Two real estate experts weigh in on Canada’s home building woes
Two real estate experts weigh in on Canada’s home building woes
An election pledge by Canadian PM Mark Carney to double home constructions to nearly 500,000 units a year is fraught with challenges that range from the current tariff fiasco to unreasonable approval processes at the municipal level, two real estate expert say.
Patrick Armstrong, CEO and founder of Hyyve, an online marketplace that connects realtors with home sellers, and Daniel Foch, an advisor to the firm and chief real estate officer at Valery.ca, a real estate brokerage that has developed a platform that runs on artificial intelligence, predict that reaching that lofty goal could be difficult.
Late last month, Carney said at a campaign stop in Vaughan “in the face of President Trump’s tariffs, we need to build for Canadians.
“We’re going to build homes Canadians can afford, and a new industry that can take on the world. We’re going to get the government back into the business of homebuilding, while partnering with workers and industry, and cutting taxes for home buyers – so more Canadians can buy their first homes.”
Under the plan, the Liberals said in a release they will “create Build Canada Homes (BCH) to get the federal government back into the business of home building, by acting as a developer to build affordable housing at scale, including on public lands.”
According to Armstrong, from a construction standpoint it makes sense, but there’s a lot of policy issues that are in the way such as approval processes that needs to get resolved.
There is, he said, “enough demand in Canada to keep building far past 500,000 so it’s not a question of demand. It’s a question of how do we enable the builders to actually deploy their capital and build? And the faster we can do that, we create more supply, so there is not as much pricing pressures.”
The key, he said, is for municipalities to not only speed up the process, but also reduce the cost to get all of the permits because “if someone is sitting on land for five years that gets expensive.”
Foch, meanwhile, said when it comes to the overall housing market, lack of consumer confidence has been an issue for two years and as proof pointed to recent data from the Toronto Real Estate Board that revealed monthly home sales in March were down by 23.1 per cent compared to a year ago.
A key reason for the drop in consumer confidence, he said is “the way that we get homes built in Canada, is part of the issue, and I think it’s coming under a lot of scrutiny. Basically, a developer will pre-sell a project and a bunch of buyers, and typically investors will pre buy those units, and then the builder will build it with basically no risk, because they already have buyers lined up.
“And that now has materialized into a really ugly situation where we’ve got a bunch of units that people paid far more than they’re worth.”
The reality, Foch added, is “if the government were to build hundreds of thousands of non-market homes, it would probably increase the supply flood that we’re already seeing taking place, and continue to drive prices down to improve affordability. The question with the LPC (Liberal Party of Canada) when it comes to housing policies is can they be trusted to execute on the promises?
“That’s what voters are battling with regards to their housing policy. On housing, their track record leaves something to be desired.”
Source: https://torontosun.com/life/homes/its-about-getting-homes-built-faster
