The Decibel - Carney’s plan to build Canada out of the housing crisis

Episode Date: May 26, 2025

Canada is facing tariffs, a possible recession and an ongoing housing crisis. The country needs millions of new, affordable homes, and Prime Minister Mark Carney wants the federal government to help build them. But how effective was it the last time the federal government built housing?Today, Dr. Carolyn Whitzman, a senior housing researcher with the University of Toronto, will walk us through the postwar plan Carney is drawing inspiration from. And then, we’ll analyze the challenges Carney and Housing Minister Gregor Robertson will face, and whether their plan can solve Canada’s long-standing housing crisis.Questions? Comments? Ideas? Email us at [e-mail]

Canada continues to face a housing crisis. The country needs millions of new, affordable homes. 3.5 million by 2030, according to the Canada Mortgage and Housing Corporation. And in Prime Minister Mark Carney's first address after the election, he shared his plans for how to tackle this. And we will create an entirely new Canadian housing industry in modular and prefabricated housing using Canadian technology, Canadian skilled workers and Canadian lumber. We will build houses faster, at lower costs,

with a smaller environmental footprint in construction and greater efficiency once families move in. The goal is to build nearly 500,000 new homes per year within a decade. It's ambitious, but it wouldn't be the first time Ottawa helped to quickly build a lot of affordable housing. Today, Dr. Carolyn Weitzman is here. She's an adjunct professor and senior housing researcher

at the University of Toronto's School of Cities. She'll tell us about what happened last time the federal government built affordable housing, and what challenges Carney's Liberals face as they now try to do the same. I'm Maynika Ramon-Wilms, and this is The Decibel from The Globe and Mail. Carolyn, thank you so much for being here.

Thank you, Maynika. So we are going to get into the current federal government's plan to build housing. But first, let's go back to a time when Canada built a lot of affordable housing really fast. This is back in the 1940s. What led the government to focus on housing then? So during World War II, there was a huge shortage of housing for industrial workers flowing to the cities. There was what the federal government called predatory landlords in jacking

up rents. The federal government did a number of things, including a rent freeze in 1941 that lasted in most parts of the country until 1949. It also built about 6,000 homes for industrial workers, and they were also intended to be lived in by returning servicemen, homes for heroes. So they were two and three bedroom bungalows. This is of course after the Second World War, then all those people coming back from war.

That's right. It's during and after the Second World War. And then around about 4748, there's a new prime minister, Louis Saint Laurent, and he is adamantly opposed to the notion of public housing, housing being built by governments. And so the system is tweaked to sell off both the housing that had been built for rental and to build or enable further ownership housing. And that ownership housing had a preferred price point of about $7,000 to $8,000 in those days, which would equate to, you know, even with inflation, that would equate to about $80,000, $90,000 in today's money. Very reasonable for a house.

Quite reasonable for a house intended to be easily affordable to someone who is just starting a career. Of course, it being the late 40s, it was assumed that that would be a man and that there would be a stay at home mom doing all the unpaid labor. Okay. How did we actually do this, Carolyn? Like, how did we go about getting all of these structures together and ready for people to move into? Yeah. And again, I'm a historian, so I'm going to try to put you back in the mindset of the 1940s. The 1930s, of course, had been a global depression. And so there really wasn't much of a homebuilding industry going on. So this is really starting from a very low baseline.

So the federal government's doing everything from getting architects to come up with easily replicable bungalow designs. They were called strawberry boxes because of their similarity apparently to boxes you found strawberries in. There was a lot of use of government land, either the government expropriating land and then making it available to developers or using crowned land. So there's land, there's this easily replicable design, there's relatively easy finance, relatively long term and low rate for the time. In other words, mortgages. That's where the Canada Mortgage and Housing Corporation is set up.

And then there's also the use of industrial factory built homes. And factory built homes sounds like this newfangled idea, but actually you could buy homes off of Sears catalog and all the components would show up just like IKEA today. That's amazing. Wow. Yeah. So you could put up one of those panelized homes in about three days. They were very simple to build. Sorry, three days to build a home? Yeah, three days to build a home. So if you had on-site construction workers, they were working very quickly and efficiently.

