By Murtaza Haider and Stephen Moranis

Canada is in the midst of a severe housing shortage, yet some advocates argue that building more homes is not the answer. A few even claim that the country has already built enough housing. These arguments fly in the face of both data and economic consensus.

This supply skepticism means the challenge for Build Canada Homes (BCH), the agency tasked with accelerating housing supply, is now twofold: rapidly increase the pace of construction while also countering the misplaced rhetoric that denies the scale of the problem.

Prime Minister Mark Carney

‘s Liberal government launched BCH, a $13-billion investment spread over multiple years, to hasten the construction of new affordable homes. While we await details on BCH’s scale, scope and how it will achieve its objectives, its establishment shows the government believes the way to tackle housing affordability is by building more homes.

Recent commentary in the media

argues that a $13 billion investment will not solve the housing crisis. We agree. Overcoming a shortfall of millions of homes requires trillions of dollars, an investment so large that it rivals Canada’s GDP. But to say that more housing won’t improve affordability is an argument rooted in ideology and an incorrect interpretation of data.

Critics of increasing supply think the affordability solution lies in unlocking millions of vacant homes across the country. Regrettably, Canada doesn’t have millions of vacant homes. This myth was perpetrated by a report that misread Canadian census data.

We debunked the myth

in an earlier column and are pleased to explain it again.

The vacant homes claim stems from a report by the Organisation of Economic Co-operation and Development (OECD), which suggested that around eight per cent of Canada’s housing stock (more than 1.3 million homes), is unoccupied.

The report used census data archived by CensusMapper, which defined “unoccupied dwellings” as either vacant or temporarily occupied by someone with a primary residence elsewhere in Canada or abroad.

This includes millions of students renting near university campuses who often list their primary residence as their parents’ home. It also included cottages and summer homes that the census enumerators found uninhabited on the census day in May.

The 2016 Census data shows that the actual share of vacant homes in Toronto was 4.6 per cent, not eight per cent. An even smaller share, 2.2 per cent, of Toronto’s single detached homes were vacant in May 2016. Montreal and Calgary had lower shares still, at 1.8 per cent and 1.4 per cent, respectively.

Furthermore, expecting a 100 per cent occupancy rate is unrealistic. A certain share of dwellings will always be vacant, whether because they are undergoing repairs, changing hands between owners or tenants or simply sitting empty while the homeowner is away for work or an extended vacation. Vacancies of this kind are a natural part of any

housing market

and cannot be conflated with chronic underutilization.

Even if millions of homes sat vacant across Canada, the housing crisis would not be solved in the non-market sector, where demand is far greater. The practical challenge is straightforward: how does one transform a costly, unoccupied property into deeply affordable housing?

Short of government expropriation, an approach that would trample property rights, there is no workable model where private homeowners willingly convert vacant dwellings into non-market, subsidized units. The gulf between expensive real estate and affordable housing cannot simply be bridged by wishful thinking or forced repurposing.

Other criticism of the BCH plan often rests on a superficial reading of its mandate. Some have seized on the figure of 4,000 homes, assuming that a $13-billion investment will yield little more than a handful of projects.

That interpretation is misleading. The 4,000-unit target only refers to six initial developments on government-owned lands. In practice, the program is expected to support the construction of roughly 45,000 affordable dwellings, an order of magnitude greater than its detractors suggest.

Estimates of Canada’s housing shortfall range from two million to 3.5 million units — dwellings that must be built above and beyond the supply expected under business-as-usual conditions over the next decade. The variation reflects different assumptions and methodologies, but both public- and private-sector economists agree: the affordability crisis cannot be resolved without a significant increase in supply.

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BCH’s mandate places the primary emphasis on non-market housing. The agency has also indicated that it will pursue prefabricated and modular construction methods, with the aim of speeding up delivery and lowering costs through economies of scale and the industrialization of homebuilding.

The $13-billion commitment, while far short of the investment required to fully address Canada’s housing gap, is nonetheless a meaningful step. It signals a renewed public-sector effort to expand supply and chip away at the affordability crisis.

Murtaza Haider is the executive director of the Cities Institute at the University of Alberta and the Radhe Krishna Gupta Executive Chair in Cities and Communities at the Alberta School of Business. Stephen Moranis is a real estate industry veteran.