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Government, not greed, is behind Canada’s housing problem

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6 minute read

Macdonald-Laurier Institute

By Anthony De Luca-Baratta for Inside Policy

When it comes to housing unaffordability in Canada, Prime Minister Mark Carney has correctly diagnosed the problem – but prescribed the wrong solution. The cost of new homes across the country increasingly exceeds the average family’s budget. But Carney’s proposal to establish a new federal entity, Build Canada Homes, to “get the government back in the business of homebuilding,” will make matters worse.

During the recent election campaign, the Liberal leader promised to make the federal government into an affordable housing developer by, among other proposals, offering low-cost financing to affordable-housing builders. This approach falsely implies that housing is what economists call a public good – something governments provide because the market cannot.

National defence is a perfect example of a public good: private contractors alone would be unable to withhold protection from those who failed to pay for their services, incentivizing many to welcome the security without paying a dime. In economics jargon, this is known as the “free-rider problem.” Defence contractors would quickly go bankrupt, and the nation would be left defenceless. For this reason, the government is the primary provider of national defence in all functioning states.

If housing suffered from the same market failure as national defence, the government’s approach would have some merit. But it does not, indicating that housing is not, in fact, a public good. The laws of supply and demand are thus the most efficient way of determining both the quantity and price of housing.

In a free housing market, when prices begin to rise, builders build more units to earn higher profits. Over time, competition among builders, homeowners, and landlords forces prices back down because individuals who overcharge lose customers to those who do not. Because overcharging is bad for business, the market provides an abundance of housing at prices negotiated among millions of buyers and sellers. The result is a natural supply of affordable housing – no special incentives needed.

Some in Canada might dismiss this logic as hopelessly naïve. According to these individuals, inflated prices come primarily from landlords and developers squeezing Canadians for more profit and greed is running rampant in the Canadian housing market.

The truth is that developers and landlords are responding rationally to bad economic policy, and homebuyers and renters are footing the bill. Municipalities across Canada limit building heights, set aesthetic standards, ban certain types of construction in designated areas, impose parking requirements, and legislate minimum lot sizes, among a host of other land-use regulations.

These rules make housing harder and more costly to build, constraining supply and radically inflating prices. The C.D. Howe Institute estimates that these regulations cost homebuyers an average of $230,000 in Vancouver, Abbotsford, Victoria, Kelowna, Calgary, Toronto, and Ottawa-Gatineau. In Vancouver, that figure is an eye-watering $1 million.

It is this economic reality, not an unwillingness to build affordable housing, that lies at the root of Canada’s housing crisis.

Housing Minister Gregor Robertson inadvertently admitted as much when he cautioned that there would be no quick solution to Canada’s housing crisis because “projects take years to approve and build.” The minister failed to acknowledge that these delays are due to cumbersome municipal regulations.

To solve Canada’s housing crisis, Carney must begin by recognizing that affordable housing in Canada is in short supply because local governments have made it impossible to build. The housing market could provide affordable housing on its own – no taxpayer-funded subsidies required – if only the government would reduce burdensome industry regulations. Just look at jurisdictions with virtually no land-use regulations, like Houston, Texas, where housing is abundant and affordable. Studies have consistently shown that wherever land-use regulations are low, so are home prices.

To be fair, the Liberal Party’s election platform did acknowledge the need to cut federal housing regulations. It also suggested that it wanted local governments to streamline development, though it was short on specifics. But since the election, there is no sign that the government is moving forward with any of these proposals.

The prime minister needs to tell local governments that their federal funds will dry up if they don’t start getting out of the way of housing development. He should also offer bonuses to cities that are especially quick to build new units. Canadians need shovels in the ground now. It is time for the prime minister to use the bully pulpit to put them there.


Anthony De Luca-Baratta is a contributor to the Center for North American Prosperity and Security, a project of the Macdonald-Laurier Institute, and a Young Voices Contributor based in Montreal. He holds a master’s degree in international relations from the Johns Hopkins School of Advanced International Studies in Washington, DC.

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“Nation Building,” Liberal Style: We’re Fixing a Sewer, You’re Welcome, Canada

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The Opposition with Dan Knight

Dan Knight's avatar Dan Knight

Ottawa held a full-blown press conference to announce they unclogged a pipe in Toronto and called it a generational housing strategy.

You probably didn’t hear much about it unless you were watching Canadian state media but this morning, the Liberal government held a press conference in Toronto. It was billed as a “generational investment” in housing. That’s the phrase they used. In reality, it was a sewer project.

Gregor Robertson, the former mayor of Vancouver and now the federal minister of housing and infrastructure, stood beside Toronto Mayor Olivia Chow and a cluster of Liberal MPs to announce that Ottawa is spending $283 million to upgrade the Black Creek trunk sewer line. That’s a pipe. A very old pipe. And according to Robertson, that investment will “unlock” the construction of up to 63,000 new homes in the Downsview area.

