Johnathon Sipos is the President of Cielo Group, a diversified company in real estate development and carbon capture headquartered in Victoria, BC.
With the federal election just days away, Canada's housing crisis is dominating campaign promises, and rightly so. Over the past decade, affordability has plummeted, pricing countless Canadians out of the market.
As a developer with 15 years of experience in large-scale commercial projects, I've seen the cost drivers behind this crisis firsthand. It's time to cut through the rhetoric and demand solutions rooted in economic reality.
Housing is a unique human good, shaped by materials, labour, land, financing, regulations, fees, and supply and demand. In 2023, Canada built just one housing unit for every 5.1 new residents — a stark imbalance driving prices skyward. Closing this gap demands bold reforms, starting with what governments can control.
Municipal Bottlenecks: Delays, Fees, and Misguided Zoning
Cities hold the keys to housing supply, but their inefficiencies strangle development. In Vancouver and Toronto, for example, approvals for non-contentious projects often take over four years. These delays force developers to hold land incurring costly financing fees or pay rezoning premiums to landowners.
A straightforward fix? Align zoning with Official Community Plans, which map out growth areas. Too often, OCP-designated zones for density remain locked in outdated uses, requiring these multi year re-zonings. Cities must rezone these areas immediately, slashing pre-development timelines and financing costs. Approvals start to finish shouldn't take more then a year; Calgary does this, and manages to maintain affordability despite high incomes.
Regardless of the above, blanket rezoning of single-family neighbourhoods for multifamily use, as some provinces have pushed, is misguided. It sparks fierce pushback and ignores common sense. Density belongs on or near arterial corridors, shopping centers, utility infrastructure, and transit hubs. Governments must target rezoning strategically to minimize resistance and maximize impact.
Municipal fees, like Development Cost Charges, are another culprit. Studies show DCCs and permits now account for 20-30% of project costs, up from 10-15% a decade ago. These hidden taxes hit buyers and renters directly. Capping or cutting DCCs would deliver instant price relief in new construction.
Cities' mandates for "affordable" units, though well-meaning, often backfire. Below-market units force developers to increase prices on market-rate units within the same building, reducing overall affordability. Canadians deserve clarity on this trade-off.
Provincial and Federal Roles: Codes, Sustainability, and Leverage
Provinces drive costs through evermore stringent building codes. British Columbia's recent seismic code changes, for instance, will likely raise construction costs by 10-20%. Similarly, aggressive sustainability mandates at provincial and federal levels add significant expenses. These changes can have merit, but governments must balance these against affordability and inform the public of the costs. It is inherently contradictory to demand both.
The federal government's role is complex, as many issues lie with provinces and cities. Both Mark Carney and Pierre Poilievre propose using federal funding to spur action. This leverage must be utilized to force cities to act regardless of who wins the upcoming election.
Federally, the Canada Mortgage and Housing Corporation has failed the housing market and consumers. The CMHC is Canadas primary rental housing financing organization, and it needs an overhaul. Its restrictive loan criteria favour institutional developers, sidelining small to medium size developers who once built the majority of rental housing in Canada. Decades ago, non institutional developers fostered community ties between landlords and tenants. Today, corporate landlords prioritize profits over local needs, in essence monopolizing the housing sector in many cities. Easing CMHC rules to support non institutional developers could revive this model, boosting supply, local connections, and keeping project profit within the community.
Economic Reality and the Path Forward
Governments can't easily or quickly cut material, labour, or financing costs, but steps like removing GST on purpose-built rentals and first-time homebuyers below a threshold help. It is important, however, to note that the current federal import tariffs on American products are driving significant cost increases, as many construction materials are manufactured in America today.
Still, the core issue is supply and demand. Developers won't build if projects don't pencil out at prices Canadians can afford. Asking buyers and renters to pay more isn't sustainable, therefore reducing the cost to build is the only solution.
The government has the tools to act. By targeting municipal delays, fees, and outdated zoning, balancing code mandates, and empowering non institutional developers, they can boost supply and restore affordability. As Canadians vote, they must demand that leaders be ready to act decisively with economic pragmatism. The housing crisis isn't unsolvable — it demands bold action and common sense.
Johnathon Sipos is the President of Cielo Group, a diversified company in real estate development and carbon capture headquartered in Victoria, BC.