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In the epic ballad of housing in Canada, there is a distinct rising chorus: Build! Build more!

On Thursday, Canada Mortgage and Housing Corp. chimed in: Build a lot more.

CMHC started with a question. How can the country have enough housing that the average person on an average salary can afford to rent or to own? The build-a-lot-more conclusion is a massive supply response to what CMHC says is a glaring undersupply of homes, particularly in Ontario and British Columbia, and especially in Greater Vancouver and the Greater Toronto Area.

Canada has about 16.3 million homes. At the current pace of construction, another 2.3 million will be built this decade. CMHC says that to make prices affordable, a further 3.5 million are needed.

That is a very big number. To put it in perspective, in Ontario this year the goal of 1.5 million new homes over a decade has become the let’s-build rallying cry. It would be almost double the 2021 rate of housing completions. Yet CMHC’s modelling says Ontario will need 2.6 million new homes.

CMHC’s conclusion attests to the depth of the problem, decades in the making. “The evidence,” CMHC says, “has been mounting for many years that the housing supply system is broken.”

The challenges to build more – a lot more – are vast.

It starts with zoning, the rules that cities started to install a century ago to heavily restrict what can be built where. In 1920s Toronto there was a war against apartment buildings, and precedents were set there, and across the country. Far too much land in most cities is reserved for the lowest density, namely detached homes. That needs to change.

On Thursday, CMHC deputy chief economist Aled ab Iorwerth pointed to these low-density neighbourhoods as the places to build – “spacious apartments” among his ideas. American city planner M. Nolan Gray, whose new book Arbitrary Lines goes so far as to argue for the abolition of zoning, cites research that shows restrictions against housing propel prices higher.

But change is grindingly slow. Vancouver, for one example, took a step on Wednesday by allowing for greater density on the city’s Broadway, where a new subway is being built. But to get it passed was a battle that took three years. This sort of politics is ingrained in the system. Established homeowners, empowered by restrictive zoning, oppose changes to their neighbourhoods, making it very hard to build anything new. All of which fits with one of CMHC’s main concerns: In Canadian housing, it takes forever to get anything done.

The other big holdup is having enough skilled people in construction. The system is stretched; in 2021, housing starts and completions were higher than they’ve been in years. But back in the mid-1970s, Ontario was annually building, per capita, twice as much housing. CMHC worries about lack of productivity in the construction industry. City halls need to move faster to assess and approve new housing. Builders need to get more efficient, too.

Why does this matter? Because housing policy is economic policy. This page has repeatedly made this point. High housing costs in Canada’s biggest and most economically productive cities deter people from moving to where they can maximize their skills, for their benefit and society’s. This is bad for Vancouver, bad for Toronto and bad for Canada. “High housing costs,” CMHC argued, “risk wider economic damage.” To the extent that high prices keep people out of cities where there is demand for their work, Mr. Gray says, ”We are collectively poorer and less innovative.”

The housing market – with extreme prices and rising interest rates – is at a crossroads. With rising mortgage rates, there are expectations of lower prices. But as this page has written before, a fall in prices owing to higher rates or recession is not really a solution. The underlying long-term scarcity of supply will remain unchanged.

When it comes to how much new housing Canada needs, a lot of estimates are bandied about. CMHC on Thursday called for the focus to be less on an exact figure and more on the how: How can this country get more housing built. Ancient restrictions remain rigidly in place. Change has to come from provinces and city halls.

It’s easy to call for millions of new homes, but how to make it happen? We close with four vital words from CMHC: “Drastic change is required.”

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