Front Burner - Can Carney move fast enough on affordable housing?

Episode Date: August 15, 2025

This week, Canada's housing department released a document with more details on the Liberal government's plans to scale up affordable housing in the country. It's now seeking feedback from the public about it.Back in March, Prime Minister Carney vowed that his government would double the number of homes built annually in Canada to nearly half a million. This would be done through an entity called Build Canada Homes, which would spur construction with a focus on affordability and a 'made in Canada' approach.But these plans are coming together in a challenging environment. A new report from the Canadian Mortgage and Housing Corporation (CMHC) forecasts a drop in housing starts over the next few years. That's against a backdrop of rising costs and other factors that are squeezing developers.So, can Carney's plan work, and can it work fast enough?Mike Moffatt, a founding director of the Missing Middle Initiative at the University of Ottawa and the co-host of the Missing Middle podcast, joins the show.For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts

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Hi, I'm Ali Jains, in for Jamie Poisson. So back in March on the campaign trail, Mark Carney made some big promises around affordable housing. Our goal is to double the pace of housing construction to almost half a million new homes every single year. homes you can afford to buy. Homes that are more sustainable and cost less to live in. Homes made right here with Canadian ingenuity, Canadian labor, Canadian products, including mass timber. Now, just over 150 days into his time in office,

we're finally getting a little bit more detail around how he plans to do that. On Monday, the Federal Housing Department released a document about the Build Canada Homes program, outlining their approach through consultations with builders and stakeholders. But, meanwhile, a new report from the Canadian Mortgage and Housing Corporation, the CMHC, is forecasting that new housing starts will actually fall well into the next few years. That's against a backdrop of rising costs and other factors that are squeezing developers, while not necessarily making housing significantly more affordable for most Canadians. So the question might not even be, is Carney's plan going to work?

but is it going to work fast enough? Today on the podcast, we've got Mike Moffat, a guy who watches housing in this country about as close as anyone can. He's a founding director of the Missing Middle Initiative at the University of Ottawa and the co-hosts of the podcast, Missing Middle.

Hi, Mike, great to have you back. Great to be here. So let's start with what we know about Mark Carney's housing strategy so far. So this document that they put out this week gives us, like it's six pages. It's not a big document, but it gives us a few more details around the agency that he plans to create called Build Canada Homes. And, you know, we heard about some of this during the campaign. What does this new document kind of build on what we had already known?

Yeah, it elaborates somewhat on the campaign promise to create this whole new agency, though it's still not clear if this is going to be an agency or a Crown Corps. called Build Canada Homes. And it gives some detail on what Build Canada homes is trying to achieve or the government hopes to achieve. But first, to build more affordable housing across Canada. And they want to do a few numbers of really big projects. So, you know, 300 units or more. And they want to work with private sector builders and developers, not for profits, co-ops, and so on. The second thing they want to do with it is to increase innovation in the homebuilding space. So that's helping innovative companies, that's looking at promising new technologies,

like 3D printing and home building. And they want to help scale these companies up and hopefully have those companies use made-in-Canada materials like lumber and so on. So this document, although it's six pages, shows that they're really trying to accomplish a lot of different things at once. So it does seem that it's going to be a fairly big, sprawling organization that is involved in many parts of the housing system.

You know, when Carney has talked about this idea, including on the campaign trail, he has directly referenced this post-war era when the Canadian government used to be much more involved in building housing than it is now. You see, the liberal government of William Lyon McKenzie King had a plan. They created new agencies to oversee the construction of homes. They found ways to cut costs and to cut the time to build. They built in the process entirely new industries, and it worked. Could you talk to me a little bit about what that actually looked like historically when the federal government was, you know, as Carney has put it, in the business of building affordable housing? So right after the end of World War II going into the early to mid-19,

