By Tsur Somerville, April 23, 2026
Governments should focus on what markets cannot or will not deliver. That means stepping in – through subsidies and supports – when markets fail to provide the full range of goods and services people rely on.
In Canada, while all levels of government are engaged in aspects of housing provision, the constitution grants primary responsibility over land use to the provinces, limiting the scope of the federal role. And when it comes to delivering services, even if the federal government can act, assuming service delivery where it lacks experience, capability, or expertise is almost certain to end in delays and cost overruns.
These conditions raise serious doubts about Build Canada Homes (BCH) as it’s currently conceived. As presented, BCH appears ill-suited to the task of building housing, running counter to the very principles that should guide good policy. Its mission statement doesn’t help matters – it offers no clear metrics by which success can be judged.
The scale of the challenge is also far greater than BCH is designed to meet. Restoring housing affordability will require roughly doubling annual construction – adding more than 200,000 units each year for the next decade. Against that backdrop, a few thousand units from BCH will make little difference, especially if they would have been built in the absence of BCH.
From the outset, Build Canada Homes is trying to do too much. It is charged with playing the role of developer, leading the “planning, development, and construction of affordable housing” on federal lands. At the same time, it is assigned a financing role that overlaps with the traditional work of the Canada Mortgage and Housing Corporation (CMHC), supporting developments tied to a range of policy goals. Finally, with a third mandate, BCH is expected to help “transform Canada’s housing industry by generating demand for new and innovative building methods like factory-built housing.” All are needed tasks, but they need not all be done by BCH.
This kind of mission creep risks undermining effectiveness. Canadians would be better served by a clearer division of labour: provinces leading on affordable housing delivery, CMHC continuing to provide subsidized or below-market financing, and BCH concentrating on a single, well-defined role – improving productivity in homebuilding and facilitating and accelerating innovation in the sector.
The name Build Canada Homes implies a clear, urgent mission: ensuring that Canadian firms can build the largest number of homes as quickly as possible. But rather than maximizing the number of units for those most in need, BCH is charged with using “innovative building methods” and at various points identifying serving diverse populations, including students, seniors, and Indigenous communities. At the same time, the goal of generating housing is muddied by prioritizing – in BCH’s own language – “the deployment of low-carbon, climate-resilient, and/or net-zero approaches and technologies, including incorporating low-carbon materials and efficient design to reduce the carbon footprint of projects and ensure long-term resiliency.”
All of this suggests that the entity should be called “Build Canada Homes of the Kind We Think Is Best Using Materials We Choose for the People We Select.” If we indeed face a housing crisis, then this seems to be a terribly inefficient way to rapidly get homes built.
The federal government is not well suited to act as an affordable housing developer. Even setting aside its well-documented struggles to deliver projects – from software systems to passports to military procurement – on time and on budget, this is not a role that Ottawa has played for a considerable time. Asking it to take on complex service delivery without the necessary institutional capability is a risky proposition.
Provinces, by contrast, have this experience. And even when it comes to housing offered at below-market rents, government does not need to be the developer. The United States provides a useful example: through the Low-Income Housing Tax Credit program, it supports the creation of more than 100,000 affordable housing units each year by incentivizing private developers with tax credits, rather than having government agencies build the units.
The traditional federal role in promoting housing – both market and affordable units – has been through the financing channel administered by CMHC. The recent boom in rental housing construction is due in no small part to CMHC’s Rental Construction Financing Initiative (RCFI) and its successor, the Apartment Construction Loan Program (ACLP), which provide financing at costs and terms that make projects financially viable. This has been done alongside commitments to include a percentage of below-market units or to reduce projects’ carbon footprints. So why do we need a new entity to do this?
One area without a clear champion – where a federal role makes sense – is in driving innovation and its adoption in residential construction. Across the developed world, productivity growth in construction has long been tepid at best, as studies like McKinsey & Company (2017) have shown. Supporting technological change and disseminating knowledge in this sector is a natural fit for the federal role.
But that requires focus and a clear diagnosis of the problem. The current vision for Build Canada Homes, with its scattered lower-density projects, does little to meet that need. A more effective approach would concentrate federal effort where it can have the greatest impact: investing in research, accelerating the spread of new techniques and technologies, and working with provinces to modernize building and zoning codes so innovative products can be deployed at scale.
Finally, if we want to quickly create a significant number of affordable units, there is a more immediate opportunity: the stock of completed – or soon-to-be-completed – unsold condominium units. Rather than building from scratch, the federal government could support provinces and established housing providers with financing to acquire these units and rent them at below-market, but still financially viable, rates to income-qualified households, as the Building Ontario Fund was announced in March in Toronto. This approach would bring units into the affordable rental pool far faster than new construction. It would not, on its own, solve the broader housing crisis. But it would provide more affordable homes, more quickly, and at lower net cost than BCH’s plan to utilize federal lands while wearing the developer hat.
Tsur Somerville is an associate professor and holder of the Real Estate Foundation Professorship in Real Estate Finance at the Sauder School of Business at the University of British Columbia. He served for 15 years as the director of the UBC Centre for Urban Economics and Real Estate, where he is now a senior fellow. His academic research focuses on housing market policies, housing supply, and housing affordability. Somerville has worked with all levels of Canadian government on the effects of immigration, capital flows, and money laundering on housing, and government policies to promote housing affordability. He received his PhD in Economics from Harvard University and his BA in Economics and East Asian Studies from the Hebrew University.