If that sounds suspiciously like taking credit for doing your job, maintaining the basic infrastructure cities rely on, that’s because it is. No one has ever accused the Liberals of missing an opportunity to repackage civic maintenance as a national moral crusade. The sewer line is 65 years old. It overflows during storms. It’s been a known problem for decades. Fixing it is not bold housing policy. It’s plumbing.

But the political optics are irresistible. The Trudeau Liberals, now under the leadership of Mark Carney are desperate for a win on housing. Their record is catastrophic. Home prices have doubled. Rents have soared. Entire generations of Canadians have been priced out of ownership and locked into permanent renter status. And the architects of that disaster are now flying around the country handing out ribbon-cutting ceremonies and calling it reform.

Today’s announcement also included the unveiling of the first project under a brand-new federal housing agency, Build Canada Homes. Never heard of it? That’s because it didn’t exist until a few weeks ago. And who’s running it? None other than Ana Bailão a Liberal operative and former Toronto city councillor who spent years helping make the city unaffordable in the first place. Now she’s being rewarded with a cushy federal appointment, tasked with building modular housing and handing out contracts on public land.

And what exactly is Build Canada Homes building? Today, they’re launching 540 homes. Not 63,000… 540. Factory-built units that will be delivered at some undefined point in the future. That’s the big federal breakthrough. A housing crisis affecting millions of Canadians, and Ottawa’s answer is five hundred and forty modular homes in Downsview.

This is the pattern every time. The government breaks something, calls it a crisis, and then demands credit for fixing a fraction of it with your money. The numbers are staggering. According to the Parliamentary Budget Office, Canada needs 3.1 million more homes by 2030 to restore affordability. That means building over 430,000 units per year. Right now, we’re building maybe half that. The backlog gets worse every year. But today, we’re supposed to celebrate because they’re unclogging a sewer and firing up a couple prefab builds on federal land.

No one in the press asked the obvious question: why aren’t private builders constructing the 300,000 units that Toronto has already zoned and approved? Because they can’t. The financing doesn’t work. The cost of materials is too high. Interest rates have crippled developers. And cities like Toronto still impose hundreds of millions of dollars in fees, development charges, and bureaucratic red tape. That’s the real bottleneck. Not the sewer. And here’s what they definitely won’t say out loud: Canada’s housing disaster is not just about supply. It’s about demand, turbocharged by one of the fastest immigration intakes in the Western world. The Bank of Canada has warned repeatedly that immigration targets, set without any link to housing capacity — have blown demand wide open and put relentless upward pressure on rents and home prices.

Mayor Chow admitted it herself, sort of. She said the city has thousands of units ready to build but no takers. And instead of confronting the root causes, monetary policy, taxes, regulatory insanity, the government announces a pilot project and tells you to be grateful. That’s how disconnected they are from reality. They’ve regulated housing out of reach and now they’re posing for photos on a construction site, pretending to be the solution.

And just in case there was any lingering doubt about how deep this failure runs, Statistics Canada released its latest building permit numbers this morning and the trend is exactly what you’d expect in a country where the government makes building homes all but impossible.

The total value of building permits dropped again in August down $139 million to $11.6 billion. Residential permits alone fell 2.4%, driven by steep declines in Ontario and Alberta, the very provinces with the most acute housing needs. Single-family permits fell off a cliff — down more than 10% year-over-year. That’s not a slowdown. That’s a stall.

Meanwhile, British Columbia and Quebec where government intervention is particularly heavy barely managed to offset the damage. The number of new dwellings authorized actually shrank month over month. And this is happening in the middle of a so-called national housing push.

StatsCan didn’t sugarcoat it. They didn’t blame foreign investors or greedy landlords or some phantom market force. They just showed the raw data: Permits are falling. Housing starts are lagging. Builders are retreating.

So let’s just pause here and appreciate the sheer absurdity of what we witnessed. A parade of officials, flanked by branded podiums and tax-funded media handlers, standing in front of a construction site to announce, with straight faces, that they are upgrading a sewer line. And for this, we are told we are “building Canada strong.” Really? That’s the pitch? Fixing basic municipal plumbing is now a nation-building moment?

No! Let’s be clear, you’re not building Canada strong. You’re doing your job. A sewer upgrade in Toronto is not some heroic act of visionary leadership. It’s literally maintenance. It’s what functioning governments are supposed to do, quietly, competently, without a six-camera press choreography and a round of applause from party MPs.

But in Liberal Carney Canada the bar has been lowered so dramatically that simply clearing a permit backlog and patching old infrastructure is treated like a moon landing. They break the system, congratulate themselves for patching one pipe, and expect gratitude.

If you want praise for fixing aging civic infrastructure, something cities used to handle without a national press event, then that tells us everything. It tells us the Liberal government has become so hollow, so addicted to performance politics, that maintenance is now treated as achievement. That’s how far we’ve fallen in just ten years.

