(Toronto) When Bob Dugan looks to the future of Canada’s housing market, he doesn’t see the rosy picture that many aspire to.
“I’m actually concerned that affordability will get worse, not better, unless we can fix it,” Canada Mortgage and Housing Corporation’s chief economist told La Presse on Friday. Canadian.
The Canadian Real Estate Association reported Thursday that the real national average home price was $729,044 in May, up 3.2% from a year earlier, while the average seasonally adjusted for homes reached $715,290, up 2.7% from April. The average was over 1 million in the Greater Toronto Area and several parts of British Columbia.
Mr. Dugan’s feelings about declining affordability have been simmering at the federal housing agency for some time, prompting him to sound the alarm last summer, when she revealed that the country needed to build 3.5 million more homes than planned by 2030 to achieve minimum affordability.
A year later, the situation is not improving. Some 271,000 homes were built two years ago and about 260,000 more last year, Dugan said.
The annual pace of housing starts – a measure of the start of home construction and a key indicator of how well Canada is filling gaps in housing supply – fell 23% in May from April, while that starts of apartments, condominiums and other types of multi-unit housing have declined in Vancouver, Toronto and Montreal.
Mr. Dugan now calculates that between 210,000 and 220,000 homes will be built this year.
“I hope my forecast is wrong, but given the current situation, I am not optimistic that we are on track to double the pace of housing starts. »
Housing starts are not less active due to a lack of interest or weak demand for construction, but rather due to labor shortages, rising interest rates and higher material costs, as well as zoning issues and the “not in my backyard” syndrome, which refers to people who object to certain projects going ahead in their neighborhood but not in others regions.
Still, CMHC believes that solving the affordability problem is not impossible. It will just require many parties to act in concert.
“There is no one solution. There is no single institution or level of government or organization that can fix the problem,” CMHC CEO Romy Bowers argued in the same discussion as Mr. Dugan.
“It [involves] really all of Canada, a response in which everyone is contributing. »
The star element of the answer must be supply, say Ms. Bowers and Mr. Dugan.
At the top of Ms. Bowers’ wish list is a more concerted effort to address the lack of built-to-let housing.
It has about 4.5 million of these homes and while Canada has seen a slight uptick in recent years, most of these homes are “super old” as they were mostly built in the 1960s, 1970s and 1980s. .
But the demand for these homes is high with rising immigration — Canada’s population hit 40 million on Friday — and many just want a roof over their heads.
“But because we haven’t invested in built-to-let housing, there just isn’t enough supply to meet the demand,” Bowers said.
CMHC has attempted to further stimulate these units with a rental construction financing initiative, which provides low-cost financing to borrowers during the riskiest phases of rental apartment construction.
But rental units can be long-term projects. In Toronto, it can take up to eight and a half years to build one from concept to move-in. Many builders just want to build something, sell it and move on, so they have less incentive to build these properties.
CMHC believes that more rental housing could be built if all levels of government worked together to find solutions.
Without this collaboration, the country faces two housing crises, Bowers said: one where the most vulnerable people face a dire socio-economic situation, the other where the middle class is also struggling in the housing market. .
While everyone can be helped by the offer, a change in attitude might also be needed.
“We have this idea that success means having your own four-bedroom, two-story house with a yard and that sort of thing,” Dugan observed.
“I think we need to get away from that in the big cities. »
Although density is often reviled, it has played a crucial role in providing housing for several other major cities like Hong Kong and London.
For Canada to replicate that, people should get over their “not in my backyard”, and developers should build bigger condominiums where people feel they have the opportunity to raise children or have space for recreation and visitors,” Dugan continued.
But how confident is CMHC that Canada can achieve all of this?
Bowers believes that the challenges we face can be solved. Mr. Dugan agrees that measures will need to be put in place.
“Crises often lead to innovation and new ways of doing things, so I think I’m hopeful that we’ll find different kinds of solutions to build more efficiently,” he said.
“We’re going to improve the situation, but it’s hard to build that into the forecast when you don’t know when it’s going to happen, or what that innovation will be. »