Affordable Housing for Everyone in Canada

Speaking Notes for Evan Siddall, President and Chief Executive Officer, Canada Mortgage and Housing Corporation

National Housing Innovation Event Series — Part One

The Globe and Mail Centre
Toronto, Ontario

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Thank you; good morning, and welcome to the first of three housing innovation events CMHC is presenting in partnership with the Globe and Mail. We’re also pleased to have as co-sponsors Dream and the Keesmaat Group.

People know me to share my views directly — not with the incomprehensible veneer of a civil servant. I won’t disappoint. Only through vigorous debate and the exchange of widely differing perspectives will we arrive at solutions that best serve our shared goal — improving housing affordability for everyone in Canada.

It’s a noble goal, which in some peoples’ minds means it is naively unrealistic. Putting a man on the moon was one thing, but affordable housing for all? C’mon …

I hope that everyone here recognizes the merit of CMHC’s aspiration — our big hairy audacious goal that “By 2030, everyone in Canada will have a home that they can afford and that meets their needs.”

To us, this is much more than a nice idea — it is an imperative. It goes to the heart of our Canadian ideal of inclusion — of social adhesion and community, family and individual well-being. Suitable, affordable housing is key to our economic prosperity and stability, to our ability to innovate and grow, to ensuring that no one is left behind.

As Matthew Desmond puts it in his Pulitzer Prize winning book Evicted, “Housing is absolutely essential to human flourishing. Without stable shelter, it all falls apart.”¹

Housing is also part of the infrastructure global cities need — every bit as vital as airports, roads, public transit systems and other must-haves for vibrant, growing urban centres.² The socio-economic benefits of stable, affordable housing are undeniable.^3,4 When people have good housing, they tend to have better health.⁵ Healthy children and teens living in stable home environments have better educational outcomes.⁶

In short, access to safe, stable and affordable housing underpins social and economic inclusivity and is essential to Canada’ sustained economic growth and competitiveness.

On this, I trust we can all agree. Differences will no doubt emerge as to how we get there. And, particularly in light of the theme of our discussions today, what policies are needed to increase housing supply?

Behind this question is a premise: that ultimately, increased and more effective supply is the primary solution to our current affordability challenges. And behind that question is a premise — or challenge: how can governments better facilitate housing supply, rather than impede it with outdated, burdensome and often counter-productive rules, regulations and by-laws?

At the federal level, the 10-year National Housing Strategy being led by CMHC provides for historic long-term investments in housing supply.

Municipalities are struggling daily to shorten housing wait lists for the most vulnerable people — and we’ve recently seen significant increases in budgets for affordable housing in cities like Vancouver, Victoria and Ottawa. And, of course, here in Toronto. Earlier this week, Mayor Tory announced an $8.5 billion investment over 10 years in the Housing TO Action Plan. With the support of other levels of government, the action plan targets building some 40,000 new affordable and supportive housing options across the city.

Yet there are also examples of policies at all levels of government that worsen housing affordability by restricting supply or stimulating demand, both of which only pushes prices higher.

Government-supported mortgage insurance and down payment assistance help people buy houses with almost no equity. Housing demand is further encouraged by the personal exemption from capital gains tax on principal residences.

Zoning by-laws and development fees generally favour the wrong sort of residential construction — more expensive single-family homes that use land and our natural resources inefficiently are increasingly unaffordable for many Canadian families, especially young households. Lengthy approval processes delay new supply coming onto the market. And in some cases, developers allowed to acquire land — a scarce commodity in large urban areas — and then sit on it for years as its value increases exponentially.

Lagging supply makes sellers wealthier and buyers more indebted. Renters end up paying more than they should have to for housing, and more people become dependent on government support to meet their housing needs.

And what really matters — what should cause all of us to reflect — is that housing inequities are dividing us: creating a divisive inequality gap that drives us apart at a time when that feels increasingly dangerous.

Ineffective supply is at the root of housing affordability problems in our cities. CMHC research has confirmed that demand is outpacing supply by a significant margin in Vancouver and Toronto, which are magnets for people seeking employment.⁷

Our “dream of homeownership” is static and regressive. It is a promise we can’t keep, not with our appetite for immigrants, foreign students and urbanization.

