The federal government\u2019s goal to double housing construction in Canada is being debated by BC economists, with some saying it\u2019s doable under the right conditions and others saying it\u2019s a pipe dream.<\/p>\n
Doubling construction would require significant hiring and productivity gains in the homebuilding sector, as well as hundreds of billions in capital investment in B.C. alone, said Brendon Ogmundson, chief economist for the BC Real Estate Association (BCREA).<\/p>\n
\u201cThe [Canada Mortgage and Housing Corp.], the federal government, the provincial government would essentially like us to double construction over the next 10 years. Much easier said than done,\u201d he told an Oct. 2 real estate conference in Burnaby hosted by the Real Estate Institute of BC.<\/p>\n
\u201cIf you ever say this in a room full of developers, or anyone who\u2019s not government, they\u2019d just start laughing automatically, because it is so difficult to do.\u201d<\/p>\n
Difficult, maybe, but not impossible, according to Alex Hemingway, senior economist with progressive non-profit BC Policy Solutions.<\/p>\n
\u201cIt\u2019s a good target. It can be done, but it does require some very significant policy changes from all levels of government,\u201d he said.<\/p>\n
Necessary reforms include ending apartment bans, funding infrastructure upgrades differently and ending \u201cback-door\u201d restrictions on multiplexes, he said.<\/p>\n
Forecasts for housing starts this year and next year are running in the 240,000 to 253,000 range. Starts peaked at 262,000 in 2022 and have been trending lower since then, despite the intense political attention given to the issue, said Jock Finlayson, chief economist with the Independent Contractors and Businesses Association (ICBA).<\/p>\n
\u201cPresently, the Canadian homebuilding industry is far short of the resources\u2014companies, workers and overall capacity\u2014to double the pace of homebuilding in the next several years,\u201d he said.<\/p>\n
\u201cCutting to the chase: Ottawa\u2019s aspirational housing targets are almost comically unrealistic.\u201d<\/p>\n
Hiring, Productivity, Capital needed<\/strong><\/p>\n The federal government\u2019s new Build Canada Homes (BCH) program is part of \u201ca national effort to double housing construction,\u201d according to a Sept. 14 announcement from Prime Minister Mark Carney.<\/p>\n Doubling construction would require hiring a massive number of new construction workers, said ICBA\u2019s Finlayson.<\/p>\n He said an estimated 1.2 million jobs were associated with the production of housing assets of all types in 2024, according to Statistics Canada.<\/p>\n \u201cThat\u2019s a lot of jobs already. Is the federal government suggesting we\u2019re going to add another million people to the workforce in homebuilding? I think that\u2019s very far-fetched,\u201d he said.<\/p>\n BCREA\u2019s Ogmundson estimated B.C.\u2019s construction sector currently has the capacity to start about 45,000 units per year. To get to 60,000, or halfway toward doubling, the sector would have to replace 55,000 workers nearing retirement and add an additional 130,000 on top of that, he said.<\/p>\n \u201cProductivity growth in the construction sector would have to go from zero to like 1.5 per cent, which is a quantum leap when we\u2019re talking about productivity,\u201d he said.<\/p>\n Innovative construction methods, a key emphasis of the BCH program, could help the industry get some way there, though Ogmundson said it\u2019s not guaranteed.<\/p>\n \u201cMaybe off-site construction completely changes how we do construction\u2014mass timber and everything else. Maybe we can use AI to read permits and approve things much faster. These are all possibilities, but it\u2019s a big assumption to get there,\u201d he said.<\/p>\n Significant capital would also be required. The prime minister\u2019s Sept. 14 announcement committed an initial $13 billion, but Ogmundson said that in B.C. alone, somewhere between $200 billion and $300 billion is needed to build 600,000 units over the next decade.<\/p>\n Investors are needed to finance new condos, and real estate investment trust (REIT) dollars and pension fund money are needed to finance new rentals, he said.<\/p>\n Zoning, Infrastructure Changes Advised<\/strong><\/p>\n Hemingway of BC Policy Solutions said Ottawa\u2019s goal is \u201cnecessary, challenging but doable if we get the right policies in place.\u201d<\/p>\n There continue to be \u201cvery severe municipal roadblocks\u201d including zoning policies that \u201ceffectively block apartment buildings on the vast majority of residential land,\u201d he said.<\/p>\n \u201cIf we\u2019re going to double homebuilding in this country, that has to change.\u201d<\/p>\n Hemingway also cited high developer fees to pay for infrastructure upgrades, which are suppressing housing creation and driving up rents. He suggested they be paid out of a broader tax base.<\/p>\n \u201cIf the province and feds could backstop that with conditions on badly needed reforms at the municipal level, that would be a huge contribution,\u201d Hemingway said.<\/p>\n His recommendations include eliminating frontage requirements that block smaller, single-lot apartment buildings, and making multiplex policies less restrictive. Municipalities are creatures of the province, he said, giving the province authority to require reforms.<\/p>\n The federal government, meanwhile, must be \u201cwilling to step up with real funding\u201d for infrastructure and the non-market component of BCH, according to Hemingway.<\/p>\n \u201cThey have the deepest pockets,\u201d he said.<\/p>\n BCH has a substantial non-market component, according to the prime minister\u2019s announcement, but ICBA\u2019s Finlayson said market housing continues to be predominant and is \u201cwhere the rubber\u2019s going to have to hit the road.\u201d<\/p>\n Over 90 per cent of all the dwelling units in Canada were built through the market, and a majority of what\u2019s being built today is also coming through the market, he said.<\/p>\n What Success Could Look Like<\/strong><\/p>\n Doubling construction could have major effects on affordability, and the market could return to \u201cthe CMHC\u2019s utopia of 2019,\u201d BCREA\u2019s Ogmundson said, citing the agency\u2019s new housing affordability benchmark.<\/p>\n Home prices could end up being flat from 2028 to 2035, or even come down slightly, he said.<\/p>\n But stagnant home prices would require reductions on the cost side, lest developers stop building, Ogmundson said. Flat or depreciating assets would also hurt consumption, because fewer people would borrow against their home equity.<\/p>\n Ottawa faces \u201chuge, huge barriers,\u201d and while its goals are \u201cnot impossible,\u201d there are certainly challenges, said the BCREA economist.<\/p>\n \u201cIf we can at least attack the cost-of-delivery part and make sure developers want to keep building, and maybe we get lucky with technology and everything else, then we could end up in a much more favourable place at the end of the decade than we\u2019re at now,\u201d Ogmundson said.<\/p>\n