This past week there were no less than 3 major housing announcements from the Federal government totaling $21.6 billion.
MAJOR FUNDING ANNOUNCEMENTS
Infrastructure Fund Allocation
The week kicked off with the announcement of a $6 billion infrastructure fund, aimed at bolstering housing supply to meet provincial demands. This funding, while crucial, awaits detailed distribution plans, with $1 billion earmarked for “shovel-ready” projects and the remaining $5 billion to be disbursed over time to jurisdictions adhering to federal conditions.
Expansion of Rental Construction Support
Following closely was the introduction of a $15 billion “top-up” fund, supplementing the existing $40 billion allocation for favorable loans to incentivize rental construction. This significant injection aims to expedite the provision of rental housing across the country.
Promotion of Modular and Prefab Construction
Rounding out the week was the provision of $600 million to promote modular and prefab construction, with a portion directed toward fostering innovative housing technologies.
$68 BILLION IN CUMULATIVE FUNDING
These announcements last week add up to $21.6 billion in addition to $40 billion already in the “Canada Builds” rental support, $2 billion in conjunction with BC for building “missing middle” housing, and the $4 billion Housing Accelerator Fund which was also topped up with another $400 million last week for a total of $68 billion directed to building “more homes faster.”
$68 billion is a huge amount, and one would expect to see some dramatic results stemming from such an investment.
CONDITIONAL FUNDING AND PROGRAM REVISIONS
Strings Attached: Conditions for Funding
However, none of the funding announced comes without strings. For example, the $55 billion Apartment Construction Loan Program under Canada Builds requires commitments such as:
- Complementing federal funds with provincial or territorial investments into housing;
- Building on government, non-profit, community-owned, and vacant lands;
- Streamlining the process to cut development approval timelines to no longer than 12 to 18 months; and
- Meeting all criteria included in the Apartment Construction Loan Program, including affordability requirements.
The existing program is also seeing several revisions to the existing program that:
- Extend loan terms;
- Extend access to financing to include housing for students and seniors;
- Introduce a portfolio approach to eligibility requirements so builders can move forward on multiple sites at once;
- Provide additional flexibility on affordability, energy efficiency, and accessibility requirements; and
- Launch a new frequent builder stream to fast-track the application process for proven home builders.
EMBRACING INNOVATIVE TECHNOLOGIES
Prefab and Modular
The $600 million that is directed to prefab, modular, and innovative housing technologies is intended to work in conjunction with the “archetypical” housing designs being worked on federally and funding will be directed to areas working co-operatively in support of clearing the way for timely adoption and construction of these designs. Per Federal Housing Minster Sean Fraser: “We need to build more homes in factories if we’re going to solve the national housing crisis … there’s advantages to building in factories. You can do it faster. In fact, twice as fast as traditional stick build homes. You can also work around the clock. You can advance automation to become more efficient. There’s a number of different advantages that can make it more cost effective and more time effective to actually build the homes that we need.”
Out of the Box Thinking
These are goals that may contribute to building “more homes faster”, and the $50 million going to support innovation such as mass timber, 3-D printing, and new design considerations may open whole new avenues to the provision of homes and support the out of the box thinking we have been advocation for. However, if everything is to go perfectly, it will be years before we start seeing tangible results. The focus on modular/prefab represents a fundamental shift in the structure of our sector and addresses stick-frame most directly. With the emphasis on higher density, introducing these technologies into medium and high-rise construction will be challenging.
HEADWINDS
Political Resistance
The pivot needed to embrace the conditions necessary to access the announced funding requires buy-in from all levels of government and represents a wholesale change in the status quo. This may be the biggest challenge of all with Ontario, and Alberta already declaring they are not supportive of the infrastructure funding on account of the conditions being imposed by the Feds. Seen as an overreach into provincial jurisdictions, we have experienced similar reactions at the municipal level regarding legislation introduced by the BC government that stipulates growth targets, land use policy, and zoning.
Industry Inertia
Affecting change of any kind in any sector is always a challenge and takes time and a comprehensive will to adapt and overcome the challenges to pursue a common goal. This raises the question of governments both federally and provincially having a finite shelf life in the face of funding to support initiatives that will take years to implement and the fruits of which will not likely be realized until after the administrations championing them have changed or been defeated in the election cycle.
Uncertainty Amidst Political Transitions
Notwithstanding the volume and high value of the recent federal housing announcements, it must be remembered that the federal Liberal government is in a minority government position relying on the support of the NDP to avoid being forced into an election. They could lose power at any time and even with continued support will face an election in 2025.
There are no guarantees that any new federal government formed by current opposition parties would maintain the programs and funding announced and while everyone is working to adapt and adopt the changes driven by current governments, could rescinding such initiatives drive further delay and disruption?
NAVIGATING FORWARD
The provision of housing takes time and altering the ways, means, and status quo that govern our industry is challenging, with many of the well-intentioned housing initiatives announced facing the potential for consequences not yet foreseen. It will be important for our industry to express and demonstrate our support for initiatives that will generate more housing and streamline efforts and costs for our members, and at the same time, it is also important to be aware of the policies and platforms of the opposition parties as well as those of the incumbent party.
Moving forward, we will seek to present the information provided by the opposition parties on their housing policies and how this may affect our industry, and I encourage you to familiarize yourself with which parties embrace policies that will best serve your interests. We are in a housing crisis and what is needed is decisive action that can actually deliver “more homes faster.” We need fewer barriers, a supportive financial climate, and an end to contradictory policies with everyone focused on the same goal.
HAVAN continues to work with CHBA BC and CHBA to advocate for all levels of government to work together to address the challenges of the housing industry including zoning restrictions, density limits, and NIMBYism.
Looking to stay up-to-date on Metro Vancouver’s residential housing industry? Sign up for Ron’s weekly Monday Morning Briefing and other HAVAN emails here.
QUICK BITES …
- Global News provides an overview of the objections being raised by Alberta and Ontario to the Federal housing funding announced last week.
- While acknowledging that the status quo is problematic, this opinion piece discusses National politics vs Local land use planning and why the feds should not necessarily intervene in the “imperfect realm of land use planning.”
- CMHC has released its 2024 Housing Outlook Highlights include:
- Economic growth outlook: Expecting weak economic growth in 2024. We’re projecting a momentum regain in 2025 – 2026 as interest rates decrease.
- Housing starts prediction: Expecting lower housing starts in 2024. There is a slight improvement forecasted over the next 2 years. Supply challenges, notably the lagged effects of higher interest rates, mean that new construction in 2025 – 2026 won’t reach 2021 – 2023 levels.
- MLS® price forecast: Forecasting demand to push MLS® prices beyond previous peak levels. This indicates a lack of short-term affordability improvement.
- MLS® sales rebound: Foreseeing an increase in MLS® sales due to strong population growth. Sales are expected to surpass the past 10-year average levels but remain below the record levels of 2020 – 2021. This is reflective of decreased housing affordability.
- Rental housing demand: Despite more rental completions, the growing demand for rental homes will not be met because the cost of homeownership will lead households to stay in rental housing. Rents will rise and vacancy rates will fall.
- The Globe and Mail presents an interview with Fortis CEO David Hutchens and what he believes is in store for the utility moving forward and the changing energy landscape.
- Please see this link to an upcoming webinar on Friday, April 12, presented by CHBA National on proposed Code changes in energy modeling and airtightness testing to design and build energy-efficient homes. While under consideration for the National Code, these will trickle down to the BCBC, eventually. Take a moment to become acquainted with the changes and take advantage of the opportunity to comment.
