Canada faces a significant housing affordability crisis, with Prime Minister Mark Carney pledging to address the issue. He has established a new agency called Build Canada Homes, which has an initial budget of $13 billion. The agency's goal is to construct modular homes on federal land to create new subdivisions.

However, experts argue that this approach may overlook a critical factor in the housing shortage: the high costs associated with home construction in Canada. Development charges, which include fees, taxes, and mandatory reports, can be prohibitively expensive. In the Greater Toronto Area, these charges can range from $150,000 to $180,000 before any construction begins. In Vancouver, the development charges for an 800-square-foot apartment are estimated at $125,000.

To put this in perspective, 40 years ago, such an amount could purchase an entire apartment. The situation has worsened, with average development charges in Canada rising by one-third between 2023 and 2025.

Homebuilders argue that reducing these development charges and streamlining the approval process would enable them to construct more homes. They believe that easing regulatory burdens could lead to an increase in housing supply. Despite these concerns, the government appears committed to its plan for factory-built homes.

As the housing crisis continues, the effectiveness of the new agency's strategy remains to be seen. The focus on modular homes may not address the underlying issues that contribute to the high cost of housing in Canada.