Origination Mortgage Corp.

Government efforts to get more homes built are, finally, meeting with some limited success but economic and market conditions suggest it is going to be a long, uphill climb.

Since the middle of September Ottawa has been able to trumpet several deals through the Housing Accelerator Fund that, it says, will see more than 9,000 homes built over the next three years.

It is a small but welcome start in the effort to close a deficit of 3.5 million homes that Canada Mortgage and Housing Corporation says the country will be facing by 2030.

Apart from the sheer magnitude of that number there are other challenges.  Chief among them: inflation and rising interest rates which have reduced construction.

A recent study by the Canadian Centre for Policy Alternatives finds builders are putting up fewer homes than they did at the height of pandemic lockdowns.

The CCPA study says, compared to February 2022 when the Bank of Canada started raising rates to fight inflation, investment in single-family homes is down 36%, semi-detached houses declined 27%, row houses dipped 2.0% and apartments fell 19%.

With approval-to-completion times of up to 10 years and an unstable interest rate and cost environment, builders say they are facing bigger risks.  Some are cancelling projects outright.

The study concludes that interest rates will only continue to deter private development.  It calls for more government intervention to get homes built.