The Decibel - Mark Carney’s plan for affordable housing

Episode Date: September 18, 2025

At the beginning of the week, Prime Minister Mark Carney announced the launch of Build Canada Homes, an agency tasked with building affordable and supportive housing across the country. This marks the first big plank of his government’s efforts to alleviate the housing crisis. But will it work?Nojoud Al Mallees covers economic issues for The Globe and she explains what kind of projects this agency will oversee, who will benefit from them and what impact it may have on the wider housing market.Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Prime Minister Mark Carney has been under pressure to act quickly on one of the biggest issues for Canadians, housing. And at the start of the week, he announced part of his solution, an agency called Build Canada Homes. A new federal entity that will supercharge housing construction across Canada. This new entity is getting $13 billion in federal funding to start. But how exactly will it quote-unquote supercharge housing construction. And what will that mean for house prices and rental costs?

Najud al-Malise covers economic issues for the globe and was at the launch of Build Canada Homes. She'll discuss how the Prime Minister believes this agency will help solve Canada's complex housing issues. I'm Cheryl Sutherland, and this is the Decibel from the Globe and Mail. Nizude, great to be talking with you today. having me. So let's start with this new agency that was announced, build Canada homes. What exactly is its mission? Its primary focus is to build more affordable housing across the country. And it wants to do this by also, as the prime minister would often say, catalyzing investment from the private sector, boosting innovation in the industry by using new ways of constructing homes and

providing financing for developers to build those homes, including on public land. Catalyzing, that's quite the word. Oh, well, it's the word of the year for this government, for sure. And so we're talking about non-market housing. Can you just tell me what exactly that refers to? Yeah, so oftentimes when we're saying affordable housing in this context, what we mean is non-market housing, which is housing that's not-for-profit. It's housing that is delivered by nonprofit organizations, by government agencies.

If you think of Toronto Community Housing, that is non-market housing. housing. If you think of co-ups, that's non-market housing. And so there's a whole spectrum of housing that falls under under this bucket. And it's primarily geared towards those with low and modest incomes. Do we have a sense of like what does affordable housing mean to the Carney government? So the government's definition of affordable housing is a housing that costs 30% or less of your pre-tax income. And so that can mean a lot of different things depending on who. we're talking about. Right, right.

Yeah. And I think that's, it's important to point out because I don't think that, you know, that means it's affordable for everyone, but that's the definition that the government's giving. Yeah, exactly. So Build Canada Homes is getting $13 billion in terms of funding to start. And that number might grow, but that's the number we've been given right now. Nizum, could you give us a sense of where this money is going?

Like, do we know if there are any specific projects that have been announced? The government has announced some initial initiatives that they're planning. But the majority of that money has not been allocated yet, and it'll be up to build Canada homes to figure out what to do with it. So the announcement included $1 billion fund for transitional and supportive housing. And so that's specifically housing for those who are transitioning out of homelessness, those who have additional needs because of mental health-related issues, drug addiction. And so that bucket of money is aimed at addressing that specific.

problem. They've also announced that they want to move forward with building homes on federal lands in six cities. Those cities are Dartmouth, Lange in Quebec, Ottawa, Toronto, Winnipeg and Edmonton. They've also announced an initiative to build 700 homes in Nunavut that are both affordable and supportive housing. So those are the bulk of the projects that were announced. Not much details around them. We don't know exactly the timeline for building them or which developers are going to step in. This was just the launch. And I think the government really wanted to show that they actually had plans on next steps and were able to say what they were going to do next and where they're going to build. But really, we don't know much else yet. Right. You said developers

there. And that makes me think about who exactly is building these homes. Because there was some concerned that the government might actually be involved in physically building these units? So the government is not going to be building these homes itself. There aren't going to be government workers with hammers and cranes. I think that was to the relief of a lot of private developers who are nervous about the idea of the government becoming a developer. So the Prime Minister really emphasized that this is about partnering with the private sector to build these homes. The role that built Canada homes is going to play is by providing low-cost financing to some developers potentially, providing the land where they could build the

homes, helping fast track the approval for some projects. And so the government's playing more of a role of facilitating these projects, making them viable, providing the financing, the land, the necessary resources to get this going. Okay. Another goal of this Build Canada Homes Agency is to create a bigger prefab or factory-built housing industry in Canada. And this is kind of essentially some of or all of the house is built in a factory setting and then transported to the location versus the custom built home, which is built in location from the ground up. How exactly can a government entity build out in an industry like this?

