Top mortgage executive sceptical of Budget 2024's housing strategy

Experts question the practicality of new housing goals amid skilled labour shortages

Top mortgage executive sceptical of Budget 2024's housing strategy

The 2024 federal budget laid out an ambitious plan to tackle Canada's housing crisis, but a leading mortgage executive has warned the initiatives face major obstacles that could derail achieving the lofty goals.

CMI president Kevin Fettig analyzed whether the budget's targets, like building 3.87 million new homes by 2031, are realistic. He was sceptical about the proposed solutions like factory-built modular housing.

" The appeal of modular housing lies in its promise to address several pressing issues facing today’s housing market: affordability, scalability, and sustainability," Fettig wrote in a blog post. “There has been no thought on how this is to be achieved, so for now, I don't see modular housing as a major solution to the housing supply problem."

While supporting rental construction through measures like accelerating capital cost allowances, Fettig questioned whether provinces would cooperate on initiatives requiring joint federal-provincial funding.

"Uptake of the new Canada Builds initiative will depend on whether there is further conflict between the federal government and the provinces or a new approach to cooperative federalism," he said.

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The biggest challenge, however, is the shortage of skilled tradespeople. “About 700,000 of the four million Canadians who work in the trades are set to retire by the end of the decade," Fettig said.

Fettig also questioned the efficacy of measures to support young buyers and renters, calling many of them "marginal" with limited impact.

For affordable housing, he highlighted past challenges, such as a lack of program integration and unclear long-term viability plans for co-operative housing projects requiring ongoing subsidies.

"Previous federal co-op programs had a stabilization fund that lapsed due to funding challenges. Currently, there's discussion of funding, but no clarity on how these projects will remain viable," Fettig noted.

Given the constraints involved, he was similarly skeptical about the new secondary suite loan program catalyzing significant rental supply growth.

Fettig said that developing a proposed tax on vacant lands will be challenging because it would need to align with taxation principles and could spark federal-provincial conflicts.

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