Canada can’t build enough houses to reach affordability target: CMHC

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Will fall well short of the target of 3.5 million new homes by 2030

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06.10.2022 • 1 day ago • 3 minutes read • 6 comments If current housing rates hold up, the Canada Mortgage and Housing Corporation said in a new report that the country's housing stock is expected to grow by just 2.3 million units through 2030, below its target of 3.5 million new homes. If current housing rates hold up, the Canada Mortgage and Housing Corporation said in a new report that the country’s housing stock is expected to grow by just 2.3 million units through 2030, below its target of 3.5 million new homes. Photo by PATRICK DOYLE /returner

Canada doesn’t have the labor capacity to build the 3.5 million new homes it would need to reach affordable housing by 2030, and Ontario is likely to outperform new homes over that time, according to a sobering new report of the National Housing Agency.

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The Canada Mortgage and Housing Corporation had set the target number of 3.5 million in a report in June, but follow-up research released Thursday found there will only be enough labor in four major provinces to increase the number of starts — Ontario, Quebec, BC and Alberta – by 30 to 50 percent.

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While Alberta could meet its needs in such a scenario, the other major provinces would lag far behind.

“Ontario, Quebec and BC must double the number of launches they can best achieve” to meet the goal, the report said.

Dana Senagama, CMHC economist and author of the report, said the agency is aware Ontario and BC face challenges but was surprised by the severity.

“The biggest surprise has been the scale of the challenge that all of these major provinces face in the future,” Senagama said.

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If current housing rates continue, the country’s housing stock is expected to increase by just 2.3 million units by 2030, for a total of nearly 19 million units, according to the CMHC.

BuildForce Canada, a construction sector industry group, predicts that these market challenges may persist during the forecast period due to a strong residential construction market and a growing pipeline of large-scale projects that are not expected to ease into 2026. Demographic trends will also be a factor, BuildForce CEO Bill Ferreira said in an interview.

“The latest census data indicates that 20 percent of Canada’s population is between the ages of 50 and 64,” said Bill Ferreira. “And only 16 percent are under 50. So if we start looking and projecting over the next 15 years, we know that more people will leave the labor market to retire than will enter the labor market.”

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CMHC based its capacity measure on how much the labor force could produce at current wage and skill levels. The agency then used the proportion of homebuilders as a percentage of the population and the minimum number of workers required for a housing unit under construction to determine the estimated labor capacity.

According to Ferreira, the federal government has introduced a number of new incentives to try to encourage craft businesses to support artisans with training.

“The reality is that this is probably the most challenging but certainly the most supportive environment the construction industry has seen in the last 20 years.”

Still, Ontario, the only province projected to outpace housing starts by 2030, faces the greatest skills shortages.

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While other provinces could benefit from expanding the labor pool, in Ontario “the gaps are too great,” according to the CMHC report.

The report concluded that “building up” in the form of housing and converting existing structures into housing units are possible ways of closing the gap, as are programs to attract more immigrants with construction-related skills and to better pay that workforce.

Kevin Lee, executive director of the Canadian Home Builders’ Association, said prefabricated structures are another possible solution.

“Whether we call it prefab construction or factory made construction, the idea is that you build either modules or panels in a factory that can then be shipped on site,” Lee said in an interview.

This type of construction was made popular by the “tiny home” trend, but Lee says it’s also possible to build typical single-family homes and apartment buildings this way. The challenge is overhead.

“Because of the overhead costs associated with a factory, it can be a bit more difficult to maintain. But because of the labor shortage we’re facing now, it’s becoming more and more sensible to invest in this type of construction,” he said.

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