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Speaking Notes for Romy Bowers, President and Chief Executive Officer, Canada Mortgage and Housing Corporation
Toronto, Ontario
Check against delivery
Thank you for the introduction. And thank you for letting me be a part of this event.
Theme of this summit is “Partnership for Prosperity.” That’s a great message that packs a lot of depth into three words. And it applies particularly to housing.
Housing affordability is directly linked to prosperity. And all of the analysis, research and practical work that we’re doing at CMHC leads us to the same conclusion: Partnership — broader, closer collaboration that reaches across old barriers — is necessary if we’re going to make housing in this country affordable again.
The good news is, we’re seeing opportunities for the best kind of partnership — the kind that results in win-wins, so everyone prospers.
But I don’t want to make this all sound too easy, because it’s not. We have a steep climb ahead to reach housing affordability. What’s more, even win-wins can get complicated, and they require a lot of hard work along the way.
I likely don’t need to tell anyone here today that housing is one of the biggest issues Canadians are facing today. Discussion of the housing crisis is at the top of everyone’s news feeds.
But at CMHC we’re actually identifying two distinct housing crises.
There’s a crisis affecting our most vulnerable neighbours struggling to have the basic housing needs met, and another affecting middle income people finding it almost impossible to afford market housing.
Housing costs are continuing to rise faster and further than income growth, and it has been for decades.
This is particularly true for renters.
Our most recent Rental Market Report found that, outside of Quebec, it’s almost impossible to find homes that are actually affordable — that is, homes that would cost less than 30 per cent of gross income — to people in the lowest-income demographic.
I don’t need to tell you that Canada’s housing challenges are a major threat to our economy overall.
They threaten our businesses’ ability to attract and retain talent. And the talent we attract needs higher wages to cover their living expenses.
High housing prices prevent us from investing in more productive segments of the economy — housing is a very low-productivity asset class.
High house prices are, of course, tied to higher overall real-estate costs, which is a drag on businesses. A recent IMF report talks about the economic impact of high housing prices, saying they force small- and medium-sized businesses to sink more of their money into their physical footprints and less on more productive assets.
Here in Canada, high prices have left us with the highest level of household debt in the G7 — with three quarters of our debt tied up in mortgages. This is a big macro-economic risk we’re facing as a country.
We have financial safeguards in place — I’m thinking here of the mortgage stress test, among other policies — to ensure that we don’t get in over our collective heads. And our labour market remains strong, even in the face of economic headwinds. But if that should change and we start seeing job losses, that elevated debt level would amplify the fallout.
And so what are the underlying reasons for these two crises?
First and foremost, it comes back to the supply and demand imbalance.
Comparing ourselves again to the G7, it’s perhaps not a coincidence that Canada also has the lowest number of housing units per capita of any G7 country.
We’re not creating enough housing to meet the demand — and we haven’t been for a long time.
Our research shows just how severe this housing gap is.
CMHC analyzed how many houses would need to be built by 2030 to help achieve housing affordability for everyone living in Canada.
If the current rates of new construction continue, we are on track to create 19 million homes by 2030.
This may seem like a lot but unfortunately, Canada needs to create 22.5 million homes by that time to return us to what would be considered affordable levels.
That’s a shortfall of 3.5 million homes, mostly in Ontario and British Columbia.
So far, supply is not being created to keep up with that pent-up demand — for a number of reasons.
We’re hearing from the construction sector itself that it just doesn’t have the capacity to respond.
With supply-chain disruptions, labour shortages and material costs going up, private developers are saying that they’re struggling to be able to ramp up construction the way we need to in Canada. The most generous financing programs in the world can’t wield the hammers themselves.
So developers are left needing to do more with less.
Yet in recent years, our construction sector has actually been less productive compared to other sectors.
We need real innovation in how we build homes in this country. We simply can’t keep doing it the same way we have been for decades.
But we can’t lay this all on developers’ doorsteps.
For example, decisions on what and when to build aren’t only up to them. Building regulations vary by municipality, and some are tougher than others.
CMHC recently conducted a survey that found that communities with more overall land-use regulation have housing that’s more unaffordable. Higher levels of regulation were associated with longer approval times for new developments, which in turn can make building projects more costly.
But if we pan out even further — to the national and, indeed, international level — we see that persistent high inflation and the resulting elevated interest rates are driving up project costs, the same as they’re doing to other aspects of the economy.
I realize that, up to this point, I’m sounding pretty gloomy. And that’s deliberate — there’s no point sugar-coating the situation we’re in. It’s urgent, and it’s there for all to see.
But I can say that we as a country are making progress in the right direction, and there’s reason to hope we can further, faster. But it means working together — it means partnership, maybe to an extent we haven’t seen since the World Wars.
I don’t say that to be dramatic. CMHC was created after the Second World War to help returning veterans find housing. That’s the kind of unifying, all-hands-on-deck, national project we’re looking at if we want to make housing affordable again.
The federal government has planned to invest more than $82 billion dollars through the National Housing Strategy — launching a range of initiatives that approach the housing shortage from every angle that will have an impact.
And beyond that Strategy, we’re taking a whole-of-government approach at the federal level, bringing other resources — other partnerships — to bear.