And of course, the approvals were there because the designs had already been approved. So all of those elements are aligning in the late 40s. It is a very inspiring time in a number of ways. But I'd also argue that the early 1970s was an inspiring time. There's more of an attention on purpose-built rental apartments for cities for mostly young singles and couples. But there is a lot of three-bedroom housing being built for families. The emphasis there was on low-rate long-term, and by long-term I'm talking about 50-year mortgages

or loan repayments for nonprofit housing providers, whether it be public housing or charitable non-profits or co-op housing, which really sprung up in the 1970s. And up to 20% of new homes were not built by private developers for profit, but were built by non-market developers for social good. So the 1970s were also a time when there were a lot of houses being built, in fact more houses being built in the early 70s than are being built today. Okay, so Carolyn, these efforts from the 1940s onwards resulted in a lot of affordable homes

getting built, around one million actually. But the government eventually got out of doing this. I want to ask you specifically, Carolyn, about the government's role here, because it sounds like in the 1940s, they were very heavily involved and actually ended up owning some of these houses, but that didn't last for too long.

Can you tell me about that? Sure, it was pretty, well, I shouldn't say it was unusual because after World War II, England for instance, directly built homes. But the idea was that the federal government was going to directly build homes in the 1940s. Starting in the early 1960s, provincial housing corporations started directly building homes. And then from the 1970s onward, there were municipal agencies like City Home in Toronto, or Metro Vancouver housing, but the funding came from the provincial

and federal government. What started happening in the 80s, interest rates went way up, 18, 20 percent. So the federal government started being worried about all those low-cost loans it had extended to non-market housing. The federal government decided this is too much of a financial risk, let's download it to provinces. And provinces, by the way, were very happy to take over that responsibility for housing, they said. But then in 1992, when those arrangements got finalized, basically non-market housing tanked. And that's about the time you see

the rise of homelessness. In the previous decades, though, did those efforts actually solve the housing shortage for people? Yeah, it did. So again, you know, one of the things that governments always need to do with housing policy is look at demographic shifts. And a lot of homes were built for particular kinds of families, two parent families where one went out to work and one worked at home with children. At the time, the life expectancy was much lower than it is today.

And what's happened since the 50s and 60s is that society's profoundly changed. People get married later. If they get married at all, people have children later. If they have children at all, the notion of being in one place with a 30-year mortgage and a job for life isn't necessarily the reality of a lot of people. People with

disabilities are not living in institutions anymore. So all of those changes means that the need for housing shifts. I'd say that from the 40s to the 80s, the federal government did have a housing policy branch within the CMHC. There was a lot of activity, particularly in the 70s and 80s, about meeting housing needs. And then when the federal government gave up, there were two provinces, BC and Quebec, that kept a strong housing arm. The other provinces just kind of gave up and in particular Ontario downloaded it to municipalities in the 1990s. Is that part of the reason why we have such an issue today then?

Yeah, absolutely. You can't neglect housing, You can't pretend it away. The notion today around aggregate supply is a notion that's actually never particularly worked for any country including Canada. Even when we talked about building lots and lots of bungalows and lots and lots of suburbs that were very car-dependent for a nuclear family, there was seniors' public housing being built. There was just the notion that there would be a lot of rooming houses, for instance, for low-income singles in cities. Then rooming houses started disappearing.

It's just like health and education. People's needs, society changes, and those basic services need to change with them. We'll be back after this message. Okay, so this brings us to the present day then and the current government's plans for housing. Prime Minister Carney has said that his government will create a Build Canada Homes Organization, also called BCH, to really focus on developing and financing affordable housing in this country. So this is $25 billion in loans and a billion dollars in equity financing for prefabricated construction. So what exactly are they planning on doing here? Do we know?

There's an emphasis on three elements. The first is land. So using government land better for affordable housing. The second element is finance. Now what you just said about Build Canada Homes is actually about the third element which is trying to ramp up factory construction. Factory construction has worked in the past, as I mentioned. It's worked in other countries like Sweden, Japan. The financing is to help the kind of steady demand that you need in order to build a factory

and hire people to work in that factory to build housing components. It's a very different approach to the housing industry than just hiring construction crews when you need them. I think this is an important point because we're not as familiar with factory constructed homes, right? What exactly is that? It's simply, instead of constructing homes on site, constructing homes in factory and transporting the components, either in panelized put it together, or in sort of volumetric and cube, so to speak,

and craning it into place. This is like prefabricated construction kind of thing? Yeah. It's sort of the difference between, hi, I'd like a car. Could you please build it from scratch? Or, hi, I'd like a car. Could you please build it from scratch? Or, hi, I want this model of car. Here it comes off the production line kind of thing. So if you pull it off, it would be a huge leap

in terms of productivity. But there's something really important about the process that I just want to point out. And that is the notion of pre-approved and replicable designs, because part of the problem right now is it can take three years easily to get approval for a multi-family house in Toronto.

