what we've tried to do is look in our own backyard to figure out what we can do as a federal government to directly reduce the cost of housing.
We have removed the GST from new apartment construction and changed capital cost allowances to reduce taxes on home builders, and we're starting to see that have an impact.
We also create low-cost financing programs, such as the Apartment Construction Loan Program, or something new that's coming up to build accessory dwelling units to get more supply into the market, which is particularly helpful during a high-interest rate environment.
We've got a big project on the go that we'll have more to say about, I think, in this conversation, including the use of public lands to build more homes.
In addition, we need to incentivize solutions at other levels of government, including zoning and permitting reforms, and, of course, embracing new technologies when it comes to building houses more quickly, such as factory-built homes. There's no silver bullet. If it were easy to solve, smarter people than me would have decades before. The reality is there's a number of levers at our disposal that can help build out that supply, which is essential if we're going to cure the supply gap and ultimately resolve a reasonable level of affordability in the housing market in Canada.
Erin: The existing programs are certainly a great step forward, but we also need to acknowledge that the reality is hitting those housing supply goals is a difficult task. We've heard some rhetoric around development cost charges. Minister, can you fill us in on how or if those are affecting our ability to not only build homes, but build affordable homes?
Minister Fraser: Certainly. I've got a particular perspective on development cost charges. For those who may not be familiar with the issue, it's a tool that municipalities use to raise revenue. In my view, it's one that does so fairly inefficiently because it raises all the revenue on new housing. When you increase the cost of something, you tend to get less of it or you get some of it with a higher price point.
From my perspective, it risks both impacting the housing output goals that we've set as a government and the housing affordability goals, because developers, despite the fact I believe most of them are in it for the right reasons, want to help provide solutions, they're also running businesses. We can't expect that businesses who incur larger costs simply to eat all of those costs. Now, to a degree, community versus community, it may happen in some and not in others. What we're trying to do is to understand, why are municipalities feeling the need to increase development cost charges? I don't believe it's because any community wants to increase the cost of housing. It's because municipalities are cash-strapped. We need to deal with the very real challenges that cities are facing in this country when it comes to now dealing with the costs of certain services that traditionally may have fallen within, particularly at the provincial level of government, including community housing, including dealing with homelessness in their communities.
When you have municipalities incur these increased costs and they have limited access to revenue tools, they go in the areas where they think they have some political space to play.
The solution is going to be to increasing, from other orders of government, the level of investment in infrastructure that currently development cost charges are being used to build out. We've put $6 billion on the table for housing-enabling infrastructure. In order to access it, we said, "You have to freeze your development cost charges."
For those who don't wish to abide by those terms, we have created a new product through the Canada Infrastructure Bank that will provide lower-cost financing to build out that infrastructure, but we want to ensure that if you're going to be using federal dollars to build out municipal infrastructure, you're not simultaneously increasing the cost to housing in your community.
Development cost charges are one of the hurdles we need to overcome. We're seeking to do that by tying access to federal infrastructure money to policies around freezing the cost of development cost charges when that policy was released in April of this year.
Erin: What are some of the frustrations that you're feeling in regards to hitting the housing supply target?
Minister Fraser: There's no shortage of things to become frustrated about, but I try to focus on the opportunities that we have to make a difference. That said, there are certain potential obstacles that we're going to need to overcome, that the impact of our policies remains to be seen. Now we're starting to see very good output when it comes to building permits, for example. We have seen some encouraging numbers when it comes to the latest data from CMHC on housing starts in the month of May of this year. If I look forward two, three years, and I ask myself what bottlenecks are we potentially going to hit if we can't resolve them today, the productive capacity of the Canadian economy is one of the very serious obstacles I think we're going to need to overcome.
We're producing homes close to the record level of production, but when I talk to builders in different markets in Canada, some are already experiencing a labor shortage that's preventing them from growing their home-building capacity. We also see an opportunity to overcome this not just by training the next generation of Canadian workers, but by incentivizing new construction methodologies that pull from a different labor pool, specifically modular housing, penalization, mass timber, potentially even 3D printing, that don't necessarily rely on the same pool of skilled tradespeople that traditional home builders may. By bringing in new solutions, we can overcome that obstacle.
The other piece that is a big question mark is the involvement of other levels of government. I think the federal government can say sincerely, "We've put our hand up and want to play a leadership role, but we need others to join the fight."
Province to province, the ambition and appetite for change varies significantly. We can't do this alone. We'll need provincial governments and municipalities pulling in the same direction.
The third and final, potentially the most important bottleneck, is capital. Making sure we're creating an opportunity for money to come into the housing sector by creating a set of circumstances that makes it more appealing to invest in Canadian home building than it does for investors who may be targeting industries in different parts of the world.
Crowding in that private capital, working with provinces, and growing the productive capacity of the Canadian home-building workforce are the three big things that I believe will pose a bottleneck if we don't sort out the policy solutions today that will reveal themselves over the next few years.
Erin: Minister, you used the term "legalize housing" last fall and it left some people curious. What did you mean by legalize housing?
Minister Fraser: This is not a concept that I've invented. This is something that becomes readily apparent to you when you start to engage in the obstacles to getting more homes built today. Thankfully, we've legalized a lot more housing than was the case even six, eight months ago.
What I meant when I used the phrase legalized housing was simply to point out that most kinds of houses are not legal to build as of right in most communities in Canada or in most neighborhoods in Canada. There's a lot of restrictions on what you can build and where you can build it. For example, a lot of suburban neighborhoods, frankly, a lot of neighborhoods altogether make it impossible to build a small apartment if you don't go and get a zoning change or a special exemption at your local council. That process can add months, sometimes years to the process of just getting an answer saying, "Yes, you are allowed to build the thing."
By the time you actually get permission to build it, when you have that lengthy process of getting an approval, the math that justified your investment in the first place may no longer take hold. We've seen this in a significant number of communities across Canada as we've dealt with a challenging interest rate environment over the past few years. A lot of projects that were approved after they got that special permission from council are now dealing with a higher rate of interest than they baked into their pro forma when they were deciding to go forward with the project or not.
When we can actually change the rules so a developer, a small builder, whoever it may be understands that they can build something without having to go through that lengthy process, that kind of housing will have been legalized in communities. When you make something illegal, guess what happens? You get a lot less of it. We should be making it easy for people to contribute solutions to the housing crisis. My own view is that if someone has land and is willing to make an investment, we should not forbid a person from advancing a solution on their own property when we're in a housing crisis. If we legalize housing by changing the rules to permit home building during a housing crisis, we're going to see more houses, and that makes sense to me.
Erin: I'm glad you mentioned land because land availability is often a key talking point when discussing housing supply, something that came up in episode 51 here when we were talking about Alberta. Can you speak to how government land could be used to address the supply crisis, Minister?
Minister Fraser: One of the things that you've got to realize, and we led off with this, it's become very expensive to build homes in this country. The cost of land, labor, material, supplies, interest, it's all gone up in the last few years and we have to look at what tools we have that can bring the cost of building down.
I'm never going to say that the home-building sector should reduce wages of workers in the home-building sector. In fact, I think if we paid people fairly, we'd see even more come into the industry in different parts of the country.