Because that doesn't really exist right now in Canada. Well, it exists, but it has been slow to scale up. And so it's not adopted as widely as one would hope it would be. The government wants to turbocharge that industry by providing more demand for these prefabricated homes. And so they're hoping that by prioritizing these modular housing in these projects, by helping with some regulatory issues that they could increase the adoption of this innovative way of building. And the reason they want to do that is because building off-site prefabricated homes cost way less can be built way faster. We're talking about right now we have a huge supply shortage. We need to speed up the pace of building and is also more climate friendly, more environmentally friendly.

But there have been various challenges and roadblocks to getting that more widely adopted in the country. You mentioned regulatory issues. Can you tell me like what kind of issues are we talking about here? Yeah. So for prefabricated housing to be adopted more broadly, you want to make sure that cities have the same building codes, for example. so that companies that are manufacturing these homes can manufacture the same house for a home in Winnipeg, for a home in Regina, for a home in Montreal. But right now, across the country, you see some differences in building code standards.

And so that means it's difficult to scale up. There are also other roadblocks beyond regulation. It requires a lot of investment upfront to get the technology going for these kinds of homes. and given how volatile housing market is, that can be difficult for builders. And financing is another problem for them as well. And so the government is hoping to kind of address some of these roadblocks to make it easier for not only the government projects to adopt modular housing, but for the private sector to also do so.

Right, right. And I imagine you also need the factories to actually build these modular homes. Yes, exactly. Yeah. And that's where the investment comes in. Right, right, right. So Build Canada Homes is tasked with building affordable homes right away, as well as creating this entire industry needed to do that at the same time.

That's like two very big things to be doing at once. Is this even possible? Well, I think it's going to take a while for Build Canada homes to scale up its operations. What they started off with, for example, announcing 4,000 homes on public lands, that is quite small in terms of how many homes we build in a year. we have about a little over 250,000 housing starts a year. 4,000 isn't going to be a big bump. And so it will take time likely for this organization to actually have an impact.

And so time will only tell if the government's able to actually get things moving rapidly. And the thing with innovation is once you get to a point where you can scale up innovation, you see change really, really quickly. And so there's a possibility that if the government is able to kickstart more modular housing, construction that down the line, you suddenly see a big shift that has an impact on the housing market. So that's an interesting point you're bringing up on on housing starts. And when we say housing starts, we actually mean, you know, the number of new houses that are built per year. And as you say, right now, we're at about 250,000 new housing units per year. But the Canada mortgage and housing corporation says that we need to actually double starts per year until 2035.

So we have a long way to go to get there. Yes, absolutely. And I think that's the part that makes people a little bit, maybe cynical about how much the government can really do or whether they could actually help affordability. We have known for years that we have a massive housing supply shortage. And we really haven't seen housing starts increase anywhere close to the level we need. And right now we're also experiencing an economic slowdown that will only make it harder to do that. Yeah, yeah. And on another point on housing starts, Toronto, where I am, they are at the lowest levels since the mid-1990s. And there is a reason for this. Like we only have so much construction labor and materials. So how will build Canada homes overcome these issues that are already complicating our ability to build homes right now?

Going back to modular and prefabricated housing, that's the solution the government is betting on. Because if you're building homes off-site using technology and you're building them faster, you need less workers to do that. And they're also adopting a buy Canada policy for build Canada homes, essentially saying that projects should prioritize Canadian materials to build these homes. And so that's the government strategy for addressing both those issues in terms of supplies. you think about the trade war and the effect that's happening on prices. You think about, again, an aging population. And so those are some of the tools the government is hoping will help address those issues. Right.

