Canada Needs 3.5 Million More Homes By 2030 To Cut Housing Costs

 

According to a new report from the Canada Mortgage and Housing Corporation, Canada needs to build 3.5 million more homes by 2030 in order to bring housing costs down as the population grows. 

 

The report shows that Ontario and British Columbia make up the largest portion of the housing supply gap. 60% of the 3.5 million more homes are allocated to Ontario and British Columbia, as both provinces have the least affordable housing markets largely because housing supply has not kept up with demand over the past twenty years in most major urban centres. Alberta and Quebec are projected to have higher economic growth compared to other provinces in the coming years, causing supply gaps to worsen. 

 

Canada is on track to build 18.6 million homes by 2030. In order to achieve housing affordability for Canadians, approximately 22 million homes need to be built by 2030. As the numbers currently stand, there is a shortfall of 3.5 million new homes. The latest 18.6 million new home projection is trending down, the main reason being the decline in housing construction.

 

Rising labour costs and higher material costs are contributing significantly to the slowdown in new home construction. As interest rates rise and borrowing conditions tighten, builders and developers are having increased trouble securing credit to fund construction. Along with the overall slower real estate market, many developers are holding off on building since their profit margins are becoming slimmer. Many new home developments have been delayed or cancelled altogether.

 

The Canada Mortgage and Housing Corporation measures how affordable housing is by comparing housing costs as a ratio to income. Canada has never seen the cost for housing this disproportionately higher than current income levels. CMHC's goal is to bring housing costs down to match the 2003-04 cost-to-income ratio, when the economy was considered more stable and housing costs were lower relative to income.