Canada Mortgage and Housing Corporation
Housing Supply Challenge: Round 2 - Getting StartedBack to all challenges
Housing Affordability Matters
Everyone in Canada deserves housing they can afford and that meets their needs. Still, many Canadians struggle to find, maintain and afford a place to live, as a lack of supply in cities coupled with significant demand for housing can push prices up.
In 2016, 2.9 M households were spending more than 30% of their gross income on housing. 1.5 M of those households were in core housing need. It is estimated that by 2030, an extra 2.1 M households will need a place to call home.
Why a Housing Supply Challenge?
Challenges are powerful tools to address complex issues where the objective is clear but the path to achieving the objective is not. Given the potential for innovation in the housing system, the Housing Supply Challenge offers an opportunity for innovators to present disruptive solutions that can effect change.
- Complex issue with a clear objective: Canada requires more housing that is affordable, but there is no single solution that can address this need. This Challenge is an opportunity to address a problem that cannot be solved by one organization.
- Local solutions to local issues: The Challenge is an effective medium to spark change from the ground up and mobilize participants to engage with and solve issues in their area.
- Housing supply at the national level: Different rounds of the Challenge can bring housing supply solutions to light that can be scaled up nationally, and others that can be replicated across various municipalities.
- Working together: The Challenge is an opportunity to bring housing sector participants together, empowering collaboration and partnerships.
- New perspectives: The Challenge welcomes new participants to engage with, and provides an environment that encourages and rewards innovation.
The Housing Supply Challenge will award up to $300 million in funding through a series of unique challenges on different topics over a five year period. More details will be available when each round launches.
- Round 1 - Data Driven [Applications closed]
- Round 2 - Getting Started: Pre-development Processes
- Northern Housing (Fall 2021)
- Construction Technology (2022)
- Scaling Solutions (2022)
- Public Perception of New Development (2023)
*launch dates are TBC, and round topics may be subject to change
Identified Issues, Trends, and Supply Barriers
The Canada Mortgage and Housing Corporation has identified some of the key issues and trends affecting housing supply in Canada, which shaped the development of the various rounds of the Challenge. Consultations with stakeholders and experts improved our understanding of these issues, which include:
- Support for urban densification
- Inefficiencies in construction
- Limited data on land availability and value
- Long approval processes and timelines
- Land availability constraints
- Lack of flexible tenure options
- Misalignment between urban infrastructure and housing plans
- Conflicting incentives for creation of new supply
Support for urban densification
Increasing the densification of our cities is a critical part of increasing housing supply. Municipal and provincial governments across Canada are taking steps to combat urban sprawl, however, it is unclear if the process of densification is meeting its potential. Defining the "appropriate" level of population density in urban centres remains a difficult task. In some cases, public resistance adds a further barrier to increased density.
Inefficiencies in Construction
The cost of building new homes consists of the cost of the land that is being built on, and the materials and labour to build the structure. Although the productivity of the construction industry has been largely constant over time, a challenge could focus on finding efficiencies through innovative methods such as manufactured production, 3D printing, materials usage, etc., which could be applied in areas affected by housing supply constraints.
Limited data on land availability and value
Land prices are critical to understanding urban economies. They reflect overall housing demand, but can also be affected by elements such as proximity to infrastructure and regulations. In Canada, there is currently a limited availability of transparent and open data on land ownership and land prices (with certain exceptions in some provinces).
Long approval processes and timelines
Building new housing can be a lengthy process. In many cases, the time delay to build involves moving through administrative and regulatory processes to obtain approval for new development or re-development. There may also be delays in getting appropriate infrastructure in place. This can increase uncertainty reduces the timeliness of responding to price increases. It can also lead to price increases directly. This barrier is strongly linked to local contexts and planning processes that differ widely between municipalities across the country.
Land availability constraints
Limited land availability is a key factor limiting the growth of housing supply in many markets. Factors affecting land availability include geographic and natural features, as well as land which could potentially be developed for housing but might be zoned or used for other purposes. However, land can also be constrained by controllable factors such as the various planning functions undertaken within jurisdictions or by maintaining underutilized land uses for lengthy periods of time (e.g. vacant shopping malls, etc.).
Lack of flexible tenure options
Housing tenure refers to how a property is occupied. It can be rental or ownership. Tenure isn’t a feature of housing supply, but a property can be built to serve a particular tenure type. Tenures can shift, for example, moving from ownership to rental. The fact that tenures can change suggests that innovation may be possible in this area, but it is unclear whether existing housing structures or designs are amenable to flexible tenures. Limited tenure options and housing choices have a large impact on vulnerable populations such as racialized communities, those fleeing violence, and seniors.
Misalignment between urban infrastructure and housing plans
Housing choices are often linked to the time it takes to get to work and local amenities. For many people, a challenging commute means that they will want to live closer to their place of work or services that they routinely access. While many jurisdictions are encouraging development of housing near transit, in many cases the high cost of new transportation infrastructure limits its expansion in a timely way to many urban areas, which in turn affects supply.
Conflicting incentives for the creation of new supply
Many of these topics interact and overlap, and there may be tensions between them. A municipality with strong densification policies may find it difficult to implement these policies in new housing developments due to market demands. New development may primarily take place at the edges of cities, where transportation networks are less developed, leading to longer commute times and higher commute costs, and counteracting the otherwise lower housing costs. It takes time for new supply to come to market, and there may be a gap between the desires of a changing demographic and the available housing stock.
Investing in Change
The Challenge is part of Impact Canada and is led by the Canada Mortgage and Housing Corporation (CMHC), in collaboration with the Impact and Innovation Unit in the Privy Council Office and Infrastructure Canada. Up to $300 million will be distributed over five years through the various rounds of the Challenge.
- Launch: June 9, 2021
- Initial Submissions: August 25, 2021
- Shortlisted: October 2021
- Stage 2 Final Submissions: April 2022
- Funded Solutions Announced: Summer 2022
- Stage 1 – Incubation Funding for prototyping: Up to 30 Shortlisted Applications will receive $75k
- Stage 2 – Implementation Funding: Selected solutions will share a pool of $38M
Who can Apply?
Lead Applicant must be a legal entity:
- For-profit and not-for-profit organizations
- Indigenous organizations and groups
- Canadian post-secondary institutions
- Government (Provincial, territorial, municipal, local, and regional)
- Consulting firms
- Teams composed of a variety of participants