And we should say also, like this is not a new thing. Like prefab homes was a thing in Canada, right, after World War II? Yeah, there was a huge push back then to build more housing. We saw a rapid increase in housing. And it was in part also because the government created this catalog of designs for homes so that they could adopt that. kind of manufacturing. Right, right.

So, I mean, I can see why the government would want to play a role building what we're calling, you know, supportive housing and below market units. But we hear from builders that the economics of these projects don't make sense, which is kind of business speak for there's no profit in them. So can you help me connect the dots? Like, how does build Canada homes help put financial incentives in place to get more affordable housing to market? Well, part of the answer there that the government is trying to offer is the public lands.

That if the government is providing land for builders to build those homes, that's one piece of the puzzle. Financing, low-cost financing is also really important because the government can borrow at a much lower rate than the private sector. And so that's been key to the boom we've seen recently in rental construction across the country. That's because of government policies, government low-cost financing that help projects become viable. And so there are definitely the financial tools there to make it easier for builders to build right now. And obviously, in the case of affordable housing, the government is really the only entity that's in a position to make those projects viable because it's not up to the private sector to offer people housing that is geared to their income.

We'll be right back. So, Najeed, you spoke with experts in the housing field after Carney made his announcement. How did they react? The not-for-profit housing sector is really excited about build Canada homes because it is putting this emphasis on affordable housing, non-market housing. And they say that should be the focus of the government because that is its responsibility. There has been some nervousness about the speed at which the government will move forward. forward with Build Canada homes because so many projects have been delayed right now as the economy slows and conditions worsen in the housing market. And so they're all hoping that the government

will move quickly and won't stall its initiatives as it builds up, build Canada homes. They want them to move ahead with what they can right now to get these projects going. Right, right. Conservative leader Pierre Poliev has criticized this plan saying that Canada doesn't need more bureaucracy to fix its housing problem. You know, the funny thing is we all agree that Canada has everything you need for affordable homes. In fact, housing should be dirt cheap because we have the most dirt to build on. We have the builders.

We have the trades. We have the companies. They have the money. They'd love to get building. What's standing in the way is bureaucracy. And so Mark Carney's solution is to add another bureaucracy that will only slow things down. Does probably have a point here because we already have the Canada mortgage and housing corporation, CMHC. So are we just adding more bureaucracy?

Well, what hurts the government's track record is that the previous liberal government had a national housing strategy that was supposed to address this issue of affordable housing. And the programs that it adopted under the CMHC have had mixed levels of success. Meanwhile, the housing market worsened significantly in terms of affordability over the last decade. And so for the conservative leader, it's easy to make that argument of saying you're going to start another office and what happened to all the other programs that you ran. They weren't successful. And now you're just going to put a shiny new sign on it and call it something else. Well, you haven't built any homes. You've mentioned a few times now that our economy is slowing down.

And in the trade war with our largest trading partner is dragging now. Even in his announcement, Carney acknowledged that there is an atmosphere of, quote, extreme uncertainty. We need to keep moving with Speed and determination, because the upheaval in the global trading system is not a transition, it's a rupture. And its effects are already profound. Workers displaced from their jobs, supply chains disrupted, and massive amounts of investment held back due to extreme uncertainty. How feasible is it to not just build more quickly, but also build out a new industry in this time of economic uncertainty? It's a challenging time to be trying to spur housing construction. So the Prime Minister is pitching Build Canada homes as a bit of a solution to all of those issues, right?

So as we're dealing with a trade war, he wants to build up domestic industries so that they don't have to rely on the U.S. as much. And that these products go towards building up Canadian infrastructure, Canadian homes. Again, it all sounds great as a plan. But oftentimes the challenge is always in the implementation and how long that's going to take, right? We got no timelines from the announcement on Sunday. And probably in part because the government doesn't want to put itself in a situation where it promises X number of homes by this specific date. And so we'll just have to wait and see in the coming months of what kind of success they have and whether you start hearing about projects becoming viable because of the government's initiatives.

Right. I mean, you said you spoke to some experts around this. Were they concerned about the fact that there were no timelines given here? Because I think that's something that's on a lot of people's minds. Like, sure, it's great to announce that we're going to do all these homes, but when, right? What did you hear? Well, the problem with timelines is that the government can oftentimes choose these lofty goals that never really are never accomplished. Like, you think about the prime minister promising to double the rate of home building.

