Canadians are facing a severe shortage of homes, now and into the future that, if not addressed as soon as possible, will see home prices and rents increase..It’s not a problem, it’s a crisis..The alarm bell is being rung in Canada Mortgage and Housing Corporation’s (CMHC) Housing Market Outlook which forecasts a decline in new homes construction well below the levels of the last two years..Bob Dugan, CMHC’s chief economist, said new home starts would be approximately 212,000 in 2023 and 224,000 in 2024, well below the level of 244,000 in 2023 predicted by the agency in October last October..“We had previously estimated about two million new homes would be built between 2023 and 2030, and then on top of this an additional three-and-a-half million homes would need to be built in order to restore affordability to housing in Canada,” Dugan told Canadian Mortgage Professional..“In other words, we need a much higher level of starts than is currently being forecast if we want affordability to improve and I’m not just talking about homeownership here.”.“Over the past year, rising interest rates have curbed homeownership demand, but demand for rental housing during this period has increased.”.“That’s seen vacancy rates fall and rent pressures increase, causing headaches for households grappling with higher costs, in particular those who had to move during the year and face inflated monthly rent payments.”.Increasing home construction levels, for ownership and rental, is far from easy and Dugan’s suggestion of building five and-a-half million new homes by 2030 is impossible, given today’s matrix..Developers and new home builders are facing increasingly more difficult logistics challenges, from rising costs of construction materials and land, to a shortage of qualified labour and sticky red tape from governments, in particular, municipal governments. .Add to that the federal government’s plans to allow in a record number of new Canadians in the coming years, nearly half-a-million per year by 2025, makes the housing shortage not a problem, but a crisis, underlining the urgency to dramatically increase new home construction..“Our overall view, and we’ve said this many times, is there’s a supply shortage for housing in Canada. And if we want to restore affordability, we have to get busy building more homes and so that population growth contributes to that need,” said Dugan..All levels of government, federal, provincial, and municipal must address the shortage, said Dugan, adding a business-as-usual approach “isn’t going to work” to address the crisis..“I think it involves a concerted and joint effort by everyone who has an interest in improving housing affordability. We have to find innovative solutions.”.“What we need is new and innovative ways to build homes, new and innovative ways of leveraging existing supply, the use of the existing housing stock.” .“It’s a complex answer, and it’s a difficult problem.”
