Construction in Focus recently sat down with Kevin Lee, long-time Chief Executive Officer of the Canadian Home Builders’ Association (CHBA), to talk about Canada’s housing crunch, what’s stopping shovels from breaking ground, and the bold changes needed to get housing built.
It is impossible to turn on the news today without hearing about Canada’s housing crisis. There is an urgent need to build almost five million new homes by 2035, which represents between 430,000 and 480,000 new housing units every year. Although 2025’s housing starts reached 259,028 nationwide—up 5.6 percent from 227,697 in 2024—there has been a dramatic shift to building units for rental rather than for ownership, and the country isn’t even coming close to the units needed to meet demand for our population of almost 42 million.
Factors behind the shortfall include everything from high development taxes to unnecessary red tape, wildly different building codes (even in the same city), NIMBYism, and more. The lack of attainably priced homes is a multifaceted problem, requiring a multifaceted approach.
All three levels of Canada’s government must come together to solve Canada’s housing challenges, says Kevin Lee, CEO of the Canadian Home Builders’ Association (CHBA), which represents some 8,500 builders, renovators, land developers, and others in the residential construction sector. For the past 13 years, Lee has been fully immersed in the challenges faced by one of the nation’s largest sectors and has led the charge in developing CHBA’s policy recommendations for the federal government on how to close Canada’s housing supply gap and help restore affordability for Canadians.
Some provinces stuck in neutral
Despite the urgent need for housing, some provinces have pulled ahead in housing starts while others have stalled. Recent Canadian Mortgage and Housing Corporation (CMHC) housing starts statistics reveal that Alberta—with a population of about five million—is pulling far ahead of 16-million strong Ontario. In the past five years, Alberta’s housing starts have jumped an impressive 71 percent, while Ontario’s have tumbled by over one-third. British Columbia isn’t faring much better. Significant differences in government-imposed taxes and charges in regions across the country have contributed to this discrepancy, says Lee.
“Ontario has become very expensive over time,” says Lee. “In the worst cases, government-imposed fees can now make up over 30 percent of the price of a new home.”
Across the country, municipal development charges (DCs) have increased by more than 700 percent over the past 25 years, says Lee, adding that they are a significant, yet often overlooked, factor driving up the cost of building new homes. For example, CHBA’s Municipal Benchmarking Study reveals that DCs have reached nearly $200,000 on a typical home in the Greater Toronto Area and almost $100,000 in the Greater Vancouver Area. By contrast, DCs make up less than $10,000 of a typical new home in smaller centres like Charlottetown.
In principle, DCs are intended to ensure that growth helps fund the infrastructure required to support it. However, over time they have expanded far beyond that purpose, says Lee. In many municipalities, DCs are increasingly used to help pay for broader infrastructure upgrades or to reduce pressure on property taxes for existing residents. As a result, those who buy new construction homes are often left paying for infrastructure that benefits the entire community, while also facing charges that are dramatically higher than those paid by previous generations of homeowners.
Lee believes the time has come to explore alternative funding models that distribute infrastructure costs more broadly across the tax base, as was more common historically. “There is a role for fee-for-use items such as water, wastewater, and transportation, and for allowing more municipal debt financing to occur. Instead, charges are put on the backs of new buyers on 25-year mortgages; they should instead be financed over the lifespan of the infrastructure—50 or 75 years—at the much lower interest rates that governments can secure, for example,” says Lee. “It’s time for a more balanced approach that would reduce the disproportionate burden currently placed on new home buyers, which would support increased housing construction and better reflect the reality that infrastructure investments benefit entire communities, not just those purchasing homes in new developments.”
Red tape and code changes add to home building costs
Many policies introduced at all levels of government—often without sufficient consultation with the residential construction industry—have added unnecessary complexity, delays, and expenses to the home building process.
While policy changes that strengthen building codes and regulations can serve important policy goals, they can also be costly, says Lee. In some cases, new requirements overlap with existing rules or impose measures that are not yet practical or cost-effective to implement. As these layers of regulation accumulate, they continue to drive up the cost of building homes, ultimately affecting housing affordability for Canadians.
To help prevent further pressure on housing costs, Lee recommends that all new policies and regulations be evaluated through a housing supply and affordability lens. This includes making affordability a core objective of the National Building Code and ensuring that regulatory changes that significantly increase construction costs are not implemented until viable, cost-effective solutions are available. In fact, at this point, CHBA has called for a full pause on changes to the national building code, and a revamping of the code development system. This is being done in Australia, which faces similar challenges, and needs to be done here too, says Lee.
