Happy 60th birthday, CMHC! You’re fired.

Today’s Globe has a story that the feds are contemplating the privatization of CMHC.

Let me get this straight. With the run-up in real estate prices, housing affordability is perhaps as bad as it has ever been. In recent years, CMHC has pulled away from supporting the creation of new affordable housing (although it does help support existing social housing for about 633,000 households). Therefore, rather than getting CMHC back in the game, it should be privatized.

There was a day when CMHC was a big part of the solution. Here is a quick history I pulled off their website:

On January 1, 1946, the Central Housing and Mortgage Corporation was created (changed to “Canada” Mortgage and Housing Corporation in 1979) to house returning war veterans and to lead the nation’s housing programs.

CMHC’s basic functions were to administer the National Housing Act and the Home Improvement Loans Guarantee Act, and provide discounting facilities for loan and mortgage companies. The capital of the Corporation was set at $25 million (a substantial amount for the times), and a reserve fund of $5 million authorized to be accumulated from profits. This requirement and capital structure are still in effect today.

Toward the end of the 1940s, the federal government embarked on a program of much-needed social and rental housing, creating a federal-provincial public housing program for low-income families, with costs and subsidies shared 75% by the federal government and 25% by the province.

The 1950s were notable for innovations in house construction and design, breaking away from the spartan, standard bungalows of the previous decade towards more spacious, convenient and modern living.During this period, the federal government provided grants to cities to encourage them to tear down derelict buildings and build municipally owned housing corporations. Regent Park in Toronto is the first urban renewal project, where 42 acres are cleared to build the 1056-unit, low-rent housing development in 1950.

In 1951, CMHC started implementing the first of many federal-provincial public housing projects with 140 subsidized rent-to-income units in St. John’s, Newfoundland.

In 1954, the federal government expanded the National Housing Act to allow chartered banks to enter the NHA lending field. CMHC introduced Mortgage Loan Insurance, taking on mortgage risks with a 25% down payment, making home ownership more accessible to Canadians.
… The 1960s was a decade of firsts. … Public housing becomes more boldly designed and integrated into communities, mixing subsidized and non-subsidized units. Increased partnership with non-profit agencies also started around this time.During the 1960s, CMHC built the first co-operative housing and, for the first time in Canadian history, multi-unit apartment buildings were beginning to outpace housing starts for single family homes.

… During the 1970s, affordability became a major factor in the home buying process. To help make housing more affordable, builders reduced lot sizes and increased the density of developments.

To appeal to first-time buyers and stimulate the housing market, CMHC introduced the Assisted Home Ownership Program (AHOP) in 1971, to help low-income people attain homeownership.

Preservation of historic neighbourhoods and downtown living became a priority and, in 1973, CMHC oversaw the transformation of Vancouver’s Granville Island, a run-down industrial area, into a thriving centre for culture, recreation and tourism.

In 1974, CMHC introduced the Residential Rehabilitation Assistance Program (RRAP) to repair substandard homes to a minimum level of health and safety and to improve the accessibility of housing for disabled persons.

During that decade, CMHC also turned its attention to Aboriginal and rural housing, introducing the Winter Warmth Assistance Program in 1971, the first of its kind to provide funds to Aboriginals for urgent repairs to housing in rural areas.
… Renovation came of age during the 1980s, rivalling new home building for dollar volume of business. Despite the high interest rates (rising to more than 20%), houses were getting larger and more luxurious – more than double the size of a 1940s bungalow.

… In 1986, CMHC introduced Mortgaged Backed Securities as an alternative to investing in individual residential mortgages. MBS helped to ensure a ready supply of low-cost funds for housing finance and to keep mortgage lending costs as low as possible for homeowners.
The 1990s and 2000s are less interesting, mostly since the feds got out of the business of building new social housing in 1993. But you get the point. CMHC could once again become a major player at a time when housing affordability is a huge issue. Here in Vancouver, well-heeled professionals are fretting about whether their children will be able to live in the city, and it has become a major concern of public policy that people who work in the city may not be able to afford to live in it. Vancouver may be exceptional in this regard but I think housing afforability is an issue in all of the major cities.

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