Here’s What Canada Is Building to Solve the Housing Crisis

Written by Posted On Thursday, 19 May 2022 00:00

When people argue about Canada’s affordable housing crisis, those promoting a solution are split into two camps. The “demand” side believes government policies, such as banning or taxing foreign buyers, along with empty homes and speculation taxes, are the answer. The “supply” side says the solution is simple: just build more homes.

A new report by Canada Mortgage and Housing Corp. says housing starts in Canada’s largest areas, and particularly in Toronto, are not keeping up with population growth. That lack of supply is making housing less affordable.

“The Montreal, Toronto and Ottawa (to some extent) areas stand out as having generally the lowest levels of residential construction per capita,” says the report by CMHC senior specialists Eric Bond and Francis Cortellino. “Toronto, contrary to the other two CMAs (census metropolitan areas) has even shown a slight downward trend in this ratio for the past few years. This indicates that, despite a high number of housing starts, construction has not been sufficient to keep pace with population growth; a situation that has certainly not helped reduce affordability problems.”

It has been a different story in Calgary and Edmonton, where a high level of construction relative to the population has helped limit housing prices, says the report.

Vancouver recorded the highest ratio, with about 100 starts per 10,000 of population. “The slowdown in population growth in recent years, combined with a high volume of housing starts, has contributed to this result,” say the authors. “With the high price increases over the past few decades in Vancouver, this area probably has a larger supply gap to fill than other CMAs in order to have a sufficient number of affordable housing units for the households that live there.”

For Canada overall, from 2016 to 2021, growth in the number of private dwellings was greater than population growth, says a recent report by Statistics Canada. “This is not new; at the national level this trend has been observed since at least the early 1950s,” says the Statistics Canada report. “From the mid-1960s to the mid-1980s, the number of private dwellings grew at more than twice the rate of the population. At the time, the many baby boomer cohorts in Canada were leaving their parents’ homes and starting their own family.”

But the report says, “At the regional level, the situation can be quite different. Population growth of some regions of the country can exceed the growth in the number of dwellings.”

CMHC says in Toronto, Montreal and Vancouver, apartments now represent three out of every four new housing units started. “This shift results from higher land prices and the need to build up on a limited land base compared to cities that generally grow out via lower-density development,” say Bond and Cortellino. “Multi-family development will also be increasingly important as cities look to grow more sustainably to help address the challenges of climate change.”

They report that “in absolute terms, Toronto…started the most housing units in 2021. It also recorded a nine-per-cent increase in housing starts compared to 2020, fueled by more apartment and single-detached home construction. However, it didn’t start the most units relative to its population.”

Almost half of the new apartment buildings in the city have more than 100 units. About a quarter of them are more than 20 storeys high. Toronto has had more construction cranes at work than any other North American city since 2015, according to the Rider Levett Bucknall Crane Index. That includes cranes that are building commercial and institutional towers, but the majority have been for residential projects.

Statistics Canada says the rapid increase in the number of apartments is expected to “continue, and even accelerate.” Among the reasons: an aging population, as seniors often live in smaller households, high house prices, smaller household sizes and increasing urbanization.

“Despite the rapid growth in the number of apartments, single-detached homes remain the most common type of dwelling in Canada, representing 7.9 million dwellings or 52.6 per cent of the total number of dwellings,” says Statistics Canada. “Due to slower growth from 2016 to 2021 (4.4 per cent), the share of these houses among all private dwellings has decreased since 1981” when it was 57.2 per cent.

Last year, single-detached homes accounted for just nine per cent of housing starts in Montreal, 11.6 per cent of starts in Vancouver and 16.5 per cent of Toronto’s starts. Single-detached starts are most common in Calgary, Edmonton and Ottawa. “These are the cities that generally have high availability of developable land and choose to expand their urban periphery,” says the CMHC report.

It says cities need a diversity of housing to meet current and future housing needs. “Choices in dwelling type, tenure type and location are needed to provide housing options for households of different sizes, ages and compositions…more choice is better. A greater diversity of new housing improves the match between household and home and makes any given housing type more affordable due to increased supply,” says CMHC. But with land costs so high, only higher-density structures are financially feasible, it says. 

One solution could be to increase the availability of row houses, which provide larger living spaces than apartments. “They also split the land cost over multiple units to make more affordable home prices possible,” says the CMHC report. More row houses in cities across Canada would offer more choice for households with different needs, it says.

Statistics Canada says the 2021 Census enumerated almost 15 million private dwellings, which were occupied by 36.3 million people.

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Jim Adair

Jim Adair has been writing about Canadian real estate, home building and renovation issues for more than 40 years. He is the former editor of Canada’s leading trade magazine for real estate professionals, as well as several home building, décor and renovation titles. You can contact him at jimremonline@rogers.com

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