That said, land is something that we actually can potentially control the price of to some degree when we're dealing with land that the federal government owns, or the different levels of government own. If we can reduce from the input cost of construction the price of the land on which a building will sit, the cost of building is going to go down and the opportunity for developers to pass on those savings to residents when we get supply and demand balanced out will become much easier.
One of the things that we're doing that's a unique approach compared to the historical practice of previous federal governments is embracing a new strategy to make land available for housing. Rather than selling off land to the highest bidder, which will not provide a level of affordability necessarily to the homes that are built upon that land, we're going to enter into long-term leases for those who will commit to certain affordability goals when it comes to the housing that will actually be built on that land.
In exchange for those affordability outcomes, we'll be able to negotiate significantly reduced cost, potentially even for as low as a dollar, for a long-term lease on the land that will last at least the life cycle of the asset or the building that's constructed.
When we make that land available, we can remove one of the most expensive contributing factors to the overall cost of home building. If we bring that cost of building down as we grow the supply of housing in this country, we can potentially be dealing with rents or home prices that are much closer to what a middle-class worker in a given community can afford as compared to what would happen in the free market on private land or on government land that is sold at market prices.
This is an enormous opportunity. As the largest landowner in the country, the federal government has a role to play. The path that we're charting and that will be revealed over the next few months, I believe, will have an enormous impact on the housing supply crisis facing the communities in every part of Canada today.
Erin: Part of CREA's advocacy efforts, as recommended by REALTORS®, has to do with growing the skilled labor force. You talked about labor there just a moment ago to help build the supply that we're missing. What does this look like, Minister Fraser? I know you spoke about this at a CREA conference last fall, but would you refresh our memories please?
Minister Fraser: Certainly. I've identified the capacity of the Canadian home-building labor force to produce homes as one of the potential bottlenecks that we're going to hit. Even if we have a perfect municipal zoning policy in place, perfect financial policies in place, there is a limit to how many homes the Canadian economy can produce today, and we want to grow the outer boundary of that limit.
There's three key areas where I think we can do this. One is by increasing the investment in training for skilled workers. We need people who have the trade and the qualification to practice that will actually be able to increase the pace of construction for existing home builders, including traditional home builders who simply need more people to grow their business.
By investing in training, we can significantly increase the capacity of the workforce over time, including by tapping into traditionally underrepresented groups in the skilled trades. Thinking about investing in programs that will bring more women into the trades, thinking about programs that will bring more racial minorities and indigenous peoples into the Canadian home-building trades, and just generally increasing the overall pool of labor supply by investing in training more broadly.
We also need to embrace targeted immigration programs that will ensure that we both align the housing output with our overall immigration numbers, but simultaneously use those immigration programs in a targeted way to bring in more skilled trades people who have the capacity to help contribute a solution to the housing crisis.
The third thing is not necessarily about growing that same pool, it's about embracing new technologies. By creating incentives to scale up home-building factories, and by incentivizing the purchase of a piece of equipment that will allow one to build more efficiently, we can significantly increase output and build homes faster by comparison, in most instances, to traditional home-building strategies.
The other advantage, in addition to just becoming more productive through the embrace of technology and the use of equipment, is the fact that you're not necessarily competing in the same labor pool. The skill set to build homes that are built in a factory and assembled on site are not perfectly aligned with conventional home-building strategies. By tapping into a pool of labor that may not come from that same skilled background, at the same time we train more skilled tradespeople in this country, we're going to be able to build that overall capacity to produce homes, which will be key if we're going to hit those supply targets.
Erin: Where does the education begin then? Are we talking like getting students coming out of high schools and going into skilled labor? You talk about the immigration adding to that workforce. How far back do we have to go and start planning for this increase in skilled labor?
Minister Fraser: There's things that we can do in the short term, for example, by embracing some targeted immigration programs. We made a change over the course of the last few years to have a category-based selection model within the express entry system that targets five key areas, one of which is the skilled trades. We've seen a fairly significant increase in the number of skilled tradespeople who've come in as a result. That can have an impact within the first year of a policy change. Not necessarily enough to solve Canada's housing crisis in one fell swoop, but enough to make a difference.
There are other things that will take, admittedly, a little bit longer to reach maturity. When you enter into training, for example, you might have a cohort of people who starts their training tomorrow, but they may take a couple of years before they get that designation. That means we must do it, but we have to be patient for some solutions to reach maturity as compared to others.
When you ask how far back do we need to go, when I talk to a lot of my friends who work in the skilled trades, though they may have only started their formal training after they finished high school, very often they grew up on a construction site working informally alongside a family business. They've been turning wrenches in garages their whole life, growing up working on bikes. That's the kind of community that I came from. You see that implementing a culture change in addition to the formal training initiatives that incentivizes and demonstrates respect towards people who have those essential skills in the trades is something that can help shift the proportion of people in a country who work in a given sector over time.
Again, by investing in home-building factories and incentivizing changes with more productive equipment or processes, we can very quickly scale up new players in the sector. There's employers I talked to who are recruiting from a broad range of industries, but not targeting people with any particular skill set, but who are willing to put in an honest day of work. They actually find training old habits out of certain skilled trades can be more challenging than having somebody start fresh who doesn't come with a particular formal skill but has a willingness to work. There's many solutions that we have to embrace, and we do have to embrace them all simultaneously.
Erin: Housing supply issues won't be solved by one person or party alone. We're realistic. We know that. It's a national issue that requires leaders, and not just political leaders, to work towards a meaningful solution together. Minister, who needs to be involved in the housing conversation outside of political leaders? Are we talking like CREA, Cooperative Housing Federation of Canada, for example, developers? Who would you like to see at the table as we build a house around that table?
Minister Fraser: Look, it's an excellent question. One of the things I've learned that I believe more than just about anything else in nine years in politics now is that decisions are not going to be made effectively if they're made behind closed doors on Parliament Hill. They need to be made in full engagement with the people and organizations who are going to be contributing solutions and to be informed by the people who need those solutions.
When you ask who should be involved, private developers and home builders should be involved. Non-profit organizations who understand the needs of specific communities can be involved. People with lived experience should be involved. Advocacy associations who understand the perspective not just of the executive director but of an entire membership of an industry need to be involved.
Groups like CREA would provide an excellent example of the opportunity to engage an entire industry in a more effective and efficient way by sending representatives into these conversations. There are academic experts who've been studying their lives to understand the solutions to some of the challenges we're facing today. Let's borrow from all of the knowledge base that the different players in the sector have to contribute. I want to point out that it's not just for formal organizations to contribute solutions. I've had the opportunity to stream a number of different local council meetings when they were debating the measures baked into their Housing Accelerator Fund agreements with the federal government and I was blown away by the perspective, particularly of young people, who were showing up at council meetings, explaining to their local councillors what these policy changes could mean for them if it would create an opportunity for them to live in the community where they grew up.
Ordinary citizens have an opportunity to advocate to their local councils, to send letters to their MPs, to their MLAs, to raise awareness as part of the need to embrace new solutions to contribute to a better housing sector a few years from now than we have today. It's not just to be left to those who have an opportunity to build massive apartments. Individual citizens can contribute solutions in this process at a local and national level as well.
Erin: Yes. I love that you mention councils because we'd like you to talk about the importance of working with cities to help create affordable housing solutions, Minister.
