Comments on Build Canada Homes

A new federal agency to build affordable housing on a large scale

The federal government released a “market sounding” guide three weeks ago for Build Canada Homes, a new federal agency to build affordable housing on a large scale. The deadline to submit comments was last Friday. I wrote up some comments and sent them in.

A modular housing project in Calgary by ATCO. Photo: HousingNowTO

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Comments on Build Canada Homes: Market Sounding Guide

Russil Wvong (morehousing.ca)
Vancouver
August 28, 2025

I’m a layperson in Vancouver with a strong interest in the housing shortage. Younger people and renters are being crushed and driven out: prices and rents have to rise to unbearable levels to force people to leave. It’s a bad situation even for older homeowners. When younger people can’t afford to live here, the healthcare system will be under increasing strain. With Covid and remote work, the shortage has spilled across the entire country.

Mandate. If I understand correctly, the new Build Canada Homes agency will have three goals:

1. Build non-market housing (“affordable housing”) directly.

2. Lend to non-market housing projects.

3. Provide demand when there’s a housing downturn, picking up the slack. This will provide stable, predictable demand for suppliers to make investments requiring high fixed costs, like factories for producing prefab assemblies, and thus support economies of scale.

To avoid duplication, confusion, and overlap, Mike Moffatt recommends that CMHC should focus on market housing, while Build Canada Homes should focus on non-market housing, including mixed-income projects where the market housing cross-subsidizes the non-market housing. This seems like a good suggestion. Specifically:

Recommendation 4. Create separation from BCH and other entities, such as CMHC, by simplifying existing programs, with BCH handling affordable housing. BCH is advertised as “Canada’s new federal entity responsible for building affordable homes”. However, the CMHC already has programs devoted to affordable housing, such as the Affordable Housing Fund (AHF), and the Apartment Construction Loan Program (ACLP), which requires a minimum number of affordable units. Pure-play affordability programs, such as AHF, should transition to BCH, and other programs, including ACLP and MLI Select, should become pure-play market-rate programs without affordability requirements.

Coordination. Mike Moffatt also recommends coordination with provinces and municipalities to ensure alignment on zoning, building codes, and approval processes. My suggestion would be to focus on the places where the housing shortage is the worst: the GTA and Metro Vancouver. Given the difficulty of negotiating with numerous municipalities, it’d probably be most straightforward to work with the BC and Ontario governments, but the city of Vancouver and the city of Toronto may need particular attention, given their central location and thus high land values, requiring more density.

Costs. The barriers to building non-market housing aren’t that different from the barriers to building market housing, namely approvals and costs. In particular, costs matter, because the stream of future rental income from the project has to pay off the up-front financing (to pay for materials and labour) needed to build it.

Some ways to reduce costs:

• Reduce the cost of land per square foot of floor space, by allowing more density. In places where land is more expensive, density should be higher.

• Reduce the cost of labour and materials by increasing productivity, e.g. by using more pre-fabricated assemblies.

• Reduce delays in the approval process by allowing more housing by right, or by speeding up rezoning and permitting

• Bring down barriers to entry so that smaller builders with lower cost structures can enter the market

• Reduce taxes and fees, including municipal development charges

Paramountcy. There’s a lever which the new agency will have, when building non-market housing directly: as a federal agency, it isn’t subject to municipal zoning restrictions. This is similar to the way that the Senakw project isn’t subject to Vancouver’s extraordinarily restrictive zoning laws, because it’s on Squamish reserve land.

Military housing. A particular housing deficit that the new agency could address whenever there’s slack: military housing. Alan Broadbent:

Canada’s military needs to build 250,000 units of new housing on its bases across the country to replace aged-out housing for its personnel. What military people and their families want now is not what was built many decades ago, they are looking for more a modern home than a barrack. This housing can be built to contemporary standards of quality and design, and to meet the modern needs of individuals and families. There is an opportunity to anticipate future quality and design standards, particularly factory-built and modular buildings with high efficiency energy systems.

Countercyclical financing. One concern about the countercyclical role is that homebuilding is sensitive to interest rates. Thus when homebuilding goes into a downturn, it’s likely to be because interest rates are higher than usual - which means that government borrowing to build more non-market housing will be more difficult. It may be helpful to set up a fund which locks in long-term funding when interest rates are low, and deploys capital when interest rates are higher.

More

• Build Canada Homes Can Work If We Get the Details Right. Mike Moffatt, Missing Middle Initiative. Moffatt also wrote an earlier, skeptical article for the Hub: The Carney government needs to kickstart a housing boom—and fast.

• Feds Outline Initial Vision For New 'Build Canada Homes' Entity. Howard Chai, Storeys.

• Liberals release first details for new Build Canada Homes entity. Marco Vigliotti, iPolitics. “A government source said the market-sounding document is sending a clear signal to developers and other housing stakeholders about the sort of projects that would be eligible for financing. One of the lessons learned from standing up the Canada Infrastructure Bank was the importance of signalling to industry what projects they should be advancing.”

• Scott Aitchison, the Conservative housing critic, argues that Build Canada Homes will duplicate work that CMHC and the Canada Lands Corporation are already doing. Scott Aitchison interview with David Herle, the Herle Burly, July 2025.