1950s, we had a massive housing shortage that we didn't really build much as a country during the war or during the Depression. And with all the returning soldiers coming back, there was a massive need for housing. So back then, the CMHC, again, worked with private builders to build all kinds of post-war housing. These tended to be small, single-detached homes, 900 square foot or so called strawberry box homes because they look like a strawberry box. And these were all over Canada and there were entire communities like Ajax, Ontario, where CMHC built neighborhood upon neighborhood upon neighborhood. So this is kind of the model that they're going back to, but they've also layered on all of this need for more innovation. And they're also probably going to build

different types of homes. It's unlikely that they'll be building C. of single detached homes everywhere simply because we don't have the land available like we did in the late 1940s and early 1950s. Right. I mean, just to put a few numbers to that, I grabbed some of this from the

Thai for context, but they wrote that between 1973 and 1994, Canada built or acquired around 16,000 nonprofit or co-op homes every year. Between 1994 and 2016, that number dropped to just 1,500 homes

year. So, like, just briefly, you know, what happened, this was under Christian that we saw this kind of drop off a cliff, but what happened? Like, why did they stop doing that? Well, as we went into an era where governments were particularly concerned about balancing budgets and that sort of thing. And when that concern came in 1993 to 1995, it was right after a home price crash in the GTA in southern Ontario and other parts of Canada. So it was kind of a perfect storm where governments needed to find reasons to save money, but also at a time where prices and rents had dropped quite a bit over the last five years. So the thinking then was, well, this isn't nearly as urgent a problem as it may have been 10 or 20 or 30 years ago. So, you know, this would be an obvious place to save money.

You know, in retrospect, that may have been a mistake that, you know, we went through a period of about 25. 30 years where we didn't build much in the way of social housing, which has certainly contributed to some of the issues we've seen across Canada, particularly when it comes to homelessness. So when he's talking about, you know, getting back into this now, I mean, you mentioned obviously there's the constraint of less land, but, like, you know, what else might be different in terms of, like, the kind of constraints or challenges that they'd be going up again if they, up against, if they want to do what was happening in this kind of period between post-war to the 80s? Well, I think there's a lot more concerns right now. And again, we should kind of differentiate the kind of the post-war era, sort of late 40s or early 1950s, where a lot of these things went up, you know, versus the 1970s. where it was more focused on apartment construction.

Right. I do think the issue that they're going to have now is that they are layering on, and I think reasonably layering on a lot of other considerations, that back in the 1940s, they just wanted to get these houses up as quickly as possible. Often they were poorly insulated. There were issues around fire safety. They weren't at all concerned about sprawl, whereas today, we're layering all of these other considerations on it, that, you know, we want to make sure, obviously, that the homes are safe.

You know, we have a much larger or more expansive building codes. Obviously, today, we have a lot more when it comes to, you know, municipal regulations and so on. You know, the government has made explicit in this document that they want to include climate considerations and so on. So it's become a far more complex problem than it was 70 years ago, because 70 years ago, again, And we were just kind of throwing these things up as fast as we can. And we weren't concerned about climate or sprawl or, you know, even safety beyond a certain kind of lower bound. What about things like building costs, tariffs, like all that stuff that presumably also going to affect costs? Well, absolutely.

That home building is far more expensive today. And, you know, we can go down the list. Land costs are far more expensive just because land is more scarce, particularly development land because we're not allowing our cities to sprawl out as much anymore. Construction costs have gone up. The tariff situation certainly doesn't help because we import a lot of our materials, a lot of our appliances and things like that from the United States, and those products are going up in costs because the Americans are putting tariffs on the components. coming in from China or India or wherever else. So that's certainly not helping. Things like development charges and taxes, you know, in the last 20 to 25 years, development charges have gone up about 2,000 percent alone in the city of Toronto. So we have all of these things. Obviously, wages are

higher than they were back then, even adjusted for inflation. And that's a very good thing. We want to make sure that our tradespeople are well compensated. So that is going to be a challenge for the federal government how many units they can build just because of their sheer cost of building a unit of housing. down the road. We do. Then with the caring support of Desjardin insurance, I pronounce you covered