I think most experts would tell you that's unlikely to happen anytime soon, right? And so even though we wonder, when are they going to move ahead with all of these plans, how many homes are you going to build? The other side of it is, well, do you want to put yourself in a corner and promise something you can't deliver? But there is definitely appetite for the government to increase its ambitions quickly and to show that it could scale up, build Canada homes. As journalists, I know that we love deadlines. So I just thought maybe they want a deadline as well. And that's how every press conference, that's what we're always asking, right?

When are you going to do this? Yeah. One thing I'm still trying to figure out, is this government has already taken heat when housing minister Gregor Robertson said he didn't think housing prices needed to come down, but just that supply needed to increase. Bill Canada Homes is vowing to increase supply for the deeply affordable end of the housing market, but what effect will that have on housing prices in Canada overall? Well, presumably, if you build up the affordable housing stock in the country, that will take some pressure off of the general housing market because more people will be able to get housing through,

I guess, the government and those nonprofit organizations. On prices, I mean, you would have to build so many homes to start seeing home prices fall. I think right now what's more realistic is talking about stabilizing home prices so that they don't continue to rise. And for politicians, there's always tricky talking about prices. There's plenty of homeowners in this country that don't want to see the value of their homes fall. There's plenty of young people who absolutely do want to see that because that's the only way they get in the housing market. And so that's a tricky balance.

I'll also add that in terms of these projects, that's rental housing. And so the effect is even more indirect because it would take pressure off of the rental market, which would presumably bring down rents, and then therefore people who are renting can save more money to buy homes, and then therefore that's how it would affect home prices. So it's really far removed from the home buying part of the market. Interesting. It's definitely a tricky balance there. But what you are saying here is it's unlikely that this is going to affect prices overall.

No. As of right now in the plans that we're seeing, I don't see this affecting prices or bringing them down at least. Okay. So just lastly here, we know that affordability, the prices of housing, is really top of mind for Canadians. And I'm just wondering when housing is such a huge issue for people. Do you think that this initiative is going to be enough? I think it depends on the success that government has. They have quite significant ambitions for build Canada homes

and what it means not only for low and middle income Canadians, but also what it means for the industry and how it builds homes. The Prime Minister on Sunday made the argument that actually a lot of Canadians are in need of non-market housing. He mentioned that those who make 90,000 and less, a two-person household that make $90,000 and less, are the ones who fall under that housing need bucket, and that makes up almost half of the country.

And so although at first glance, build Canada home seems like an initiative that's maybe not for you or me, it is actually important for a lot of Canadians. That was the argument the Prime Minister made. He said, listen, Canadians are a generous people. But Canadians, Canadians are generous people. Canadians care about homelessness.

They care about people in transition. They care about our communities. And they recognize that there are deep challenges in our communities, many of which are at least contributed to by the state of our housing market. And that's why we're active. And so that was his argument for why Build Canada Homes matters and matters to a broader demographic than you may think. think at first glance. The challenges in the housing market are so significant and they've been there

for so long that change is not going to happen overnight. It's going to take years to change the nature of the housing market. So these are just the first steps. It's really hard to judge where this goes. And there's more that the government's going to have to do to address housing affordability in this country, including in just the normal housing market, housing that is not provided by government or non-profit organizations. And there have been some promises made related to cutting GST charges and bringing down development charges and addressing regulatory issues in the country.

And all of those things are going to matter and are going to have an impact on the housing market in the long run. And so we'll just have to wait and see. All right, Nizu, we'll leave it there. Thank you so much for being on the show. Thanks for having me. That was Najud al-Malise, who covers economics for the globe out of our

Ottawa Bureau. That's it for today. I'm Cheryl Sutherland. Our producers are Madeline White, Michal Stein, and Ali Graham. David Crosby edits the show. Adrian Chung is our senior producer, and Angela Pichenza is our executive editor. Thanks so much for listening and I'll talk to you soon.