Governments need to lead. And we need to work in unison, through better coordinated policies and by supporting true innovation. Calling on other levels of government to be bold would be … bold … if we weren’t already pushing through barriers.

Government boldness in response to insufficient supply sounds like even more money. But, to be honest, there isn’t enough of that. Money helps but I’ve concluded that our dollars could go much further with more effective supply. Under-utilized capacity is inexpensive and readily available. It exists in the form of over-housed seniors and singles, bans and limits on laneway houses and secondary suites, co-living models and other ideas.

Which brings me to today’s topic and my challenge to cities. In our view, much greater densification is essential to solving housing affordability challenges in supply-constrained markets. I am talking about increased housing capacity utilization on a grand scale.

On this metric alone, Canadian cities have a long way to go to catch up to other global cities. Metropolitan Vancouver and Toronto average about 486 people per square kilometre. New York City, by comparison, has close to 1,700 people per square kilometre, London has almost 1,800 and Tokyo close to 4,200.⁸

It seems self-evident that we need to close that densification gap in global cities like Toronto and Vancouver. But it’s also time for other cities to up their densification game — to get ahead of the curve, so to speak. Increasing density by only 25 per cent would add about 530,000 new homes in the Toronto CMA and nearly a quarter of a million in the Vancouver CMA.

If cities want to grow their economies, they need to attract both employers and workers. Housing is an essential part of the growth equation. Simply pushing new housing further out into the suburbs comes with steep economic, environmental and social costs.

Densification is at the heart of the economic “supercluster” idea. There is ample evidence of the benefits of densification. We only have to look to cities like San Francisco, Tel Aviv and New York itself to see the merit of firms locating close together to foster economic growth. Moreover, densification supports more efficient transit infrastructure and easier access to social and community services.

Dense supply is more economically affordable and environmentally sustainable. Densification can also make a significant contribution to Canada’s climate change goals. Crucially, especially in cities like Toronto, densification also uses land more efficiently. Evidence exists going back 200 years that the combination of a limited supply of land and a growing population leads to higher land prices.⁹

Current land prices in some Canadian cities are prohibitive to affordability. As one of my colleagues puts it, we’re starting out in a six-foot hole. In Toronto, land accounts for 77 per cent of the cost of a new home. In Vancouver, it’s 80 per cent. By comparison, land accounts for just over 30 per cent of the cost of a new home in Montréal.¹⁰

Densification is not the only answer but it is without doubt the most effective, the most necessary and the most logical. And it is missing — beyond minor tinkering.

And I’ll be frank: we are far from convinced that the “gentle densification” we are going to hear about in the first session today is going to move the needle significantly in making housing more affordable for people in land-constrained cities like Toronto and Vancouver. Aggressive — even disruptive — densification will be necessary if our cities are to continue to serve as engines of economic growth, innovation and job creation that benefits all Canadians.

That’s not to say we do not support gentle densification — in some neighbourhoods, it makes great sense. As I’ve said on previous occasions, any new supply is good supply — whether it be a secondary suite, a basement apartment or a project that replaces an existing single-family home with a duplex or triplex.

To have a meaningful impact on housing affordability, we need to build up — vertically, rather than horizontal urban sprawl. We need to replace 10 single-family homes with 100 or 200 homes in a multi-unit development, whether that be purpose-built rental or condominiums.

All things being equal, house prices are likely to continue to increase unless housing density is increased.¹¹

The usual challenges stand in our way. NIMBYISM, zoning restrictions, density limits, development fees that favour single-family homes over multi-unit projects. Simply put, current approaches to urban planning are impeding densification and other affordable housing solutions.

Only through the concerted efforts of all levels of government and others who share our cause can we overcome barriers to increased density.

We don’t profess to have all the answers, but CMHC has identified some areas we think need attention.

For example, we need to address problems in the supply chain that are restricting new construction. We need to explore unconventional ways to encourage developers to build housing now, rather than holding off until they can maximize their profits. Governments need to remove the myopic economic opportunity of delaying development by time-limiting approvals or by taxing land banking.

