Another week, another blockbuster announcement from Ottawa aimed at solving our national housing crisis. This time, it’s a shiny new federal agency dubbed “Build Canada Homes,” launched with a cool $13 billion of your money. The promise? To slice through the red tape, leverage public lands, and finally start building the affordable homes that Canadians are so desperately crying out for. On the surface, it sounds like the cavalry cresting the hill. But as anyone who’s been in the real estate and mortgage game as long as I have knows, the devil is always in the details. And in this case, the details are as sparse as a downtown Toronto parking spot.

So, let’s peel back the layers of this government onion and see if it brings tears of joy or sorrow. What is this program really going to do?

THE GRAND PLAN: PUBLIC LANDS, PREFAB HOMES, AND A WHOLE LOT OF HOPE

The core idea behind Build Canada Homes is for the federal government to become a master developer. They’re planning to use vast swaths of public land – we’re talking about 88 federal properties spanning 463 hectares, roughly the size of downtown Ottawa – to build everything from high-rise apartments to single-family homes. The initial rollout is slated for six cities: Dartmouth, Longueuil, Ottawa, Toronto, Winnipeg, and Edmonton, with a first-phase target of 4,000 factory-built homes.

This factory-built, or modular construction, approach is being touted as a game-changer, with promises of cutting construction timelines by up to 50% and reducing costs by as much as 20%. The homes will be part of mixed-income communities, with a mix of “deeply affordable” and “community housing” for low-income households, alongside homes for the middle class. The government will also be partnering with private developers to get these projects off the ground.

THE BILLION-DOLLAR BLIND SPOTS: UNANSWERED QUESTIONS FOR RENTERS AND BUYERS

Now, here’s where things get murky. While the headlines are filled with impressive-sounding numbers, the practical questions that matter most to everyday Canadians remain largely unanswered.

How much will it cost to rent or buy one of these homes? The government has been frustratingly vague, using terms like “affordable” and “below-market rates.” But what does that actually mean in a city like Toronto, where the average rent for a one-bedroom apartment is pushing past $2,500? Will “affordable” be a few hundred dollars less, or will it be a truly significant discount that allows a family to save for their future? We just don’t know.

And who, exactly, will qualify for these subsidized homes? Will it be a lottery system? Will there be income-testing? The government has mentioned prioritizing low-income households and the “middle class,” but these are broad categories.⁷ Without clear, transparent eligibility criteria, we risk creating a system that is ripe for inequity and frustration.

Furthermore, how much will the government charge each buyer or renter? For renters, will it be a percentage of their income, a fixed rate, or something else entirely? For buyers, will the government be offering discounted sale prices, shared equity mortgages, or some other form of assistance? And for how long will people be able to stay in these homes? Are these long-term solutions, or are they designed as a stepping stone to the private market? These are not minor details; they are the very foundation of a workable housing program.

A LOOK IN THE REARVIEW MIRROR: THE GHOST OF HOUSING PROJECTS PAST

Before we get too excited about this new venture, it’s worth taking a look at the historical track record of government-sponsored housing in Canada. While the intention has always been noble, the execution has often been fraught with challenges. Many of the large-scale social housing projects of the 1960s and 70s, while providing much-needed shelter, became concentrated pockets of poverty with a host of social issues. After a decade or two, many of these buildings were in a state of disrepair, suffering from underfunding and neglect.

Now, the government will argue that Build Canada Homes is different, that the mixed-income model will prevent the creation of “ghettoes.” And to be fair, that is a step in the right direction. But the long-term success of these communities will depend on sustained funding for maintenance and social support services – something governments of all stripes have a notoriously short attention span for.

THE ELEPHANT IN THE ROOM: IS GOVERNMENT THE PROBLEM AND THE SOLUTION?

This brings us to the most critical question of all: is another massive government program the answer, or would it be more effective to get the government out of the way? For years, builders and developers have been sounding the alarm about the suffocating web of regulations, levies, permits, and fees at the municipal, provincial, and federal levels. These costs, which can add hundreds of thousands of dollars to the price of a new home, are a major impediment to new construction.

So, here’s a thought: what if we took just a fraction of that $13 billion and used it to eliminate all new construction levies and permit fees for a period of, say, five years? That would be a direct and immediate incentive for the private sector to build, build, build. It would unleash the power of the market to increase supply, which is the only real, long-term solution to the affordability crisis.

Instead of the government trying to play the role of developer – a role it has historically not excelled at – it could focus on creating the conditions for success. This means streamlining the approvals process, which can currently take years, and working with municipalities to end restrictive zoning policies that make it illegal to build anything other than single-family homes in many urban areas.

THE UNCOMFORTABLE TRUTH: HOUSING THE MOST VULNERABLE

Finally, we need to have an honest conversation about who makes up the most visible segment of our homeless population. It is an uncomfortable truth that a significant number of people living on our streets are battling severe mental illness and drug addiction. Simply building more “affordable housing” will not solve their complex needs. They require supportive housing with integrated health and social services.

While the Build Canada Homes initiative does allocate $1 billion for transitional and supportive housing, it’s a relatively small portion of the overall budget. Isn’t it more pressing to first provide a safe and stable environment for our most vulnerable citizens? A compassionate and effective housing strategy must start with those who are in the most desperate need.

IN CONCLUSION

While the ambition of the Build Canada Homes initiative is commendable, it is fraught with unanswered questions and potential pitfalls. A top-down, government-led approach to a problem that has been exacerbated by government policy feels, at best, ironic. Before we pour billions into a new federal bureaucracy, let’s have a serious debate about the real barriers to housing in this country. Let’s consider a radical approach: a moratorium on the taxes and fees that stifle construction, and a laser-like focus on providing supportive housing for those who need it most. We can’t afford to get this wrong. The future of our cities and the well-being of millions of Canadians hang in the balance.

I hope you will enjoy this article and if you have any questions or would like to discuss I am always available.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114; steve@canadamortgagenews.