Minister Fraser: This is where the rubber hits the road. In a lot of communities across Canada, the success or failure of housing initiatives will be determined by a willingness of the local level of government to embrace solutions or to sometimes bow to pressure to avoid the reforms that we know will have a positive impact. I've seen extraordinary leadership at cities across the country.
Though I've been in the news a couple of times for having a disagreement with a municipal government here or there, I found over the course of the past 11 months that I've been in this position that there's an awful lot of cities who want to be incredible partners out there. I'm yet to meet a single one who doesn't want to build more homes for members in their community who are underserved when it comes to housing. Some are willing to go the extra mile.
I think about mayors like Cam Guthrie, who is advocating for ambitious reforms. I think about Berry Vrbanovic in Kitchener or Dorothy McCabe in Waterloo who are implementing these kinds of reforms that are transitioning vast employment lands into residential lands, who are embracing new zoning practices.
The City of Kelowna, who has been ahead of the curve, not only in zoning for four units as of right, which has seen an uptick in the construction of fourplexes, but also in using AI in order to identify faster processes for issuing building permits.
There are incredible leaders and if we understand the best practices from the cities who are experiencing success, we can share those lessons with other levels of government and in fact put financial incentives on the table through a program like the Housing Accelerator Fund, which has led to what is likely the largest upzoning in Canadian history over the course of the past year.
Some of these changes are not just going to have an impact in the short term, as the money we put on the table is used to support more housing growth, but in perpetuity as the systemic reforms that make it easier and faster to build homes and get permits take hold and create a new culture of home building in the cities that have made those important changes. We have to work with cities.
Thankfully there are many good partners across the country who share the desired outcome and are willing to make some of the changes to turn that desire into a reality.
Erin: Looking outside of Canada for a minute, Minister, we've seen countries and areas that have implemented programs or policies that have helped address similar supply and affordability issues. Is there anywhere that we can draw inspiration from to help within our own borders?
Minister Fraser: Certainly. Look, there's no shortage. Some of the work that's been done around building design which is able to withstand very serious safety threats, but nevertheless embrace a single-stair egress, creates opportunities for more efficient, effective building designs that will allow you to fit more home into each building, if that makes sense.
It's not limited to any one country. I think about the work that has gone on in Finland when it comes to more or less eliminating chronic homelessness by adopting a housing-first approach. I think about zoning reform in Auckland, New Zealand, Minneapolis or Austin, Texas, that has led to an explosion of multi-unit residential growth. Factory-built homes have become more or less the norm in countries like Sweden.
I had the opportunity to spend a year studying a master's degree in the Netherlands. Though I didn't live in the biggest city in the country, I nevertheless benefited from a serious public transit system where I was able to walk or take my bike to classes every day that was just as efficient as driving through the city.
There's incredible lessons we can pull internationally from zoning reform, from investments in non-market housing, to modernizing the home-building industry, to investing to solve homelessness. There are so many examples to pull from and I think about the successes and failures that others have experienced as we sit down to develop our own policy track.
Erin: Many people think that building homes is strictly about single-family homes, which are important, too, of course, but there are many other types of housing that could address Canada's supply crisis, right?
CREA's asks in its pre-budget submission are all related to supporting the entire housing continuum, including the stimulation of prefabricated housing.
Can you talk a bit, please, about how modular and prefabricated homes could be part of the solution, like automation as well as 3D printing, all helping Canada to reach its housing supply goals?
Minister Fraser: We need every kind of housing manufacturer to be building more housing, whether that's traditional contractors doing stick-built homes, whether it's modular housing, whether it's panelization, mass timber. We did mention 3D printing. It's got a lot of ways to go before the sectors mature and can be counted on for the kind of volume that we need, but we need to embrace all of it.
I think the advantage right now, though on a cost basis, depending on the building design, you can be competitive. You don't see enormous savings when it comes to manufactured homes. Some kinds of designs could even be a little more expensive, but for multi-unit residential, depending on the scale of the building, you can be cost competitive, but you can build sometimes twice as fast. When you have an opportunity to build more quickly, time can be money based on the terms of financing or the interest rate environment you may be dealing with. You have an opportunity to create a solution much more quickly, and though the cost of building may only be on par, it can help address some imbalances between supply and demand in the market more quickly.
There's a few things we're doing to incentivize more use of manufactured homes in this country. The first is directly incentivizing the uptick of new technology or processes with a hundred million dollars in contribution through both one of our supercluster initiatives and through the regional development agencies in Canada who understand the more localized opportunities to scale those factories.
When I actually talk to those in the sector, they tell me though incentives are appreciated, what they need even more is orders. If they're going to justify a factory expansion, they needed to know there's a pipeline of projects that will justify a bigger facility, the new piece of equipment, staffing up, whatever it may be. We're trying to do that in two key ways. One is to carve out a $500 million tranche of the apartment construction loan program just for homes that are built in factories.
The second is to use our public lands initiative, and this is still under development now, to create greater opportunities for manufactured homes by figuring out how we can commit to a certain scale of factory-built homes when it comes to the public lands initiative to incentivize growth in the sector at the same time we get that housing output.
There's a number of different opportunities that I see, but these tools that we put on the table as part of the National Housing Plan, I expect, are going to have a significant impact.
Erin: We can hope, and hope is what this is all about. Why should Canadians be hopeful moving forward in regards to housing supply and affordability, Minister, when this is clearly a daunting problem to solve? Are you hopeful?
Minister Fraser: I am, and it's not out of a sense of blind optimism. I'm hopeful because I'm actually seeing solutions implemented at a local level that I believe can be scaled up and replicated at a national level.
When I see the extraordinary uptake of the Housing Accelerator Fund, for example, in six months we've reached deals with 179 partners across the country. Following it, we've seen remarkable upzoning of cities across the country. In April, the most recent month for which I've seen the data, we set a record for the issuance of building permits in this country. We didn't do that by snapping our fingers and creating a new tool altogether. We borrowed from the best practices that were already being implemented in cities right across the country, and created an incentive for everyone else to implement those practices as well, and we're seeing change. When we removed the tax from new purpose-built rentals in this country, we saw a number of provinces join forces with us, and then most of those provinces have seen a positive impact when it comes to starts this year as compared to last year.
In my own home province of Nova Scotia, where we've removed the tax on both the federal and provincial tax on new apartment construction, we've actually seen growth this year compared to last of more than 100%. It's remarkable what we're seeing in certain provinces, but this is not to say the job is done. We have a long way to go, but we are starting to see the early signs of success of some of the measures we're putting in place.
The reason that I'm optimistic that we can continue to see these measures taken up is I've never seen such alignment across party lines, across levels of government, in the desire to solve a problem like we currently see with the housing crisis.
We've seen the federal government put out what has been billed as the most ambitious plan in half a century to build homes in this country. Provinces seem more than live to the issue and are implementing a lot of measures on their own. Cities are waking up not just to the need to build more homes, but the opportunities for their communities if they can accommodate the people who want to move in and call those city homes and contribute their talents to the local economy and local community.
The political will is there across levels of government, across party lines. We're starting to see signs of success, and we're even seeing the latest rate cut from the Bank of Canada demonstrate not that we are where we need to be, but that we're trending in a positive direction.