For example, just this week Immigration, Refugees and Citizenship Canada announced a package of new immigration measures, which include integrating housing, health care and infrastructure planning into Canada’s immigration levels planning.
This includes leveraging Category-Based Selection to attract more immigrants who can help us build the housing we need.
However, as I said a moment ago, the federal government doesn’t have access to all the levers that control housing affordability in Canada. Most of them are in the jurisdiction of municipal, provincial and territorial governments, who are responsible for things like land-use policies, permitting and tenant-landlord relations.
I’m pleased to be able to say that real progress is being made on this front. Earlier this year, the Government of Canada began rolling out agreements with municipalities under the Housing Accelerator Fund.
This initiative, which CMHC is delivering, lets the federal government work directly with municipalities to slash some of that regulatory red tape.
The agreements are being couched in the number of new housing units that will be created, but the real outcome is systemic change. These agreements change the way that cities build houses, and so they should continue paying dividends well beyond the life of the program and agreements themselves.
And yet it’s not just governments who will play a role.
Governments must provide a foundation and develop policies for solutions to our current problems — it can identify the needs, develop incentives and frame the business environment.
But the private sector’s ability to finance, explore and operationalize will continue to be the driving force.
I mentioned earlier that we need to build 3.5 million extra homes by 2030. Our most recent research put a price tag on that: it will cost $1 trillion dollars to build that many homes.
That’s more than governments can hope to spend. We need to work with the private sector.
That includes helping the private sector to find new, more efficient ways to respond to demand.
As I said, this will partly come down to innovation.
New approaches like modular construction and panelization are showing huge promise in helping the industry do more with less. It speeds up construction time, requires less labour, and reduces waste as well.
Late last year CMHC issued a call for applications to the fourth round of our Housing Supply Challenge. This round, called Building for the Future, is seeking out — and then incubating — exactly these sorts of new ideas. The winning entries will be announced next year.
That challenge is one small way we can pitch in to this process. But we need to show broader leadership at the federal level as well.
We have a new minister — Sean Fraser, Minister of Housing, Infrastructure and Communities — and he has a new vision for making housing affordable.
One of the things he’s talking about is the need to “change the math for developers.”
This is a big way we can leverage our partnership with the private sector: finding ways to help the market function and help the private sector respond to demand.
It’s about seeking out win-wins — learning how we can align our interests so that the kind of housing Canada needs is also the kind of housing that makes sense for developers’ bottom lines.
So it really is all about partnership. It’s about finding new ways to work together, and ways to deepen those relationships.
CMHC plays a critical role as a convenor. Our unique position as a federal Crown corporation means we can, and do, bring all these players together — governments, the private sector and the non-profit and community sectors.
We do this because we’re stronger together. And we do it because there’s no silver bullet, no one-size-fits-all solution that will give us the housing outcomes we need.
We need all the solutions. We need all hands on deck, working together toward a better housing system, which is something that benefits all of us.
That brings me to my call to action — the big ask.
I’m asking you to bring us your ideas. I ask this of all of you, not just those with ties to the housing sector.
How can you leverage your expertise, innovation, and experience, to help us find innovative the innovative solutions we need? The technical advancements and new ideas that will support the major acceleration of housing development that our country so badly needs? And to develop it in a way that suits our present and our future?
We've worked on projects with all sorts of partners — projects that help us both prosper.
For example, we’re participating in a project led by the Bank of Montreal and the United Way Greater Toronto, called Inclusive Local Economic Opportunity, or ILEO. It’s bringing together many sectors to find innovative ways to create more inclusive economic prosperity in Toronto’s Greater Golden Mile. We’re working with ILEO on a range of initiatives, including pilots that are replicable or scalable to other neighbourhoods.
We’re also proud of our new partnership with Keewaywin, an Indigenous-owned investment firm that’s now turning some of its funding toward building homes for Indigenous people on and off reserve.
For those of you who are connected to the housing sector, look at the programming CMHC has to offer and see if any of it will help you reach your goals. We truly believe there’s something there for just about everyone.
And if you don’t find something there that helps you, tell us what you need. Our specialists want to hear about your wants as well as your ideas.
Housing affordability isn’t an issue for just some Canadians, it’s an issue for all Canadians.
Everywhere across this country there are people struggling to meet that most basic need of getting, and keeping, a roof overhead. Their stories are hard, and I couldn’t hope to do them justice by telling them here.
Taken together, those stories add up to a macro-level threat to our country.
And so I’m not asking you to worry about housing as good Samaritans — though I know that many of you do. Today, at this summit, I’m asking you to worry about it as business leaders.
I can’t think of a more innovative and entrepreneurial collection of leaders than those in this room today.
We’re staring down a huge challenge. But business leaders like yourselves know that we succeed by turning challenges into opportunities.
A crisis is an opportunity to do things differently. It’s an opportunity to innovate, and an opportunity to build new partnerships.
Convening people who don’t normally get together, in the name of innovation, is exactly what summits like this one are all about.
So I’m asking you, now, to direct some of that energy, and some of this opportunity, toward housing.
Direct it towards the win-wins that are out there for the taking.
