Right across the country politicians and housing advocates are calling Canada’s current situation a crisis.  They say adequate, affordable housing has all but disappeared, for both sale or rent.  They also point out the situation is only going to get worse as the federal government moves ahead with its push to welcome more immigrants in an effort to bolster Canada’s workforce.

B.C. Announces Action Plan

The province of British Columbia – home to one of the hottest housing markets in Canada – is the latest jurisdiction to introduce a wide-ranging program to ease its housing crunch.  And it is pointing to the workforce as a key driver of its so-called Homes for People Action Plan.

“Businesses are struggling to attract workers who can’t afford to live in the communities where the jobs are,” Premier David Eby said.

“This crisis is touching people in every corner of our province. It’s impacting quality of life in our communities and it’s holding back our entire economy.”

In response the B.C. government wants to start building homes as quickly as possible.  It is committing a total of $12 billion over the next 10-years, starting with $4 billion over the first three years.

Proposed Measures

The province intends to introduce new zoning legislation that will streamline the processes and increase density, allowing small-scale, multi-unit housing – including town homes, duplexes and triplexes – on property that had been traditionally designated for single-family detached housing.  There will also be incentives to build secondary suites in existing homes which could be rented out at below market rates.

An “anti-flipping tax” will be put in place to discourage residential real estate speculation, which is seen as a key driver of price increases in B.C.

Implementation of the plan is set to start in the fall and will continue into next year.  The government has not said how many units it expects to see added to the housing stock.

The Conundrum

Along with B.C. other governments, including Ontario and Ottawa, have made commitments to get more homes built.  But they all face the same major challenge: a stagnating construction industry.

Retiring Baby Boomers led to a shortage of skilled labour, which got worse due to COVID-19.  Worldwide lockdowns triggered by the pandemic slashed the production of building materials and snarled supply chains.  But even as those problems ease, rising interest rates are adding to the troubles and government priorities seem to be working against each.

“On the one hand you’ve got the federal government – and to some degree, provincial governments – pushing for more housing to be built, and on the other hand you’ve got the Bank of Canada” [and its raising of interest rates], says David Macdonald, senior economist with the Canadian Centre for Policy Alternatives.

“In so far as we’re relying on the private sector to build a lot of that new housing stock, that’s a lot less likely to happen now than it was a year ago, given much higher interest rates.”

Construction Complaint

The construction industry also complains about excessive red tape in the planning a permitting process.  It remains to be seen whether legislative changes and funding programs will reduce that burden.

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