I'm filled with a sense of hope and optimism. The scale of the task before me is not lost on me, but I do understand what can be done when you have three levels of government working together, and I think we've got that in every region of the country.
Erin: Okay. How can we use those wins to continue the momentum?
Minister Fraser: Success begets success. What has been incredible to me is, again, pointing to the experience of the Housing Accelerator Fund, though there were some challenges with some of the measures we were inviting cities to adopt in the outset, nothing created more momentum than a neighbouring city adopting those changes first.
When we were able to stand up and announce that City X was going to receive several million dollars to make certain kinds of changes, City Y next door decided they wanted to do the same. Then City Z took similar measures, and we saw that the competition actually became not just a competition for the federal money that was on the table, but making sure that they weren't to be outdone by their neighbours, knowing that that would actually potentially pull people from one community to another based on housing availability.
When we demonstrate that certain measures work and can be done within the political context of a given community, it creates a level of courage and ambition at a local level, I find, right across Canada, to say we can solve this problem.
My sense is the political temperature has reached a stage where leaders will ignore the housing crisis at their peril. There are solutions that are being made evident in communities across the country, not by the most rigorous or recent study that's been performed on them, but by the policies that are being implemented that were informed by those studies 10 and 20 years ago that are having an impact today.
We can continue to increase the level of ambition by rewarding communities who are adopting policies that are making a difference. I have full faith that when those solutions prove their merit, the momentum will continue to snowball. We're seeing that with zoning, we're seeing that with multi-unit residential construction. My hope is we can see that in the home-building industry with more factory-built homes.
There's no shortage of solutions, but once communities see that they start to work somewhere, they're willing to try them in their own backyard more often.
Erin: Can you tell us why initiatives such as the Cooperative Housing Development Program are going to help Canadians?
Minister Fraser: Certainly. If you're going to understand how we can help, you have to understand that there is a problem first. Separate and apart from the housing affordability challenges we have in the market, there's an enormous challenge when it comes to the lack of social housing, affordable housing for low-income families in this country that is subsidized by governments.
The reason that we have a shortage of non-market housing in Canada, and by the way, we have about 4% of our total share of homes in this country exist outside of the market, the average for developed economies in the world is about double that, and the number of people in Canada who live below a low-income threshold is between 10% and 11%. There are going to be people who fall through the cracks. If you have more low-income people in your country, then you have houses that are designed to support people with low incomes. The cost, by the way, of a shortage of affordable housing is not revealed just in housing costs. You see increased health costs as people run into challenges with the mental health system and emergency room more often. You see more challenges in the legal system when people have challenges with the police or the courts. You see people less often fulfill their economic potential because it's awfully hard to look for a job when you don't have a place to go to bed at night.
When we have investments like the partnership we've made with the Cooperative Housing Federation, or like the increased contributions through the Affordable Housing Fund, or a new acquisition fund to pull low-cost housing from the market into a non-profit setting, we can correct that imbalance between low-cost housing that's subsidized by governments and the number of low-income Canadians that live in this country. It's been 30 years without any serious investment by the federal government in affordable housing. Conservative governments and liberal governments have both chosen to pull back. We changed that in 2017 with the introduction of the National Housing Strategy. We've increased the ambition with the latest plan to solve the housing crisis, but these investments will help specifically target the needs of low-income Canadians and therefore benefit not just the people who live in them, but the entirety of a community's population on the basis of those costs we won't incur and the opportunities that more people who have their housing needs met can create in the communities where they live.
Erin: Nobody knows their communities better than REALTORS®. There are more than 160,000 in Canada, a collective that continues to be a strong voice for housing supply and affordability issues in Canada. Do you have any tips for them, Minister?
Minister Fraser: Look, I won't tell anybody else how to do their job. I've got enough people telling me how to do mine, but there are a few points maybe I'll make in response to your question.
First, I'm grateful to REALTORS® who put the interests of their clients first. This goes without saying, but I trust the industry to ensure that they're well informed on what policy tools may be available to their clients who are trying to save up for that down payment, who are considering whether they want to avail themselves of a 30-year amortization period. Make sure you understand what policies are on offer. You will be better than me at guiding people through the process of buying their first home in particular, given your wealth of experience. Continue to put the interests of your clients first, and continue to be aware of the tools the government has on offer to make it easier to become a participant in the housing market or a homeowner.
Finally, don't assume that governments know what your experience is. It's been extraordinary for me, before and after my time in this position, the wealth of information and experience that REALTORS® have shared about my own market in my own community, my own province of Nova Scotia, or nationally.
I should give a shout out to Susan Green, my friend, neighbor, and REALTOR® who's been involved with advocacy campaigns with CREA for a number of years.
Don't be afraid to show up at that council meeting. Advocate strongly if you believe in zoning reform, because in the absence of voices explaining how it will make a positive difference, there will be people who are afraid of change in their community.
If you can demonstrate through your experience, your knowledge, your training, that we can invite new solutions to communities who are not accustomed to them, and the world doesn't end. You can live in a community that creates a vibrant and dynamic place to live for a next generation of people who may call a community home. Don't be afraid to participate in the debates as they play out at a local level. Inform folks like me and my counterparts provincially about your industry's point of view. Make sure at an individual service level you continue to support people by making them aware of what tools are available.
I'm grateful for the work that you do to help guide people through the home buying process, and very grateful for the opportunity to connect today.
Erin: We're very grateful as well, Minister. Thank you so much for your wisdom, your insight, and your time. Thanks a lot.
Minister Fraser: A pleasure, as always. We'll look forward to our next conversation.
Erin: You bet. Thanks again to Minister Fraser for taking the time to be with us today. We all know this conversation isn't going away, and the REALTOR® community continues to roll up their sleeves and take action.
Of course, if you liked this episode, please tell us by giving us a rating or review on your preferred podcast platform. We always appreciate it.
REAL TIME is brought to you by the Canadian Real Estate Association, CREA. Production courtesy of Alphabet® Creative, with tech support from Rob Whitehead. Thank you so much for listening. I'm Erin Davis, and we'll see you next time on REAL TIME.
53 episode
Manage episode 429202325 series 2644972
It’s no secret that Canada is facing a housing crisis. The country is in need of programs and strategies to help build more homes that meet people where they are. It’s a national issue that requires collaboration from all leaders, politically and otherwise.
The Honourable Sean Fraser, Minister of Housing, Infrastructure and Communities, is our guest on this episode of REAL TIME, where we discuss Canada’s housing supply goals, where we can draw inspiration from, and how REALTORS® can be part of solutions.
Transcript
Erin Davis: Canada is in a housing crisis. The country is in need of programs and actions to help build more homes that meet people where they are. It's a national issue that requires collaboration from all leaders, politically and otherwise, to help ensure everyone has a home.
Hi, I'm Erin Davis, and this is REAL TIME, the podcast for REALTORS®, brought to you by the Canadian Real Estate Association. Today, we are joined by the Honorable Sean Fraser, Minister of Housing, Infrastructure and Communities, to talk about Canada's housing supply goals, the challenges we are facing to make them a reality, and how REALTORS® can be part of the solution. Minister Fraser, thank you for being here today.