Compare that with the city of Kelowna that created a number of designs for duplexes and triplexes and fourplexes that are pre-approved. We like the look of them. We feel it would fit in any one of, you know, 1,500 lots. They provide a building permit in 10 days. So it's partly about mass producing certain kinds of housing. And it's partly about the pre-approval aspect, which is something that the federal government has gotten very interested in again.

AMT – Interesting. I think a lot of people might think of factory construction as maybe not as good as our traditional construction. Is that the case? Is this kind of more shoddy work? BF – No, quite the opposite. There's a lot of evidence that factory built, because it's not exposed to the elements

while it's under construction, because it's done a lot more scientifically and possibly in a more automated fashion than on-site construction, it's usually more likely to be better insulated, more likely to be better put together. And sometimes people go, oh, isn't that going to look very dull? But if you've seen a suburban subdivision lately,

it's not terribly exciting. Any kind of replicable or mass produced housing is going to be, look like the one next to it. And that's where cladding comes in and that's where gardens comeding comes in and that's where, you know, gardens come in and all kinds of things. So I don't really accept those criticisms of modular housing. There are criticisms of modular housing that make a lot of sense.

Like, you know, we're going to have to work out things about construction, we're going to have to work out things about where the stage and where the crane is going to go, where the materials are going to go, while the home is being built, having said that, you can build an apartment building in less than two months. And that's as compared to several months to a year in the case of a more traditional construction model. So I'd say the prospect for direct money savings isn't huge unless there's a huge scaling up. The potential for time savings, if we again get it right and that's going to take a certain

amount of scaling, is big. And time is money. So that's great. COLLEEN O'BRIEN Okay. So it sounds like, yes, more efficient here, but what about the affordability of these homes? Do we know if these kind of pre-construction homes are actually going to be more affordable? Yeah, and that's where the third element comes in.

So I talked a bit about land, we've talked a little bit about construction. The third element is finance. So if we go back to the 1970s, we're talking about mortgages of up to 50 years and a focus on the needs of non-market developers who are developing houses for low and moderate income people. They've really been left out of the equation for 30 years now and it shows. We need to figure out how to get to the price points that people can afford. If someone is on a minimum wage job, they can afford a maximum

of say, $1,000 a month for a one bedroom. If you've got a young professional couple who are earning about 80% of median income, they can afford in most cities in Canada, about $1,700 a month. How do we start producing that? And really the most promising approach is, for a start, doubling non-market housing because not only is it cheaper to take out the profit motive from development, it also stays affordable over time, much more so than market rental. So how do we scale up non-market production? Where does modular housing fit in? Well, some of the most successful examples of modular housing in Canada have been around student housing.

There's a company called UTL in Quebec that builds modular student housing that's, you know, available for $1,000 a month rent or less. That's what we need a lot more of. So we know it can be done with affordable and deeply affordable housing. That doesn't mean it can't be done with more expensive housing. It just means that it's it's part of the mix. Yeah. And I guess just for some context, the CMHC, the Canada Mortgage and Housing Corporation, defines affordable housing as 30% of pre-tax household income here. So I mean, currently, people are paying a lot more than that in a lot of the cities, right?

And that's not even looking at kind of the lower end of that. People are paying 50, 70%. There are cases of people who are paying more than they're earning. They're living off their savings because they can't afford housing. So yes, I think an income-based definition of affordability is the way to go. So we're still kind of seeing how this plan by Carney is going to play out, but it does face some big challenges that we can pinpoint already. Some of the top ones are zoning, labor shortages, building costs.

