Housing supply in Canadian cities has seen a steady decline over the past decade and could be reaching a “crisis point”, according to a new report.
The report, released Monday by Re/Max Canada, looked at active listings in July between 2012 and 2022 in eight major metropolitan areas across Canada. It revealed that seven of those eight urban centers saw fewer active listings in July 2022 compared to the 10-year average for the month.
“Population growth and household formation have played a significant role in depleting stocks from coast to coast over the past decade, triggering chronic housing shortages in major urban centers that have resulted in mini-cycles of ‘boom’ and ‘bust’,” Re/Max Chairman Christopher Alexander said in a press release. “If we don’t act now to build more housing in the current lull, this same scenario is expected to continue to surface again and again.”
The Halifax-Dartmouth area recorded the largest decline in registrations. Compared to the 10-year average, the region had 65.5% fewer listings in July 2022, although the report notes that home-buying activity has stabilized thanks to rising home-buying rates. interest and slowing migration from other parts of Canada.
The Ottawa-Gatineau region saw a 41.9% drop in enrollment compared to the 10-year average, while enrollment in the Montreal region fell by 40.16%. Re/Max warns that due to increasing migration from Ontario to Quebec, as well as interest from US buyers, “current inventory levels will not support future growth” in Montreal.
Enrollment in Calgary was 26.1% below the 10-year average, while in Winnipeg it was 23% below. Re/Max notes that due to the migration of Ontarians and British Columbians in search of cheaper housing, Calgary’s housing inventory “has fallen to its lowest level in a decade.”
Metro Vancouver saw listings drop 16.1% from the 10-year average. The region recorded an average of 12,792 July registrations between 2013 and 2022, which is still well below the 10-year July average of 14,352 between 2003 and 2012.
It’s a similar story in the Greater Toronto Area. July 2022 listings were 6.8% below the 10-year average of 16,458 units. It’s also well below the 10-year average between 2003 and 2021, which saw 21,243 listings. Re/Max also notes that the population of the GTA increased by 21% between 2006 and 2021.
“We’ve been here before. The actions we take now will determine our future. Currently, there is insufficient supply to accommodate future growth,” the report said.
The Hamilton-Burlington region in Ontario was the only market to report an increase over the 10-year average. The area saw 3.2% more listings in July 2022 than the 10-year average as Toronto buyers, along with new immigrants, continue to drive population growth.
Last June, a report by the Canada Mortgage and Housing Corporation indicated that the housing supply in Canada needed 3.5 million more units than what is already expected to be built by 2030. But Alexander thinks Canada “will likely need more than CMHC’s estimate to create the desired level of affordability.”
“During this lower demand window, construction efforts should be ramped up, not scaled back. The side effect is straining rental markets and contributing to the steady rise in homelessness across the country.” , did he declare.
The Re/Max report says policymakers need to take steps to speed up homebuilding, such as cutting development fees, easing zoning restrictions and approval processes, and even leveraging partnerships between governments and developers.
“The problem is that housing construction is a slow process, and experience tells us that the only thing slower might be government processes,” Alexander said. “There is a need to remove barriers and reduce red tape. A crisis is looming, but the outcome is not set in stone. There is a short track to turn the tide before the impacts become very real for Canadian buyers and renters.