Minister Sean Fraser: Thanks so much for the opportunity to connect. Looking forward to it.
Erin: The natural place to start is the state of the housing crisis in Canada. 5.8 million homes are needed to be built by 2030 to help restore affordability and address supply. What is currently in place to help with the development and affordability of housing in Canada, both now and in the shorter term?
Minister Fraser: Look, thanks very much for the question. Depending on who you ask, you're going to get a range of different estimates on exactly what it's going to take to cure the supply gap. The one thing I think everybody agrees on is we need to build more homes. The housing plan that we've put out just in April of this year seeks to do that in three keyways. The first is to reduce the cost of building homes. The second is to make it easier to build homes. The third is to adopt new strategies when it comes to the way that we actually build them. Let's dig in a little bit on what that means.
To reduce the cost, what we've tried to do is look in our own backyard to figure out what we can do as a federal government to directly reduce the cost of housing.
We have removed the GST from new apartment construction and changed capital cost allowances to reduce taxes on home builders, and we're starting to see that have an impact.
We also create low-cost financing programs, such as the Apartment Construction Loan Program, or something new that's coming up to build accessory dwelling units to get more supply into the market, which is particularly helpful during a high-interest rate environment.
We've got a big project on the go that we'll have more to say about, I think, in this conversation, including the use of public lands to build more homes.
In addition, we need to incentivize solutions at other levels of government, including zoning and permitting reforms, and, of course, embracing new technologies when it comes to building houses more quickly, such as factory-built homes. There's no silver bullet. If it were easy to solve, smarter people than me would have decades before. The reality is there's a number of levers at our disposal that can help build out that supply, which is essential if we're going to cure the supply gap and ultimately resolve a reasonable level of affordability in the housing market in Canada.
Erin: The existing programs are certainly a great step forward, but we also need to acknowledge that the reality is hitting those housing supply goals is a difficult task. We've heard some rhetoric around development cost charges. Minister, can you fill us in on how or if those are affecting our ability to not only build homes, but build affordable homes?
Minister Fraser: Certainly. I've got a particular perspective on development cost charges. For those who may not be familiar with the issue, it's a tool that municipalities use to raise revenue. In my view, it's one that does so fairly inefficiently because it raises all the revenue on new housing. When you increase the cost of something, you tend to get less of it or you get some of it with a higher price point.
From my perspective, it risks both impacting the housing output goals that we've set as a government and the housing affordability goals, because developers, despite the fact I believe most of them are in it for the right reasons, want to help provide solutions, they're also running businesses. We can't expect that businesses who incur larger costs simply to eat all of those costs. Now, to a degree, community versus community, it may happen in some and not in others. What we're trying to do is to understand, why are municipalities feeling the need to increase development cost charges? I don't believe it's because any community wants to increase the cost of housing. It's because municipalities are cash-strapped. We need to deal with the very real challenges that cities are facing in this country when it comes to now dealing with the costs of certain services that traditionally may have fallen within, particularly at the provincial level of government, including community housing, including dealing with homelessness in their communities.
When you have municipalities incur these increased costs and they have limited access to revenue tools, they go in the areas where they think they have some political space to play.
The solution is going to be to increasing, from other orders of government, the level of investment in infrastructure that currently development cost charges are being used to build out. We've put $6 billion on the table for housing-enabling infrastructure. In order to access it, we said, "You have to freeze your development cost charges."
For those who don't wish to abide by those terms, we have created a new product through the Canada Infrastructure Bank that will provide lower-cost financing to build out that infrastructure, but we want to ensure that if you're going to be using federal dollars to build out municipal infrastructure, you're not simultaneously increasing the cost to housing in your community.
Development cost charges are one of the hurdles we need to overcome. We're seeking to do that by tying access to federal infrastructure money to policies around freezing the cost of development cost charges when that policy was released in April of this year.
Erin: What are some of the frustrations that you're feeling in regards to hitting the housing supply target?
Minister Fraser: There's no shortage of things to become frustrated about, but I try to focus on the opportunities that we have to make a difference. That said, there are certain potential obstacles that we're going to need to overcome, that the impact of our policies remains to be seen. Now we're starting to see very good output when it comes to building permits, for example. We have seen some encouraging numbers when it comes to the latest data from CMHC on housing starts in the month of May of this year. If I look forward two, three years, and I ask myself what bottlenecks are we potentially going to hit if we can't resolve them today, the productive capacity of the Canadian economy is one of the very serious obstacles I think we're going to need to overcome.
We're producing homes close to the record level of production, but when I talk to builders in different markets in Canada, some are already experiencing a labor shortage that's preventing them from growing their home-building capacity. We also see an opportunity to overcome this not just by training the next generation of Canadian workers, but by incentivizing new construction methodologies that pull from a different labor pool, specifically modular housing, penalization, mass timber, potentially even 3D printing, that don't necessarily rely on the same pool of skilled tradespeople that traditional home builders may. By bringing in new solutions, we can overcome that obstacle.
The other piece that is a big question mark is the involvement of other levels of government. I think the federal government can say sincerely, "We've put our hand up and want to play a leadership role, but we need others to join the fight."
Province to province, the ambition and appetite for change varies significantly. We can't do this alone. We'll need provincial governments and municipalities pulling in the same direction.
The third and final, potentially the most important bottleneck, is capital. Making sure we're creating an opportunity for money to come into the housing sector by creating a set of circumstances that makes it more appealing to invest in Canadian home building than it does for investors who may be targeting industries in different parts of the world.
Crowding in that private capital, working with provinces, and growing the productive capacity of the Canadian home-building workforce are the three big things that I believe will pose a bottleneck if we don't sort out the policy solutions today that will reveal themselves over the next few years.
Erin: Minister, you used the term "legalize housing" last fall and it left some people curious. What did you mean by legalize housing?
Minister Fraser: This is not a concept that I've invented. This is something that becomes readily apparent to you when you start to engage in the obstacles to getting more homes built today. Thankfully, we've legalized a lot more housing than was the case even six, eight months ago.
What I meant when I used the phrase legalized housing was simply to point out that most kinds of houses are not legal to build as of right in most communities in Canada or in most neighborhoods in Canada. There's a lot of restrictions on what you can build and where you can build it. For example, a lot of suburban neighborhoods, frankly, a lot of neighborhoods altogether make it impossible to build a small apartment if you don't go and get a zoning change or a special exemption at your local council. That process can add months, sometimes years to the process of just getting an answer saying, "Yes, you are allowed to build the thing."
By the time you actually get permission to build it, when you have that lengthy process of getting an approval, the math that justified your investment in the first place may no longer take hold. We've seen this in a significant number of communities across Canada as we've dealt with a challenging interest rate environment over the past few years. A lot of projects that were approved after they got that special permission from council are now dealing with a higher rate of interest than they baked into their pro forma when they were deciding to go forward with the project or not.
When we can actually change the rules so a developer, a small builder, whoever it may be understands that they can build something without having to go through that lengthy process, that kind of housing will have been legalized in communities. When you make something illegal, guess what happens? You get a lot less of it. We should be making it easy for people to contribute solutions to the housing crisis. My own view is that if someone has land and is willing to make an investment, we should not forbid a person from advancing a solution on their own property when we're in a housing crisis. If we legalize housing by changing the rules to permit home building during a housing crisis, we're going to see more houses, and that makes sense to me.