Core housing need is four times as common among renters compared to homeowners, mostly for affordability reasons. We need faster supply of new higher-density rental housing.

We also need to stop taxing density. Research by CMHC indicates that higher-density developments in the GTA face higher non-federal charges — development fees, re-zoning charges and other municipal and provincial fees – than low-density development. This is effectively a tax on density. In Greater Vancouver, redevelopments of property face higher non-federal fees than new development.

We need to find ways to bring communities along with us in accepting and endorsing densification — even if it is in their backyards.

And we need to call out the glorification of homeownership for the regressive canard that it is. Renting is a perfectly valid option, and may in fact be the best long-term option for many households. Over-promotion of homeownership is both economically and socially counter-productive, contributing to the increasing division between rich and poor.

We have our work cut out for us, especially in a country where the dream of a single-family home in the suburbs still burns strong for many — a fire fanned by a real estate industry that is drunk on its excess. For example, home builders would do more for the environment if they promoted dense, low-emission multi-unit rental structures than tilting at windmills in promoting net-zero single family homes.

Housing matters. It matters too much for us simply to accept the status quo, which is unsustainable and represents a very real threat to the environment, our social fabric and financial stability.

CMHC is prepared to do its part — to act as a national convenor in bringing people together to develop and implement policy solutions that will support our 2030 aspiration. We are grateful to the Globe for doing exactly that.

We will offer the best advice we can to governments and others, find ways to say “yes” to new approaches, hopefully dream up some ourselves and continue to champion the inclusiveness that is Canada’s hallmark around the world. If we do not, we have doomed our children to a society we likely won’t recognize.

Housing matters. Densification shows that we are paying attention.

¹ Matthew Desmond, Evicted: Poverty and Profit in The American City, Crown, 2016.

² Evan Siddall, “It Takes a Village to Build a City: Housing Affordability as a Shared Responsibility,” speech to the Northwind Professional Institute Housing Finance Forum, Cambridge, 7 February 2018.

³ Evan Siddall, “Why Housing Matters,” speech to the Board of Trade of Metropolitan Montreal, 3 December 2015.
Evan Siddall, “No Solitudes: A Canadian National Housing Strategy,” speech to the Canadian Club of Toronto, Toronto, 1 June 2017,

⁴ A 2012 study by the Mowat Centre at the University of Toronto noted that investments in affordable rental housing boost GDP while at the same time reducing downstream costs to society. Noah Zon, Melissa Molson and Matthias Oschinski,. “Building Blocks: The Case for Federal Investment in Social and Affordable Housing in Ontario,” Mowat Research #98, School of Public Policy and Governance, University of Toronto, September 2014.

⁵ David Hay, Housing, Horizontality and Social Policy, Canadian Policy Research Networks, Family Network, 2005.

⁶ Selected references include:
Evan Siddall, “Why Housing Matters,” op. cit.
Canada Mortgage and Housing Corporation,“Building Families’ Futures and Opportunities Through Habitat Homeownership,” Research Highlight, Socio-economic Series 13-004, April 2013.
Charles Waldegrave and Michaela Urbanová, Social and Economic Impacts of Housing Tenure, Report for the New Zealand Housing Foundation, Family Centre Social Policy Research Unit, November 2016.

⁷ CMHC, Market Analysis Centre, Examining Escalating House Prices in Large Canadian Metropolitan Centres, February 2018.

⁸ Organization for Economic Co-operation and Development. The OECD has developed a methodology to look at population densities across countries, and therefore these figures may differ from those of Statistics Canada.

⁹ David Ricardo, 1817. On the Principles of Political Economy and Taxation, London: John Murray. These issues are examined theoretically in Volker Grossman and Thomas Steger, 2017, “Das House-Kapital: A Long Term Housing & Macro Model,” IMF Working Paper WP/17/80.

¹⁰ JLR, Landcor, MPAC calculations by CMHC. Data are for respective cities, not CMAs.

¹¹ David K. Miles and James Sefton, “Houses across time and across place,” Centre for Economic Policy Research Discussion Paper, DP12103, June 2017.