OTTAWA — The federal government finished the week by touting the popularity of a program designed to quickly build or buy affordable housing for the nation's most vulnerable — one piece of a larger home-price puzzle.
The program first launched at the start of the pandemic when cities were renting hotel rooms to house homeless people as shelter capacity dropped along with the temperature.
Over two rounds of funding, the rapid-housing program will have created more than 10,000 units by the time projects are completed over the next year by helping cities and housing providers build modular units or buy vacant apartments or hotels and turn them into affordable units.
Joanne Vanderheyden, president of the Federation of Canadian Municipalities, said municipal leaders want the government to expand the rapid-housing program to also help expand housing options in communities of all sizes.
The first round of funding created some 4,700 units, jumping past expectations but leaving hundreds of applicants in the cold when the program ran out of money.
The Liberals revamped the program in last year's budget with $1.5 billion more, which the government says will create about 5,500 units, above the 4,500 the government originally estimated, as demand again outstripped the available funding.
"Projects that would provide affordable homes to vulnerable individuals are falling to the wayside because the federal government is not there to provide support," said NDP housing critic Jenny Kwan in calling for more funding.
The program targets those who are, or at risk of becoming, homeless, but experts say it is only one part of a larger solution the country needs to address an affordability crisis.
MPs on the House of Commons finance committee were told Friday that housing affordability is also affecting renters, with some 30 per cent of Canadian households saying they live in a home that is too small or too costly for them.
Creating a rapid-housing plan for non-profit housing could alleviate the crunch on households with moderate incomes who are financially vulnerable to high rent and home prices, said Dallas Alderson, director of public affairs and policy with the Co-operative Housing Federation of Canada.
"That's the thing that we've had a little bit of success on through different programs in the national housing strategy," she said, "but we could do a lot more in a similar ambition to the rapid housing initiative."
Romy Bowers, president of the Canada Mortgage and Housing Corp., said the country needs more units because supply hasn't kept up with demand and population growth.
"And it's not money or investments alone that will fix the problem," she said in her opening remarks to the committee, saying that other issues include inflexible and long approval processes at the local level, as well as "NIMBY-ism (not in my backyard) in our neighborhoods."
She later told the committee that in a supply-constrained market, any policy response should be careful not to feed demand.
Demand for larger homes and low interest rates have helped housing prices rise steadily over the past year, and the Liberals have promised action in this year's budget.
TD senior economist Sri Thanabalasingam wrote in a note that buyers in some markets appear to believe price growth will continue unabated, which the Bank of Canada has warned poses an economic risk.
Next week, the Bank of Canada has a scheduled rate announcement. Economists expect the bank to raise its key policy rate — which influences interest rates on mortgages and loans and can cool demand — or signal an increase is coming in March.
"Regardless of the decision next week, it's clear that we will soon be saying au revoir to rock-bottom interest rates," Thanabalasingam wrote.
There are concerns that rising rates could strain households that have taken on large mortgages. Bowers noted that Canadians owe $1.72 for every dollar of disposable income.
Peter Routledge, superintendent of financial institutions whose office regulates banks, told MPs that he felt the financial system could handle any interest rate increases, noting a tighter stress test for uninsured mortgages.
"That is a margin of safety that'll help us," he said.
This report by The Canadian Press was first published Jan. 21, 2022.
Jordan Press, The Canadian Press