Erin: I'm glad you mentioned land because land availability is often a key talking point when discussing housing supply, something that came up in episode 51 here when we were talking about Alberta. Can you speak to how government land could be used to address the supply crisis, Minister?
Minister Fraser: One of the things that you've got to realize, and we led off with this, it's become very expensive to build homes in this country. The cost of land, labor, material, supplies, interest, it's all gone up in the last few years and we have to look at what tools we have that can bring the cost of building down.
I'm never going to say that the home-building sector should reduce wages of workers in the home-building sector. In fact, I think if we paid people fairly, we'd see even more come into the industry in different parts of the country.
That said, land is something that we actually can potentially control the price of to some degree when we're dealing with land that the federal government owns, or the different levels of government own. If we can reduce from the input cost of construction the price of the land on which a building will sit, the cost of building is going to go down and the opportunity for developers to pass on those savings to residents when we get supply and demand balanced out will become much easier.
One of the things that we're doing that's a unique approach compared to the historical practice of previous federal governments is embracing a new strategy to make land available for housing. Rather than selling off land to the highest bidder, which will not provide a level of affordability necessarily to the homes that are built upon that land, we're going to enter into long-term leases for those who will commit to certain affordability goals when it comes to the housing that will actually be built on that land.
In exchange for those affordability outcomes, we'll be able to negotiate significantly reduced cost, potentially even for as low as a dollar, for a long-term lease on the land that will last at least the life cycle of the asset or the building that's constructed.
When we make that land available, we can remove one of the most expensive contributing factors to the overall cost of home building. If we bring that cost of building down as we grow the supply of housing in this country, we can potentially be dealing with rents or home prices that are much closer to what a middle-class worker in a given community can afford as compared to what would happen in the free market on private land or on government land that is sold at market prices.
This is an enormous opportunity. As the largest landowner in the country, the federal government has a role to play. The path that we're charting and that will be revealed over the next few months, I believe, will have an enormous impact on the housing supply crisis facing the communities in every part of Canada today.
Erin: Part of CREA's advocacy efforts, as recommended by REALTORS®, has to do with growing the skilled labor force. You talked about labor there just a moment ago to help build the supply that we're missing. What does this look like, Minister Fraser? I know you spoke about this at a CREA conference last fall, but would you refresh our memories please?
Minister Fraser: Certainly. I've identified the capacity of the Canadian home-building labor force to produce homes as one of the potential bottlenecks that we're going to hit. Even if we have a perfect municipal zoning policy in place, perfect financial policies in place, there is a limit to how many homes the Canadian economy can produce today, and we want to grow the outer boundary of that limit.
There's three key areas where I think we can do this. One is by increasing the investment in training for skilled workers. We need people who have the trade and the qualification to practice that will actually be able to increase the pace of construction for existing home builders, including traditional home builders who simply need more people to grow their business.
By investing in training, we can significantly increase the capacity of the workforce over time, including by tapping into traditionally underrepresented groups in the skilled trades. Thinking about investing in programs that will bring more women into the trades, thinking about programs that will bring more racial minorities and indigenous peoples into the Canadian home-building trades, and just generally increasing the overall pool of labor supply by investing in training more broadly.
We also need to embrace targeted immigration programs that will ensure that we both align the housing output with our overall immigration numbers, but simultaneously use those immigration programs in a targeted way to bring in more skilled trades people who have the capacity to help contribute a solution to the housing crisis.
The third thing is not necessarily about growing that same pool, it's about embracing new technologies. By creating incentives to scale up home-building factories, and by incentivizing the purchase of a piece of equipment that will allow one to build more efficiently, we can significantly increase output and build homes faster by comparison, in most instances, to traditional home-building strategies.
The other advantage, in addition to just becoming more productive through the embrace of technology and the use of equipment, is the fact that you're not necessarily competing in the same labor pool. The skill set to build homes that are built in a factory and assembled on site are not perfectly aligned with conventional home-building strategies. By tapping into a pool of labor that may not come from that same skilled background, at the same time we train more skilled tradespeople in this country, we're going to be able to build that overall capacity to produce homes, which will be key if we're going to hit those supply targets.
Erin: Where does the education begin then? Are we talking like getting students coming out of high schools and going into skilled labor? You talk about the immigration adding to that workforce. How far back do we have to go and start planning for this increase in skilled labor?
Minister Fraser: There's things that we can do in the short term, for example, by embracing some targeted immigration programs. We made a change over the course of the last few years to have a category-based selection model within the express entry system that targets five key areas, one of which is the skilled trades. We've seen a fairly significant increase in the number of skilled tradespeople who've come in as a result. That can have an impact within the first year of a policy change. Not necessarily enough to solve Canada's housing crisis in one fell swoop, but enough to make a difference.
There are other things that will take, admittedly, a little bit longer to reach maturity. When you enter into training, for example, you might have a cohort of people who starts their training tomorrow, but they may take a couple of years before they get that designation. That means we must do it, but we have to be patient for some solutions to reach maturity as compared to others.
When you ask how far back do we need to go, when I talk to a lot of my friends who work in the skilled trades, though they may have only started their formal training after they finished high school, very often they grew up on a construction site working informally alongside a family business. They've been turning wrenches in garages their whole life, growing up working on bikes. That's the kind of community that I came from. You see that implementing a culture change in addition to the formal training initiatives that incentivizes and demonstrates respect towards people who have those essential skills in the trades is something that can help shift the proportion of people in a country who work in a given sector over time.
Again, by investing in home-building factories and incentivizing changes with more productive equipment or processes, we can very quickly scale up new players in the sector. There's employers I talked to who are recruiting from a broad range of industries, but not targeting people with any particular skill set, but who are willing to put in an honest day of work. They actually find training old habits out of certain skilled trades can be more challenging than having somebody start fresh who doesn't come with a particular formal skill but has a willingness to work. There's many solutions that we have to embrace, and we do have to embrace them all simultaneously.
Erin: Housing supply issues won't be solved by one person or party alone. We're realistic. We know that. It's a national issue that requires leaders, and not just political leaders, to work towards a meaningful solution together. Minister, who needs to be involved in the housing conversation outside of political leaders? Are we talking like CREA, Cooperative Housing Federation of Canada, for example, developers? Who would you like to see at the table as we build a house around that table?
Minister Fraser: Look, it's an excellent question. One of the things I've learned that I believe more than just about anything else in nine years in politics now is that decisions are not going to be made effectively if they're made behind closed doors on Parliament Hill. They need to be made in full engagement with the people and organizations who are going to be contributing solutions and to be informed by the people who need those solutions.
When you ask who should be involved, private developers and home builders should be involved. Non-profit organizations who understand the needs of specific communities can be involved. People with lived experience should be involved. Advocacy associations who understand the perspective not just of the executive director but of an entire membership of an industry need to be involved.