for home, auto, and flexible life insurance. For life's big milestones, get insurance that's really big on care at daisjardin.com slash care. Art has power to inspire us, to unite us,

to give us solace and courage when we need it most, to create important stories, lasting memories, a sense of belonging, Your National Arts Center serves as a catalyst and communities across Canada, empowering artists, inspiring audiences, and bringing us closer together. Learn more at nacc.ca.ca.c.c.c.c.c. Mr. Carney promised the fastest and biggest build-up of housing since the Second World War

that he would double home building. Since that time, home building has actually gone down in Canada. And according to his own housing agency, it will fall next year and the year, After that, it will not even be... So conservative leader, Pierre Pahliav, has said that this is adding a bunch of unnecessary government bureaucracy when the solution should be just to essentially get out of the private sector's way. What do you make of that criticism? Well, I certainly think that, you know, I think there's two components to it.

That obviously there's an ideological component to it where, you know, you can look at, you know, having the private sector do more, having government do more, and, you know, that kind of comes down to ideology. But I think there's a second non-ideological argument or complaint here that actually do think that has some merit, that we are creating this whole agency, build Canada homes, out of kind of whole cloth, where it's going to do a lot of the same things that the CMHC is currently doing. So, you know, to create a whole separate bureaucracy, a whole separate agency, where, you know, in the 1940s and 50s, we just use the CMHC, which still exists. So far, he's still trying to set up a new bureaucracy with an awkwardly named Build Canada Homes because he hasn't even set up the office. He hasn't built an office or built the bureaucracy yet, let alone built a single home.

And I also think there's another legitimate concern here is that this agency that's built Canada homes is trying to do too much, that all of the things that it wants to accomplish are all fine things, but they kind of work at odds with each other. So this agency is trying to create affordability and they want to do a bunch of projects that have a lot of units, which is going to require them to work with the biggest builders and use the most, traditional methods because that's what's cheapest in that scale. But at the same time, they want to focus on innovation, which is a bunch of scale up companies using not particularly well-developed technologies that tend to be more expensive. So, you know, there is a certain contradiction at the

heart of BCH where, you know, they want to do things that are, you know, already at scale and affordable, but at the same time, they want to work with companies that are more expensive and haven't achieved that scale yet. From what I'm understanding from it, too, it seems like they're talking about a sort of more modern model of, you know, private public partnerships where, you know, they're like either contracting private companies, giving them access to money. Is there a case where that ends up kind of being like as it is with some projects, you know, a kind of word. of both worlds where you create a bunch of new overheads but still like ultimately end up running

into the same kind of issues that the private sector does yeah absolutely that is uh it is a large concern here that these um these homes that are getting built in these projects you know are at some level a form of a public private partnership now the documents that put out by the federal government you know has a lot of different models that they they look at from you know loans to equity sharing and so on but you absolutely could get the worst of both worlds here where you have you know the profit-oriented focus of private developers coupled with the uh bureaucracy and red tape and slow moving of the government so i think that is a real concern and i think that is something that the federal government is going to have to navigate to try and get the best of both worlds and

not the worst of both worlds So, you know, again, this is super open-ended document. It says could a lot, and it's open for feedback until the end of August. We're, I know, expecting a formal launch sometime in the fall, but when would you expect this could conceivably start actually delivering tangible results? Unfortunately, for the government, I don't see it getting shovels in the ground until after the next election. And obviously, we don't know when that is because we're in a minority government. But if you think about all the things that this needs to do, that first of all,

we need to create this whole agency, find someone to run it, figure out where it lives. Then it needs to staff up, you know, get everybody on board. I think it needs to develop all of those systems in place because they are using billions of dollars of taxpayer money. So you need to have a certain set of controls put in place so that that money is spent well. then it needs to develop these relationships with builders and developers and co-op housing providers and you name it, decide on a bunch of projects and so on. So I think even in the best case scenario, they might have some deals for some projects. They might even have some shovels in the ground.