They didn’t rebuild a nation. They didn’t launch a housing renaissance. They unclogged a sewer, and are now demanded a standing ovation. And that, in a single image, is modern Liberal Canada: the total collapse of standards, repackaged as progress and sold back to you at full price.

Canadians don’t need more press conferences. They need homes, dignity, and a government that works without constant applause. And if unclogging a pipe is what passes for leadership now — then God help the country.

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LA skyscrapers for homeless could cost federal taxpayers over $1 billion

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From The Center Square

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A 104-unit tower is being pursued at a cost of $90 million. State staff noted would it cost $865,656 per apartment — more than California’s median sale price for an entire house.

Federal taxpayers might be on the hook for more than $1 billion over the lifetime of three downtown Los Angeles skyscrapers designed to house the homeless, state records show.

State and city programs provide the funding and financial tools to construct the three towers. But federal Section 8 Housing vouchers will be used to repay the state and city and fund private developer fees and investor returns over the 55-year life of the buildings.

“Taxpayers are being forced to foot the bill for over $800,000 per unit for homeless housing,” said Howard Jarvis Taxpayers Association Vice President of Communications Susan Shelley in an interview with The Center Square. “There should be an audit to determine if this is genuinely the best option to provide housing or if this is just making a lot of people rich off the taxpayers’ dime.”

These towers are projects of the Weingart Center Association, a homeless services nonprofit and major recipient of taxpayer funding, which was created by the Weingart Foundation. The Weingart Foundation describes itself as a “private grantmaking foundation advancing racial, social and economic justice in Southern California.”

Last year, Weingart’s 19-story, 278-apartment, $167.7 million tower was completed in Los Angeles’s Skid Row, which hosts the nation’s highest concentration of homeless people.

Constructed at cost of over $600,000 per unit, the tower was funded with $32 million of the city’s homeless housing bond, a $1.8 million land loan from the city, $48.7 million in deferrable loans from the California Department of Housing and Community Development, $56.9 million in tax credit equity and $85.3 million in tax-exempt bonds. The state treasurer’s report noted the project would “have positive cash flow from year one” and would be occupied entirely (except for the managers’ units) with people using federal Section 8 project-based vouchers.

The developer, Chelsea Investment Corporation, earned $18.3 million in development fees for the project, according to the project’s tax credit application.

While voucher details for new tower was not available, another nearby $171 million Weingart tower for the homeless that opened in June 2025, featuring 298 resident units and four manager units. It received federally-funded, city-administered housing vouchers worth $194 million over 20 years, as reported by the Los Angeles Business Journal.

Over the lifetime of the second tower, these vouchers, if renewed, would be worth $534 million.

Assuming proportional voucher revenue for the first tower, the two completed towers’ 55-year, federally-funded voucher revenue would be worth $1 billion.

Weingart is now pursuing a third, 104-unit tower at a cost of $90 million. State staff noted would it cost $865,656 per apartment — which is more than California’s median sale price for an entire house.

This tower — to be constructed at $1,048 per square foot, or as much as high-end luxury homes in the Los Angeles area — would also rely on Section 8 vouchers to fund occupancy, which, over the lifetime of the building, could provide nearly $200 million in revenue for developers. The Related Companies, the developer of the second and third project, will reportedly earn $10.4 million from developing the third tower.

Its development fee for the second project could not be established by the time of publication.

The investors who purchase the tax credits and invest in the building also receive distributions on the building’s profits, offering lower but much safer returns than the private market because the Section 8 vouchers nearly guarantee revenue and occupancy.

Market-rate, private-sector housing construction has collapsed in Los Angeles in recent years, with permitting approvals for government-regulated, income-restricted “affordable” housing rising from 24% in the prior four years to 60% in fiscal year 2023-2024. Real estate experts blame Measure ULA, the voter-approved “Mansion Tax.”

A UCLA recent report ties the transfer taxes to significant declines in housing production and property tax revenue growth.

“[ULA] has damaged the real estate market in the City of Los Angeles by adding a 4 to 5 and a half percent tax not just on mansions, as it was advertised, but also on apartment developments, commercial real estate —all properties in the City of Los Angeles above $5.3 million in value,” said Shelley. “HJTA is the proponent for a new initiative called the Local Taxpayer Protection Act to Save Proposition 13 that would repeal measure ULA because real estate transfer taxes were prohibited by Proposition 13 and the courts have improperly allowed them.”

California Gov. Gavin Newsom and the state legislature successfully sued to block a similar measure from appearing on the state ballot in the November 2024 general election. HJTA’s new initiative, collecting signatures until February 2026, would repeal ULA and similar transfer taxes, and restore the prior maximum transfer tax of 0.11%.

Los Angeles Mayor Karen Bass, Weingart Center Association, Chelsea Investment Corporation, and The Related Companies did not respond to requests for comment from The Center Square by the time of publication.

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