Groups like CREA would provide an excellent example of the opportunity to engage an entire industry in a more effective and efficient way by sending representatives into these conversations. There are academic experts who've been studying their lives to understand the solutions to some of the challenges we're facing today. Let's borrow from all of the knowledge base that the different players in the sector have to contribute. I want to point out that it's not just for formal organizations to contribute solutions. I've had the opportunity to stream a number of different local council meetings when they were debating the measures baked into their Housing Accelerator Fund agreements with the federal government and I was blown away by the perspective, particularly of young people, who were showing up at council meetings, explaining to their local councillors what these policy changes could mean for them if it would create an opportunity for them to live in the community where they grew up.
Ordinary citizens have an opportunity to advocate to their local councils, to send letters to their MPs, to their MLAs, to raise awareness as part of the need to embrace new solutions to contribute to a better housing sector a few years from now than we have today. It's not just to be left to those who have an opportunity to build massive apartments. Individual citizens can contribute solutions in this process at a local and national level as well.
Erin: Yes. I love that you mention councils because we'd like you to talk about the importance of working with cities to help create affordable housing solutions, Minister.
Minister Fraser: This is where the rubber hits the road. In a lot of communities across Canada, the success or failure of housing initiatives will be determined by a willingness of the local level of government to embrace solutions or to sometimes bow to pressure to avoid the reforms that we know will have a positive impact. I've seen extraordinary leadership at cities across the country.
Though I've been in the news a couple of times for having a disagreement with a municipal government here or there, I found over the course of the past 11 months that I've been in this position that there's an awful lot of cities who want to be incredible partners out there. I'm yet to meet a single one who doesn't want to build more homes for members in their community who are underserved when it comes to housing. Some are willing to go the extra mile.
I think about mayors like Cam Guthrie, who is advocating for ambitious reforms. I think about Berry Vrbanovic in Kitchener or Dorothy McCabe in Waterloo who are implementing these kinds of reforms that are transitioning vast employment lands into residential lands, who are embracing new zoning practices.
The City of Kelowna, who has been ahead of the curve, not only in zoning for four units as of right, which has seen an uptick in the construction of fourplexes, but also in using AI in order to identify faster processes for issuing building permits.
There are incredible leaders and if we understand the best practices from the cities who are experiencing success, we can share those lessons with other levels of government and in fact put financial incentives on the table through a program like the Housing Accelerator Fund, which has led to what is likely the largest upzoning in Canadian history over the course of the past year.
Some of these changes are not just going to have an impact in the short term, as the money we put on the table is used to support more housing growth, but in perpetuity as the systemic reforms that make it easier and faster to build homes and get permits take hold and create a new culture of home building in the cities that have made those important changes. We have to work with cities.
Thankfully there are many good partners across the country who share the desired outcome and are willing to make some of the changes to turn that desire into a reality.
Erin: Looking outside of Canada for a minute, Minister, we've seen countries and areas that have implemented programs or policies that have helped address similar supply and affordability issues. Is there anywhere that we can draw inspiration from to help within our own borders?
Minister Fraser: Certainly. Look, there's no shortage. Some of the work that's been done around building design which is able to withstand very serious safety threats, but nevertheless embrace a single-stair egress, creates opportunities for more efficient, effective building designs that will allow you to fit more home into each building, if that makes sense.
It's not limited to any one country. I think about the work that has gone on in Finland when it comes to more or less eliminating chronic homelessness by adopting a housing-first approach. I think about zoning reform in Auckland, New Zealand, Minneapolis or Austin, Texas, that has led to an explosion of multi-unit residential growth. Factory-built homes have become more or less the norm in countries like Sweden.
I had the opportunity to spend a year studying a master's degree in the Netherlands. Though I didn't live in the biggest city in the country, I nevertheless benefited from a serious public transit system where I was able to walk or take my bike to classes every day that was just as efficient as driving through the city.
There's incredible lessons we can pull internationally from zoning reform, from investments in non-market housing, to modernizing the home-building industry, to investing to solve homelessness. There are so many examples to pull from and I think about the successes and failures that others have experienced as we sit down to develop our own policy track.
Erin: Many people think that building homes is strictly about single-family homes, which are important, too, of course, but there are many other types of housing that could address Canada's supply crisis, right?
CREA's asks in its pre-budget submission are all related to supporting the entire housing continuum, including the stimulation of prefabricated housing.
Can you talk a bit, please, about how modular and prefabricated homes could be part of the solution, like automation as well as 3D printing, all helping Canada to reach its housing supply goals?
Minister Fraser: We need every kind of housing manufacturer to be building more housing, whether that's traditional contractors doing stick-built homes, whether it's modular housing, whether it's panelization, mass timber. We did mention 3D printing. It's got a lot of ways to go before the sectors mature and can be counted on for the kind of volume that we need, but we need to embrace all of it.
I think the advantage right now, though on a cost basis, depending on the building design, you can be competitive. You don't see enormous savings when it comes to manufactured homes. Some kinds of designs could even be a little more expensive, but for multi-unit residential, depending on the scale of the building, you can be cost competitive, but you can build sometimes twice as fast. When you have an opportunity to build more quickly, time can be money based on the terms of financing or the interest rate environment you may be dealing with. You have an opportunity to create a solution much more quickly, and though the cost of building may only be on par, it can help address some imbalances between supply and demand in the market more quickly.
There's a few things we're doing to incentivize more use of manufactured homes in this country. The first is directly incentivizing the uptick of new technology or processes with a hundred million dollars in contribution through both one of our supercluster initiatives and through the regional development agencies in Canada who understand the more localized opportunities to scale those factories.
When I actually talk to those in the sector, they tell me though incentives are appreciated, what they need even more is orders. If they're going to justify a factory expansion, they needed to know there's a pipeline of projects that will justify a bigger facility, the new piece of equipment, staffing up, whatever it may be. We're trying to do that in two key ways. One is to carve out a $500 million tranche of the apartment construction loan program just for homes that are built in factories.
The second is to use our public lands initiative, and this is still under development now, to create greater opportunities for manufactured homes by figuring out how we can commit to a certain scale of factory-built homes when it comes to the public lands initiative to incentivize growth in the sector at the same time we get that housing output.
There's a number of different opportunities that I see, but these tools that we put on the table as part of the National Housing Plan, I expect, are going to have a significant impact.
Erin: We can hope, and hope is what this is all about. Why should Canadians be hopeful moving forward in regards to housing supply and affordability, Minister, when this is clearly a daunting problem to solve? Are you hopeful?
Minister Fraser: I am, and it's not out of a sense of blind optimism. I'm hopeful because I'm actually seeing solutions implemented at a local level that I believe can be scaled up and replicated at a national level.
When I see the extraordinary uptake of the Housing Accelerator Fund, for example, in six months we've reached deals with 179 partners across the country. Following it, we've seen remarkable upzoning of cities across the country. In April, the most recent month for which I've seen the data, we set a record for the issuance of building permits in this country. We didn't do that by snapping our fingers and creating a new tool altogether. We borrowed from the best practices that were already being implemented in cities right across the country, and created an incentive for everyone else to implement those practices as well, and we're seeing change. When we removed the tax from new purpose-built rentals in this country, we saw a number of provinces join forces with us, and then most of those provinces have seen a positive impact when it comes to starts this year as compared to last year.
In my own home province of Nova Scotia, where we've removed the tax on both the federal and provincial tax on new apartment construction, we've actually seen growth this year compared to last of more than 100%. It's remarkable what we're seeing in certain provinces, but this is not to say the job is done. We have a long way to go, but we are starting to see the early signs of success of some of the measures we're putting in place.
