Parliament's budget watchdog dropped a report last week that should make anyone paying attention to Canada's housing crisis do a double take.

While the government talks about doubling housing construction, federal housing spending is getting slashed by 56% over the next four years. From $9.8 billion in 2025-26 down to $4.3 billion by 2028-29.

And the new $13 billion agency created to solve the housing crisis? The Parliamentary Budget Officer projects it'll build 26,000 homes over five years. That's a 2.1% increase in housing completions compared to what would happen anyway.

Let's be clear about what 2.1% means. An agency created specifically to double housing construction will deliver about 2% of that goal.

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The Programs Getting Axed

The spending cuts aren't abstract. Real programs that help people afford housing are disappearing.

The Canada Housing Benefit, which helps low-income renters pay rent, is ending. The Affordable Housing Fund, which finances below-market housing construction, is wrapping up. The Housing Accelerator Fund, a flagship program under the previous government, has funding only until 2028.

These aren't small support programs. The Canada Housing Benefit directly assists thousands of households every month. Without it, those people compete with everyone else for the same tight rental supply.

The math is straightforward. Remove rental assistance, and people who would have qualified for that support now bid on market rentals. People who would have rented market units now try to buy. Competition intensifies at every price point.

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CMHC Takes the Biggest Hit

Canada Mortgage and Housing Corporation will lose $2.4 billion between 2026 and 2030. These cuts are deep enough that the PBO warns they'll affect the agency's ability to maintain existing social housing, not just build new units.

Here's the problem. Ottawa is legally obligated to fund certain social housing agreements. Those contracts can't be cut. So where do the cuts fall? On programs without legal protection. The most vulnerable housing supports get eliminated first.

Canada has roughly 600,000 to 700,000 social housing units. That number hasn't grown much in three decades. Most OECD countries dedicate about 7% of their housing stock to social housing. The EU average is 8%. Canada sits at 3.5%.

We're already behind, and now we're defunding the main agency responsible for that housing.

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Build Canada Homes: The New Plan That Delivers 2%

The government launched Build Canada Homes in September with $13 billion in funding. The mandate is to double housing construction. It sounds ambitious until you read what the PBO actually projects.

Over five years, Build Canada Homes will produce 26,000 units. Half will be considered affordable for low-income households. The other half will be market housing that developers likely would have built anyway.

That represents a 2.1% increase in housing completions compared to baseline projections. Not 21%. Not 12%. Two point one percent.

To put that in perspective, the PBO estimates Canada needs 690,000 additional units by 2035 to restore affordability. Build Canada Homes' 26,000 units would address 3.7% of that gap.

Housing Minister Gregor Robertson pushed back on the report, saying the projections don't account for private sector investment and provincial partnerships. Maybe. But the PBO is non-partisan and has access to all the same government data. When they project 26,000 units instead of hundreds of thousands, that deserves attention.

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The Per-Unit Cost Nobody's Talking About

Here's where the numbers get uncomfortable. Taxpayers will spend $13 billion to produce 26,000 homes over five years. That works out to roughly $500,000 per unit.

For context, the average market price for an apartment in Canada is around $479,000. We're spending more per unit in subsidies than market apartments actually cost.

And these units aren't being given to end users. They're being built as financial assets, often with public land subsidizing private construction.

Half these units are market housing. That means private developers already had a business case to build them. So what exactly is the $13 billion buying?

The PBO's estimate of 26,000 units is actually generous. It doesn't account for any reduction from the CMHC cuts, which the report makes clear will likely decrease overall production.

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This Exact Problem Was Flagged in 2021

None of this is new. Back in 2021, the PBO reviewed the federal housing plan and warned that the "$70+ billion plan" might not create any new housing. The concern was that Ottawa could be taking credit for projects already in the pipeline.

The warning was specific. Loans and financing don't necessarily create housing that wouldn't have been built otherwise. They just change who pays for it and when.

Now we have a new agency, new branding, and the same fundamental problem. Government spending induces construction, which drives up costs. Banks accept unreasonable risks to avoid recognizing losses on overvalued properties. And policy continues to ignore basic economic realities about what's actually achievable.

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The Reality of Doubling Construction

To restore housing affordability to 2019 levels, CMHC estimates Canada needs between 430,000 and 480,000 units annually for the next decade. That's roughly double current construction rates.

Canada completed about 250,000 new homes last year. Build Canada Homes will add roughly 5,200 units annually. Even with the new agency, we're nowhere close to the target.

The PBO projects Canada will average 227,000 new completions per year over the next decade. That leaves a gap of almost 700,000 homes between what's projected to be built and what's needed.

And remember, these projections don't account for the CMHC cuts, which will likely reduce production further.

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What This Means for Local Markets

National housing policy affects local markets. When federal support for affordable housing disappears, pressure on the private market increases. When programs helping low-income renters end, those households compete for the same limited supply everyone else wants.

This pushes demand up the price ladder. People who would have qualified for affordable units now bid on market rentals. People who would have rented try to buy. Competition intensifies everywhere.

The Okanagan has already seen significant price appreciation over the past few years. Recent policy changes around immigration and interest rates are cooling some markets, but the underlying supply problem remains. If federal housing investment drops by half while demand pressures persist, price normalization won't happen as quickly as people hope.

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The Bigger Pattern

Housing policy in Canada has become a case study in how not to solve a crisis. Programs expire as the need grows. New agencies launch with mandates they can't achieve. Billions get spent without producing proportional results.

The PBO report isn't just budget analysis. It's a reality check. And the reality is that despite all the announcements and press releases, Canada's housing situation is getting worse.

For buyers, this means competition will likely remain intense, especially for affordable options. For sellers, it suggests continued strength in certain segments, though broader market conditions still matter. For investors, it highlights that housing scarcity isn't getting solved anytime soon.

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The Government's Response

Housing Minister Gregor Robertson says the agency is "just getting started" and will "deliver a ton of affordable housing." He suggested the PBO's numbers don't capture investment from provinces and the private sector.

That's possible. Government officials told media that just because programs have expiry dates doesn't mean they won't be extended or topped up.

But budget decisions reflect priorities. Right now, the stated priority is cutting housing spending, not increasing it. The numbers are public. The cuts are scheduled. Until that changes, this is the reality.

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What Actually Happens Next

Maybe these programs get extended before they expire. Maybe private investment fills the gaps. Maybe the government announces new funding.

Or maybe they don't. The PBO has a track record of accurate forecasting. They're non-partisan. When they say a plan will deliver 2% of its stated goal, that deserves serious attention.

The interim Parliamentary Budget Officer, Jason Jacques, told the Senate's national finance committee that the government didn't respond to questions about which programs are being cut. The projections are based on public announcements, corporate plans, and budget details.

"If not addressed, the current public data indicates that we're on track for a substantial decrease in federal spending in this area," Jacques said.

That's not speculation. That's what the numbers show.

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The Local Impact

If you're navigating Kelowna's real estate market right now, federal policy won't rescue you. Programs that might have helped first-time buyers or renters are disappearing. Support for affordable housing construction is drying up.

The market you're in is the market you've got. And based on what the PBO is saying, it won't change dramatically in the near term.

Don't overextend financially hoping prices will drop soon. Don't wait for perfect conditions that may never arrive. Don't assume government programs will make housing significantly more accessible.

Whether you're considering buying your first home, selling to upgrade, or evaluating investment properties, understanding what these national trends mean for your specific situation matters. The team at Coldwell Banker Horizon Realty can help you make decisions based on market realities, not what policymakers promise but fail to deliver.