2 days ago
Housing crisis may get worse, new forecasts show
OTTAWA — Canada's housing crisis may get worse before it starts to show much relief, as new projections say that the number of housing starts will actually decrease this year and next.
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These new estimates, from both public and private sector housing forecasts, contradict political promises from all levels of government to boost supply of homes across the country.
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The Canada Mortgage and Housing Corporation (CMHC) forecasts that the total number of housing starts in Canada this year will be about 237,800, down from 245,367 in 2024. CMHC, a Crown corporation that acts as Canada's national housing agency, also forecasts a drop to no more than 227,734 next year and 220,016 in 2027.
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'Affordability remains a major issue and new construction is slowing,' the CMHC wrote in its recent update report on the country's housing market.
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Many economists, meanwhile, say that more new builds would mean a number of positives: they create more places for people to live, put downward pressure on housing prices by boosting supply, and create economic activity and jobs through construction and the various purchases of furniture, appliances and other items that new homeowners typically make. New buildings are also a boon for government coffers at all three levels.
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The CMHC isn't the only voice sounding the alarm that the country's housing stock isn't growing fast enough.
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Mike Moffatt, who was an economic advisor to former prime minister Justin Trudeau, wrote this week that governments 'do not appear to be getting the message, nor do they seem willing to take the necessary steps to address the crisis.'
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During the recent federal election, all the major parties unveiled plans to boost the number of new homes, designed to make housing more affordable and to help deal with the increasing homeless problem in many cities.
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Analysts say there's often a lag of a dozen years or more from when a plot of land has been identified for a new home, subdivision or apartment building to when people are living there. Housing analysts say that's especially the case when roads and key services — sewer, water, electricity — need to be added.
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The current market is also being affected by increased interest rates, higher unemployment, higher labour costs and prices for steel, lumber and other materials, the uncertainty from trade tensions with the United States, slower population growth and a sharp decline in pre-sales. In most Canadian cities, finding convenient land to build on is also an ongoing challenge.