The reason that I'm optimistic that we can continue to see these measures taken up is I've never seen such alignment across party lines, across levels of government, in the desire to solve a problem like we currently see with the housing crisis.
We've seen the federal government put out what has been billed as the most ambitious plan in half a century to build homes in this country. Provinces seem more than live to the issue and are implementing a lot of measures on their own. Cities are waking up not just to the need to build more homes, but the opportunities for their communities if they can accommodate the people who want to move in and call those city homes and contribute their talents to the local economy and local community.
The political will is there across levels of government, across party lines. We're starting to see signs of success, and we're even seeing the latest rate cut from the Bank of Canada demonstrate not that we are where we need to be, but that we're trending in a positive direction.
I'm filled with a sense of hope and optimism. The scale of the task before me is not lost on me, but I do understand what can be done when you have three levels of government working together, and I think we've got that in every region of the country.
Erin: Okay. How can we use those wins to continue the momentum?
Minister Fraser: Success begets success. What has been incredible to me is, again, pointing to the experience of the Housing Accelerator Fund, though there were some challenges with some of the measures we were inviting cities to adopt in the outset, nothing created more momentum than a neighbouring city adopting those changes first.
When we were able to stand up and announce that City X was going to receive several million dollars to make certain kinds of changes, City Y next door decided they wanted to do the same. Then City Z took similar measures, and we saw that the competition actually became not just a competition for the federal money that was on the table, but making sure that they weren't to be outdone by their neighbours, knowing that that would actually potentially pull people from one community to another based on housing availability.
When we demonstrate that certain measures work and can be done within the political context of a given community, it creates a level of courage and ambition at a local level, I find, right across Canada, to say we can solve this problem.
My sense is the political temperature has reached a stage where leaders will ignore the housing crisis at their peril. There are solutions that are being made evident in communities across the country, not by the most rigorous or recent study that's been performed on them, but by the policies that are being implemented that were informed by those studies 10 and 20 years ago that are having an impact today.
We can continue to increase the level of ambition by rewarding communities who are adopting policies that are making a difference. I have full faith that when those solutions prove their merit, the momentum will continue to snowball. We're seeing that with zoning, we're seeing that with multi-unit residential construction. My hope is we can see that in the home-building industry with more factory-built homes.
There's no shortage of solutions, but once communities see that they start to work somewhere, they're willing to try them in their own backyard more often.
Erin: Can you tell us why initiatives such as the Cooperative Housing Development Program are going to help Canadians?
Minister Fraser: Certainly. If you're going to understand how we can help, you have to understand that there is a problem first. Separate and apart from the housing affordability challenges we have in the market, there's an enormous challenge when it comes to the lack of social housing, affordable housing for low-income families in this country that is subsidized by governments.
The reason that we have a shortage of non-market housing in Canada, and by the way, we have about 4% of our total share of homes in this country exist outside of the market, the average for developed economies in the world is about double that, and the number of people in Canada who live below a low-income threshold is between 10% and 11%. There are going to be people who fall through the cracks. If you have more low-income people in your country, then you have houses that are designed to support people with low incomes. The cost, by the way, of a shortage of affordable housing is not revealed just in housing costs. You see increased health costs as people run into challenges with the mental health system and emergency room more often. You see more challenges in the legal system when people have challenges with the police or the courts. You see people less often fulfill their economic potential because it's awfully hard to look for a job when you don't have a place to go to bed at night.
When we have investments like the partnership we've made with the Cooperative Housing Federation, or like the increased contributions through the Affordable Housing Fund, or a new acquisition fund to pull low-cost housing from the market into a non-profit setting, we can correct that imbalance between low-cost housing that's subsidized by governments and the number of low-income Canadians that live in this country. It's been 30 years without any serious investment by the federal government in affordable housing. Conservative governments and liberal governments have both chosen to pull back. We changed that in 2017 with the introduction of the National Housing Strategy. We've increased the ambition with the latest plan to solve the housing crisis, but these investments will help specifically target the needs of low-income Canadians and therefore benefit not just the people who live in them, but the entirety of a community's population on the basis of those costs we won't incur and the opportunities that more people who have their housing needs met can create in the communities where they live.
Erin: Nobody knows their communities better than REALTORS®. There are more than 160,000 in Canada, a collective that continues to be a strong voice for housing supply and affordability issues in Canada. Do you have any tips for them, Minister?
Minister Fraser: Look, I won't tell anybody else how to do their job. I've got enough people telling me how to do mine, but there are a few points maybe I'll make in response to your question.
First, I'm grateful to REALTORS® who put the interests of their clients first. This goes without saying, but I trust the industry to ensure that they're well informed on what policy tools may be available to their clients who are trying to save up for that down payment, who are considering whether they want to avail themselves of a 30-year amortization period. Make sure you understand what policies are on offer. You will be better than me at guiding people through the process of buying their first home in particular, given your wealth of experience. Continue to put the interests of your clients first, and continue to be aware of the tools the government has on offer to make it easier to become a participant in the housing market or a homeowner.
Finally, don't assume that governments know what your experience is. It's been extraordinary for me, before and after my time in this position, the wealth of information and experience that REALTORS® have shared about my own market in my own community, my own province of Nova Scotia, or nationally.
I should give a shout out to Susan Green, my friend, neighbor, and REALTOR® who's been involved with advocacy campaigns with CREA for a number of years.
Don't be afraid to show up at that council meeting. Advocate strongly if you believe in zoning reform, because in the absence of voices explaining how it will make a positive difference, there will be people who are afraid of change in their community.
If you can demonstrate through your experience, your knowledge, your training, that we can invite new solutions to communities who are not accustomed to them, and the world doesn't end. You can live in a community that creates a vibrant and dynamic place to live for a next generation of people who may call a community home. Don't be afraid to participate in the debates as they play out at a local level. Inform folks like me and my counterparts provincially about your industry's point of view. Make sure at an individual service level you continue to support people by making them aware of what tools are available.
I'm grateful for the work that you do to help guide people through the home buying process, and very grateful for the opportunity to connect today.
Erin: We're very grateful as well, Minister. Thank you so much for your wisdom, your insight, and your time. Thanks a lot.
Minister Fraser: A pleasure, as always. We'll look forward to our next conversation.
Erin: You bet. Thanks again to Minister Fraser for taking the time to be with us today. We all know this conversation isn't going away, and the REALTOR® community continues to roll up their sleeves and take action.
Of course, if you liked this episode, please tell us by giving us a rating or review on your preferred podcast platform. We always appreciate it.
REAL TIME is brought to you by the Canadian Real Estate Association, CREA. Production courtesy of Alphabet® Creative, with tech support from Rob Whitehead. Thank you so much for listening. I'm Erin Davis, and we'll see you next time on REAL TIME.
53 episode
Semua episode
×Selamat datang di Player FM!
Player FM memindai web untuk mencari podcast berkualitas tinggi untuk Anda nikmati saat ini. Ini adalah aplikasi podcast terbaik dan bekerja untuk Android, iPhone, dan web. Daftar untuk menyinkronkan langganan di seluruh perangkat.