But, you know, I think we're looking probably, you know, three to five years at the earliest before we have a place. that somebody can actually live in. And I think that's a problem for the government. When the CMHC has housing starts falling, you know, each of the next three years, and at the same time, their landmark policy, you know, even in the best case scenario where it goes perfectly and acts just as designed isn't going to show results until 2028 at the earliest and more likely not until the 2030s. So you just mentioned this CMHC report that's talking about a slowdown and new housing starts

over the next few years. They're also talking about kind of a general slowdown. Can you talk to me about, you know, in a broader sense, like what are we seeing in Canadian housing right now? So it's essentially kind of a two-speed market that traditionally less expensive markets, which includes some larger cities, like in Alberta and Quebec, they're still humming along and they're still doing relatively well, and we're seeing construction go up. And, you know, in the first half of 2025, you know, Alberta had more housing starts than

Ontario, despite the fact that Ontario is several times larger. Where we're seeing the weakness is in the greater Toronto area, greater Vancouver area, and a little bit maybe southern Ontario and lower mainland BC. And basically what's happened in those markets is that prices have fallen, like in the GTA, they've fallen about 20% since the beginning of 2022. And to be clear, that's a very good thing. Prices and rents were far too high. We need them to come down to create affordability.

But the challenge is all of the costs in home building have been flat or been going up, whether that's materials, uh, development charges, um, and so on. So we've gotten to a point now where the cost of building is so high relative to the price. It just doesn't make economic sense that a new, uh, a home builder can't compete with an existing home that's on the market, a resale home. So building is not happening. You know, condo, uh, sales are down over 90% in the GTA. single-family homes are down about 70%. Purpose-built rentals, you know, there's still some strength there, but even there, we're getting into questions of whether or not we're going to continue to

see building in a universe with falling rents. So that's really what's happening, that are really expensive markets, prices and costs have become so disconnected. You're just not seeing much in the way of construction. so basically if i'm understanding that correctly it's like okay obviously this is a really good thing for renters and also um for people who are trying to get into the housing market like this is a moment where maybe there's an opportunity conceivably but what you're saying is that like down the road if there isn't an incentive for builders to build then we're we're going to be in this

even like bigger like crunch in supply and like maybe that ends up causing things to skyrocket even more? Yeah, absolutely. That is exactly my concern. And we've seen this through history that, you know, 2008, 2009, after the financial crisis, we had some weak years in home building. And then once the economy improved, because we hadn't built much for a couple of years, there wasn't that inventory and prices absolutely took off.

And that's really the concern that I have right now is that if we don't build in this you know, relatively weak market than by 20, 28, 20, 29, 2030, you know, if the economy is better than or interest rates are lower than, then we're absolutely going to see prices and rents take off. And I think that would be a disaster. So what we need to happen is that prices need to keep falling and need to be clear about this, that they're still too high. But the only way that you get robust home building is if those costs fall at the same rate or faster than prices. So I think that's where the focus needs to be, because that's the only way to have falling prices and robust home building is if you have substantially falling costs.

You know, a big part of what we're kind of talking about here is this, I guess, kind of paradox where it's like we need costs to come down so that people can get into the housing markets so that they can have somewhere to live. But we're also in a situation where you've got so many homeowners who don't want to lose, like all of their equity is tied up in their home.

And I mean, I'm thinking about a couple months ago when Carney's new housing minister, former Vancouver Mayor Gregor Robertson, was asked if housing prices need to come down and he said, No, I think that we need to deliver more supply. Make sure the market is stable. It's a huge part of our economy.

We need to be delivering more affordable housing. Which sounds good, but like how is that even a coherent goal? Like, how realistic is it to, you know, make housing more affordable without somehow not hurting the equity of people who own homes? Like, how are these two goals supposed to work together? Yeah. In other words, you know, how can prices both go down and not go down? Like, how do you mean more affordable homes, but also not have housing prices go down? Like, I don't even understand how that makes sense.

