The Rise of Rescue Capital

Introduction The Liberal Government is in and we are starting to get more clarity on what that means for housing in Canada. In our last article, we compared the Liberal vs. Conservative Housing Platforms , and discussed how the majority of the Liberal housing platform would be positive for housing investors, but that the Build Canada Homes program had the potential to negatively overshadow everything else. One month later, our opinion has softened. The limited documentation available about Build Canada Homes indicates that the government will be (directly) building far fewer homes than we initially anticipated, which has materially lowered our level of concern. Build Canada Homes looks to be far too small to displace private builders or upset private markets. In this edition of the Bird’s Eye View, we review publicly available information on the Build Canada Homes program to determine its scale and potential impact. We then turn to the secondary question of how successful that program is likely to be as we review two of the models that the Liberals have used as inspiration for Build Canada Homes; the Wartime Homes Limited program that saw the Federal Government get directly involved in homebuilding post-WWII, as well as the Singaporean Public Housing model. Build Canada Homes “The Liberal housing plan will double Canada’s current rate of residential construction over the next decade to reach 500,000 homes per year”. Liberal Housing Plan, March 31, 2025 We begin as we so often do with a caveat. It’s important to recognize that there is uncertainty about what this program will look like, as the entire housing plan (at least what is publicly available) is a mere two-page document. The truth is that we really don’t know what this program will look like, even if we know its goals and now have cost estimates. Canada built ~245,000 homes in 2024, which is near the all-time high for annual construction (257,453 units were built in 1974). Getting to 500,000 units by 2036 feels like it borders on impossible, and is potentially much higher than what’s necessary. When we saw the 500,000 homes per year target, alongside the words “deeply affordable,” and the announcement that “the Federal government will get back in the business of building homes”, we saw a very real potential for the heavy disincentivization of private development. If the government is going to compete with private industry while subsidizing costs, why would private industry build anything? Why would private investment fund it? On further review, those concerns are now much smaller than we initially feared. Since we won’t see the 2025 federal budget until the fall , we are limited to the Liberal Housing Plan as well as the Liberal Fiscal and Costing Plan to get a sense for the program itself and how much money the Feds will be allocating to it, but those documents indicate that funding allocations will be small. Here are some of the housing highlights from the Liberal Fiscal and Costing Plan: 

Introduction Election season is here, and while housing affordability and availability have taken a backseat to how Canada should approach its relationship with the United States, changes to housing policy still feature as central pillars of both the Conservative and Liberal party platforms. What makes their proposed changes particularly notable is that since the 1980s, the Federal Government has played a smaller role in housing compared to Municipal and Provincial governments, influencing markets indirectly through immigration and monetary policy. Those days look to be over, as both parties have introduced proposals that would see the Federal Government take a much more active role. In this edition of the Bird’s Eye View, we review the housing platforms for both the Conservative and Liberal parties, and offer our opinion on how these policies will impact development generally, and real estate investors specifically. Note: We recognize that other parties also have housing platforms, but for brevity, we are only covering the Conservative and Liberal platforms. Policies in Common Between Conservatives and Liberals Before we dive into the novel proposals from each party, we begin with three policies in common: 1. Elimination of GST on new homes Both parties have proposed to eliminate GST on new homes, but there is a massive difference in the size and scope of the two programs:

Most investors would be thrilled with the outcomes forecasted in the CMHC 2025 Housing Market Outlook given the level of uncertainty ahead. The question is, how likely is CMHC to be right?

Demand is high and has nearly chewed through the supply overhang in many markets, which should result in rising rents and falling vacancies over the next few years.

While GDP isn’t a perfect predictor of housing prices, the two tend to run in the same direction. If we do in fact see a decline in GDP from 2024, it would take a unique set of circumstances to see anything more than flat housing prices in 2025.

It doesn’t take a genius to hypothesize that population decreases could cause rental rates and housing prices to soften over the next two years. However, a look at historical data shows that changes in population growth often don’t result in immediate housing price changes

While we will continue to watch and seek to understand how investors may be affected by who ends up in government and any resulting policy shifts, there is something reassuring about knowing that in the past, real estate has performed well for investors regardless of who is in power.

In this edition of the Bird's Eye View, we look at deal structure changes that developers are making to attract LP investors, and how these features are making deals more attractive on a risk-adjusted basis.

In this edition of the Bird’s Eye View, we cover how real estate prices have historically moved in falling rate environments and explore some of the perils both in forecasting rates and what prices will do as a result of changes in rates.