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Lessons from 2023 and Strategies for the Future of Canadian Homebuilding

Lessons from 2023 and Strategies for the Future of Canadian Homebuilding

As we reflect on the challenges, successes, and learnings from 2023, we’ve highlighted a few of the core topics and discussions that often came up with our clients over the last year, and the solutions we hope these conversations will lead to in the future. 

These topics centered around evolving building codes, carbon considerations, and the constant pursuit of energy efficiency, all while balancing affordability and economic constraints.

Carbon Considerations and Code Evolution

The hottest topics related to Canadian building codes all revolve around considerations of carbon. The burning questions are about how to prepare for a carbon-centric future, the evolving codes in that domain, and the necessary preparations for builders. The Tiered Energy Codes, especially in the Ontario market, hang under a big question mark, making it a focal point as we step into 2024.

While we are getting a clearer picture of how codes will address carbon, the fast pace of developments in this relatively new space is still a challenge. There's ongoing exploration of how to measure carbon, what aspects are measured, and where there are still gaps. Some builders are keen on carbon reduction in areas where there's currently no credit, and the industry is grappling with ways to account for it. 

Even in areas where we have accounting practices, such as embodied carbon, the understanding is evolving. For instance, early discussions highlighted the positive role of wood products in capturing carbon, but now there's a more nuanced perspective, considering reforestation practices. 

The industry is swiftly adapting to this new terrain, and the complexity of the issue is expanding our understanding, both answering and raising questions in spaces that need further exploration. 

Addressing Uncertainty with Planning and Action

Throughout the whole of 2023, our focus here at Building Knowledge was helping the industry develop ways to move forward, even as we anticipate evolving codes. We've emphasized the idea that taking action, even in an imperfect way, is the right move. The saying, "perfection is the enemy of the good," resonates strongly, emphasizing the importance of making plans and not succumbing to paralysis caused by uncertainty.

This mindset has driven much of our engagement with our clients, guiding them in long-term, mid-term, and short-term planning. We encourage a step-by-step approach, offering builders strategies for the current year, the next five years, and a decade ahead. This way, they can move forward without feeling overwhelmed. 

In terms of our role at Building Knowledge Canada, staying abreast of code developments is crucial. We provide support by offering insights into the requirements of upcoming codes, available tools, and reporting mechanisms. Builders often approach us seeking guidance on complying with the next version of the building code, and we're equipped to assist in benchmarking and calculations for measurable aspects.

Looking beyond mandated measures, we've found ourselves involved in supporting builders in new directions. Larger developers and builders are increasingly looking to report on their carbon practices, influencing financial mechanisms like ESG reporting, which considers carbon practices for funding access.

As we navigate these shifts, the concept of carbon and its impact on the environment has gained wider recognition. While we haven't seen concrete data on consumer behaviour, there's a growing societal awareness of the role of carbon in climate change. This is reflected in discussions about heat pumps, electrification of homes, and other eco-friendly practices within the real estate landscape.

Affordability vs Energy Efficiency. Must They Compete?

Reflecting on 2023, the acceleration of energy efficiency in building codes has been noteworthy. The 2020 National Building Code, adopted in 2022, is already influencing changes for 2025, creating a condensed timeframe for adjustments. However, the emphasis has been on implementing changes gradually, ensuring builders are not blindsided by drastic shifts. The goal is a series of incremental steps rather than a leap into the unknown, allowing builders to adapt successfully amid other industry pressures.

We've heard a lot about affordability last year, and it continues to be a hot topic, for good reason. Often, the discussion presents affordability and energy efficiency as contrasting elements, almost opposites. However, we're working to add more nuance to this narrative, emphasizing that the impacts on affordability are broader than just energy efficiency. Factors like development taxes and land transfer taxes also play a significant role.

Energy efficiency, unlike certain fees, gives something back to homeowners and builders. While there is a cost involved, it offers tangible benefits. In discussions at the Canadian Home Builders’ Association (CHBA) meetings in Ottawa last fall, a builder pointed out that a third of their construction costs go towards land transfer fees and taxes. When compared to the relatively modest impact of measures like improving air tightness or using higher efficiency mechanical products, it becomes an attractive proposition, especially since these energy efficiency measures provide tangible and marketable benefits.

The complexity of homes being built also significantly contributes to costs, influenced by homeowner demand, builder preferences, and design complexity. Exploring avenues to simplify home designs and adopting more standard material palettes could be part of the solution. Affordability remains a crucial aspect of every conversation, and it will likely continue to be a significant topic in the coming year.

Net Zero Certification for Multi-Residential Buildings

Considerations of Net Zero for mid-density housing projects in 2023 brought new challenges and exciting opportunities. Although the Net Zero MURB pilot report is still pending, there has been increased focus on high-density projects and Net Zero MURB projects as a desirable built form. Building Knowledge has been involved in exploring alternative compliance options and metrics for such projects.

The challenges arise from the unique characteristics of mid-density projects, particularly townhomes and stacked townhomes, where the amount of living space is under a small roof area. Traditional Net Zero models, where energy production from rooftop solar matches consumption, face limitations due to this form factor. To address this, Building Knowledge, in collaboration with CHBA, is exploring alternative ways to validate these projects as NET ZERO Ready.

One approach is to consider the future integration of more efficient solar panels or alternative energy supply methods, such as community energy plans or microgrids. The goal is to make Net Zero achievable for mid-density projects in a practical and feasible manner.

In response to questions about modeling for different home styles, it's acknowledged that there is an ongoing exploration of new approaches. The traditional one-to-one offset may not apply seamlessly to smaller homes with limited roof space. CHBA and Building Knowledge are actively engaged in finding solutions that align with the evolving needs of the industry and the changing landscape of building codes.

Looking ahead, the focus remains on making Net Zero achievable for various housing types, including mid-density projects. 

The Best News from 2023: Increased Collaboration within the Industry

As we have seen for decades, the collaborative efforts of industry stakeholders, builders, and organizations like Building Knowledge Canada are crucial in shaping the future of sustainable building practices.

Over the last year, we've seen builders open to sharing more than we've ever seen in the past. Builders have recognized that climate change is a crisis that we have to all solve together, and adopting the mentality that ‘a rising tide lifts all boats’ has led to a constructive collaboration to the benefit of all. Our larger builder clients have come out right from the top level and said, “anything that you help us to figure out, we want you to share with others because that's going be good for everybody.” We're seeing builders that have formerly been competitors getting together voluntarily to collaborate on the way forward, which is significant and just wonderful to see.

The homebuilding industry stands, as always, at the intersection of innovation and adaptation. We remain dedicated to helping Canadian homebuilders navigate challenges, embrace opportunities, and successfully build the homes of tomorrow, which Canadians will love to live in. 

If you are involved in the building industry and need assistance with testing, diagnostic, or design services, please get in touch

Visit our Builder 360° or our How We Work With Builders page to find out more about how we support our clients.

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