Canada Mortgage and Housing Corporation

Housing Supply Challenge

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Identified Issues and Trends

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The Canada Mortgage and Housing Corporation has identified common issues and trends affecting housing supply in Canada, which will help shape the development of a challenge prize aimed at stimulating the development of innovations that can improve outcomes in this area.

Throughout the process of developing the Challenge, citizens, stakeholders, and experts will be engaged to improve our understanding of these issues and help us prioritize areas of focus. A more detailed description of issues affecting housing supply can be found in the CMHC report, Examining Escalating House Prices in Large Canadian Metropolitan Centres, published in February 2018.

Some of these issues include:

  • supporting 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, because of limited data, it is unclear if the process of densification is meeting its potential. Moreover, 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. A challenge prize could be designed to address barriers to urban densification, for example, by seeking innovative development models that increase densification in ways that achieve high levels of public support and encouraging a diverse set of housing types to meet varying needs for citizens and families.

  • enhancing productivity 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 in using these inputs has been largely constant over time, a potential area of focus for a challenge prize could be to find efficiencies through innovative methods such as manufactured production, 3D printing, materials usage, etc., which could be applied in areas affected by housing supply constraints.

  • improving 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. However, 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). A challenge prize could investigate ways to make data more easily available to help allocate time and resources more effectively.

  • reducing building timelines

    Building new housing can be a lengthy process. In many cases, the time delay to build involves moving through administrative processes to obtain approval for new development or re-development. There may also be delays in getting appropriate infrastructure in place. This lag increases uncertainty in the supply process and reduces the timeliness of responding to price increases. It can also lead to price increases directly. As such, innovative approaches for expediting the time for new supply to enter the market could help to reduce uncertainty in housing markets.

  • addressing land availability constraints

    Limited availability of land 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.). Finding innovative ways to make more or underutilized land available for development more quickly could have positive effects on supply.

  • expanding flexible tenure options

    Housing tenure refers to how a property is occupied. It can be rental or ownership. While it isn’t a feature of housing supply, a property can be built to serve a particular tenure type. However, the type of tenure can change, for example, moving from ownership to rental. The fact that tenures can change suggests that innovation may be possible in this area; however, whether existing housing structures or designs are amenable to innovations remains unclear. However, there may be merit in exploring whether changes to tenure type in certain markets might help more people find the most appropriate form of home occupancy that meets their needs.

  • aligning transport infrastructure and housing

    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. As the provision of high quality transit options would likely affect housing prices, it may be worth exploring whether innovative financing methods based on land value could help improve the alignment of and accelerate both the development of transportation infrastructure and housing supply in certain cases.