Of course, zoning laws vary across the country, right? So Carolyn, do we know how the government plans to address these challenges? Well, in terms of municipal approvals, there is a program called the Housing Accelerator Fund, which is basically infrastructure money for cities, which they absolutely need, in return for certain kinds of zoning and approvals changes. And that's already been extremely successful in some cities. I mean, Edmonton had already started a big work of reform, but it's probably, in fact,

a number of developers have studied it and say that Edmonton is the best big city to work in right now. Approvals times, zoning, the consistency of decision making. And really many of the cities that have gotten housing accelerator funds have done what they said they'd do with them. And certainly that's going to be extended and possibly expanded because it has been working. The Build Canada Homes, it's honestly, it's too early to tell what that's going to look like, but it is a promising approach, let's say.

The main thing that I hope that the new federal government does is get serious about what it means about affordability. The only way to address homelessness is deeply affordable housing with supports for those who need them. That housing first approach is literally the only way that works and the federal government needs to lead the way in terms of enabling that kind of low-income housing, and then it's absolutely up to the provinces, to make sure that tenants have rights to secure tenure. The number of evictions has been going up precipitously

in Canada, and that is a big factor in homelessness right now. So there needs, even though it's not the federal government's direct responsibility, I'm not saying it should be a rent freeze, but there have been times when the federal government goes right. Provinces, this is your job, duped. So the things you're mentioning here, these are these are tall orders from the federal government, provincial, and municipal levels here. Are you seeing the

kind of action that you think is necessary in order to make this happen? So the federal government needs to realize its responsibilities around finance and around a national plan and national targets. And those targets shouldn't just be about produce this many houses, but it should have a little bit of nuance as the BC government has done about how much supportive housing we need to end homelessness or how much seniors housing that we need. And then the federal government should be working with provinces and as I say, provinces

are responsible for social and health services associated with housing. They're responsible for income supports. They're responsible for landlord-tenant law. So you can't get around it. That's the province's responsibility and municipalities. They have one job, which is approvals and good decision making about who lives where at what cost. And they haven't been doing that one job terribly well. And just in our last few minutes here, Carolyn, I do want to ask you kind of about a statement that I think is indicative of the federal government's position here when it comes to

building housing. Earlier this month, we saw Carney's new housing minister, who's former Vancouver Mayor Gregor Robertson. He said that housing prices wouldn't need to come down even as they build more homes. 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. The government of Canada has not been building affordable housing since the 90s,

and we've created a huge shortage across Canada. What do you make of that response here? It is what we call a mask-off moment. It's been super clear that there's this ongoing tension, whether it's a conservative or a liberal government, between housing as a retirement investment or as an investment and housing as a place to live. And at some point, I'm afraid you

do have to make a decision which one's more important. And that decision might not be very popular. So you have really three groups of households in Canada. You have folks who have paid off their mortgage, generally older, who are sitting on a lot of wealth. And then you have another group of people who are desperately, they've just bought houses, they have huge mortgages, they're under a lot of stress. And then there's a third group of tenants

who don't have equal rights and don't have tenure security. So depending on how you play it, you're gonna at least make angry a third of the population and possibly that second group of people who have mortgages and are quite anxious about them. That has to be played very carefully. I'm not saying there's an easy answer. There really, really isn't. At the same time, when you've got house prices that only the top income quintile can

afford, when you have house prices in Toronto that are four times as much as a middle income household can afford, in Vancouver, five times as much as a middle income household can afford, I can't imagine a scenario where house prices shouldn't be going down in order to deal with the housing crisis. So there is no magic bullet. It would take 50 years of doubling the current supply in order to bring prices down. So supply alone won't get us there. The right supply will get us there. We know, we know there needs to be a lot, a lot more secure family friendly rental. There have to be other ways to invest other than what's been a really great investment for the last 40 years, which is assuming that house prices will inevitably go up. And, you know, the World Bank, the OECD,

they've all pointed to Canada and said, this is very shaky for Canada's economy to rely so much on housing speculation. So we need to become less of a housing speculation country and more of a housing innovation and housing fairness country and there's no two ways about that. Carolyn, thank you so much for taking the time to be here. Thank you, Maynika.

That was Dr. Carolyn Weitzman, an adjunct professor and senior housing researcher at the University of Toronto's School of Cities. That's it for today. I'm Maynika Ramon-Wilms. Our intern is Kelsey Howlett. Our associate producer is Aja Souter. Our producers are Madeleine White, Michal Stein and Ali Graham. David Crosby edits the show. Adrian Chung is our senior producer and Matt Freiner is our managing editor. Thanks so much for listening and I'll talk to you tomorrow.