Yeah, the logic of it doesn't make sense. And that's always been the prevailing political wisdom. And Robertson, Minister Robertson, is not the first politician to give that answer. I think politicians should be questioning that, that logic. And we saw in a response video to Minister Robertson's remarks, the conservative housing critics Scott Agenson came out in a video and said, well, this is just wrong. Of course prices have to come down. You know, maybe that's easier to say if you're in opposition, but we're still willing to say it. They weren't really pilloried for it. One of the data points I like to point out is that

home prices in the GTA have gone down about 20% since 2022. And this is a region that has reelected a provincial conservative government and reelected a federal liberal government since then. So, yeah, I do think there is a limit to the sort of the patients or how far you can go before existing homeowners, you know, start to scream. But I think that limit is farther than politicians realize or willing to admit. And we also have to realize that a lot of homeowners I put myself in this place that, yeah, I'm 48 years old and I've been a homeowner for over 20 years. And sure, you know, all else being equal, yeah, I want my assets to be worth more than otherwise. But I'm also the parent of two children, you know, my daughter's 14. I would like

her to own a home someday. So even as a homeowner, I'm conflicted. You know, it's not the idea that ever-rising prices are unambiguous good for me is simply incorrect because I would like, you know, my daughter to be able to have the same opportunities that I had. So I want to end by, you know, talking about what you think is the way forward here. Obviously, a big thing for you is the idea of the missing middle, which is to say, you know, affordable middle-class housing as opposed to like luxury teeny tiny condos or McMansions or whatever. And so do you think that this plan does enough to address not just the raw numbers of homes, but the variety of types of housing that this country needs?

And if you see something lacking, like what would you like to see? Well, I think there needs to be more on the focus of the permission to actually build these things. And, you know, that's one of the issues that the federal government's had for a while, you know, whether it be with Build Canada homes that they're developing or, you know, with the CMHC catalog of housing designs, that there is interest in the federal government and, you know, building things like fourplexes, building small apartments and so on. But these are constantly getting kind of blocked at the municipal level. There was a big debate in Toronto around. legalizing six plexes, you know, even though the city of Toronto had agreed, you know, may cut a deal with the federal governments saying, yeah, we will do this as part of our housing accelerator funding. They didn't follow through. So I do think that the federal government's going to have to pay attention to that because they can come out with the best programs ever to finance, you know, small-scale apartments, make them affordable, make them

climate friendly, but if you're not actually allowed to build them, or if it gets caught up in municipal red tape for extended periods of time, then all of those other things don't matter. So I think we need to see that. I think we need to allow for a more diverse type of buildings. You know, one of the things I often hear is, you know, people question, well, you look at Europe, you know, families with kids live in these great apartment buildings, but why can't they in Canada? And the reason is all of those great European buildings, they're all illegal to build in Canada. And I think until we change that, we're not going to see the diversity of housing types we really need.

So a lot of this really does come down to the provinces. Even with zoning, for say, that there's no reason why that we have to decide this at a municipal by municipal level. The province, it could be Ontario, any other province could just pass a law saying, as a minimum, you know, four or six units as of right everywhere. And the municipalities would have to follow it because municipalities are creatures of the province. So a lot of times, you know, we focus, we heavily focus on the federal governments and when it comes to housing. But most of the policy levers are actually with the province. All right. We'll leave it there. Mike, thank you so much. Thank you for having you.

All right, that is all for today. Front Burner was produced this week by Matthew Amha, Joytha Shangupta, Mackenzie Cameron, Matt Mews, and Lauren Donnelly. Our YouTube producer is John Lee, music by Joseph Chavison. Our executive producer this week is Elaine Chow. And I'm Allie Jains. Thanks for listening to Frontbrenner, and we'll talk to you Monday. For more CBC podcasts, go to cBC.ca.ca slash podcasts.