Support needed for productivity improvements
Labour shortages have been an issue in the residential construction industry for years, and there are currently not enough construction workers to pursue federal housing targets, let alone meet the status quo. Recognizing this challenge, CHBA says support is needed in three areas: growing the domestic workforce; reforming Canada’s immigration system to welcome more newcomers with the skills to contribute to building more housing; and increasing productivity. Part of the problem is the federal government’s emphasis on Red Seal occupations and skills training for unionized labour, as well as its prioritization of highly educated immigration pathways.
“The fact of the matter is, outside of Quebec, 90 percent of the residential construction industry is not unionized,” says Lee, who is in talks with the federal government about recognizing the people who actually build houses and the skills required. Unions have their place, but Canada also needs to support the vast majority of the residential workforce, which isn’t unionized. The same goes for the apprenticeship system, which can be well-suited to non-residential construction, but so often doesn’t work for the workforce building housing.
“For example, the residential construction industry needs framers, who don’t have to be Red Seal carpenters to have very successful careers in the industry,” says Lee. “We need to revisit how we get those people trained, credentialed, and working. That’s a systemic issue we need to address.”
Lee further emphasizes the need for immigration reform. “In Canada, immigration works on a points system based on education and qualifications. At present, the people we need to bring in to build houses don’t score enough points in the current system, so they can’t immigrate to Canada, and this must be addressed.”
Another area of housing construction where there is enormous opportunity is factory-built construction. In 2017, CHBA launched its Modular Construction Council, which rightfully anticipated industry labour shortages and the need to increase productivity. While factory-built construction has its benefits—it’s faster, less labour-intensive, and reduces construction waste compared to traditional site-built methods—Lee says it’s part of the solution, but not a silver bullet. “Moving toward more factory-built construction is an important part of the future, but it’s not as simple as just switching over,” he says.
Among the barriers to scaling up, factory-built construction is often challenged by municipal building code interpretations, where the same house cannot be built twice across different municipalities, and sometimes even within the same municipality, depending on the interpretation of the individual building official. This is of course a huge barrier for site builders as well. “We really need to eliminate all those different interpretations and variances within cities,” Lee says. “We really need to get everything aligned. We can’t increase productivity when we are dealing with different rules [across or even within municipalities] like we are right now. Repetition is the key—to increase productivity, we need to be able to build the same units repeatedly—and right now, all the differences municipally make scaling up too difficult.”
CHBA’s Sector Transition Strategy well outlines the challenges preventing a widespread transition to factory-built construction and offers a multitude of actions governments can take to mitigate them and de-risk investments in these methods.
Come together
For sufficient housing to be built, all three levels of Canada’s government must be focused and aligned on the same strategies. “Should all these rules be aligned so we can scale? Absolutely!” says Lee. “We need to get everybody together to work on that—and it will have to come from all levels of government in coordinated fashion.”
In February, members of CHBA met with Members of Parliament in Ottawa for CHBA’s Day on the Hill. This saw CHBA delegates meet with 84 MPs about CHBA’s recommendations. One of the key issues was removing the GST on new homes, which, after extensive CHBA advocacy, finally came through in March for first-time buyers after nearly a year being stalled in Parliament, but needs to be extended to all buyers, says Lee. Another was attacking regulatory red tape at the municipal level and being more flexible on zoning. For the construction of new housing to speed up, it is critical that these issues and others are addressed.
“We need to deal with taxes at all three levels of government,” says Lee. “The federal government needs to remove the GST for all buyers of new construction homes (not just for first-time buyers) and renovations that create additional units of housing, like secondary suites and laneway housing. For those provincial governments that have PST on new construction homes, they need to remove it. Municipalities also need to dramatically reduce their DCs and find better funding models. We need that fast to turn the market around in Canada’s most expensive regions. Meanwhile right now, the industry is seeing substantial layoffs, particularly in Ontario, which will permanently scar the industry in terms of workforce capacity moving forward. All three levels of government need to work together on issues like taxes, alternative funding models to DCs, more rapid approvals, and being smart with the building code and not too intrusive. This industry needs support to turn the market around. We simply can’t double housing starts with so many policy barriers in the way,” he says.
“There is a lot of systemic, three-level collaboration that could happen to help move things along.” These kinds of improvements, CHBA believes, can’t come soon enough.
