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Edmonton has overtaken Toronto in housing construction – and that’s no coincidence
Published on December 17, 2024 • Last updated 1 week ago • 4 minutes reading time
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Construction crews are working on homes in west Edmonton, Alta. Photo by David Bloom/Postmedia Files
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A strikingly uneven picture of new home construction is emerging across Canada, with some regions hitting record highs while others are struggling to stem the ongoing decline.
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Annual housing starts (based on rolling 12-month totals) show how a smaller western city has overtaken Canada's largest urban center in housing construction. As of October 2024, Edmonton recorded 9,441 condominium starts, predominantly low-rise, family-oriented units. In contrast, Toronto managed just 8,730 starts in the same category.
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Edmonton and Toronto provide a stark contrast in this landscape, with Edmonton on track to surpass previous records in construction activity while Toronto faces a sharp decline in condo construction. Although Toronto's population is more than four times that of the Edmonton Census Metropolitan Area (CMA), it is notable that the number of new homeowners and rentals in Edmonton exceeds that in Toronto. Toronto's total remains higher, but only because of historically high volumes of new condominium starts – a sector that saw a sharp decline in 2024.
The gap is even greater when it comes to rental housing, a crucial segment for affordability and the provision of safe housing for middle- and low-income households. Edmonton reported 7,190 annual rental starts (over 12 months), surpassing Toronto's 6,301. Excluding condominium construction starts, Edmonton has built more housing units than Toronto in the last 12 months.
Edmonton's construction recovery is timely and meets the increasing demand that has driven up real estate prices. According to the Canadian Real Estate Association (CREA), the average seasonally adjusted sales price in the Greater Toronto Area reached $1.13 million, a staggering 2.5 times higher than Edmonton's $437,237. The affordability gap has spurred westward migration and led to a 12.4 per cent year-over-year increase in real estate prices in Edmonton, compared to just 0.7 per cent in Toronto.
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Edmonton's housing boom is no accident, but the result of a coordinated effort by local, regional and federal governments. Strong local political will and commitment from planning authorities have allowed Edmonton to streamline development processes while cities like Toronto continue to be mired in bureaucracy. As of the end of October, Edmonton recorded 14,791 housing starts – a testament to the city's proactive approach to meeting its housing needs.
Edmonton Mayor Amarjeet Sohi proudly admits that “Edmonton is leading the country in cutting red tape and putting shovels in the ground.” The city’s innovative automated residential permit approval system – the first of its kind in Canada – allows builders to apply for a permit and begin construction on the same day. In Toronto, the approval process can take years.
The Liberal government's Housing Accelerator Fund (HAF) has emerged as a key initiative to address the housing crisis, providing financial support to local governments to accelerate construction of much-needed rental housing and other housing types. The program has made significant progress: Ottawa has secured 178 agreements to accelerate the creation of 750,000 homes across the country.
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Edmonton is among the cities benefiting from the fund. The fund is expected to receive $175 million if it meets its goal of 35,443 housing units over three years. As of November, the city had issued permits for nearly 15,000 units, reaching 42 percent of its goal.
The recent interest rate cuts are expected to provide relief to builders and home buyers and provide a slight boost to the real estate market. An extension to the 30-year repayment period for insured mortgages and the removal of GST on new home construction could further reduce borrowing and construction costs. However, these steps alone are not enough to address the sharp decline in construction activity, particularly in cities like Toronto. A major factor driving up costs in Toronto is the sharp increase in municipal development fees over the last decade, which is considered a major factor in rising construction costs.
The construction sector is struggling with labor shortages, despite record numbers of workers currently being employed in residential construction. Women remain severely underrepresented and make up only 7.4 percent of employees in craft, transport and equipment industries. Addressing this imbalance will allow the industry to reshape and expand its workforce, potentially alleviating future labor shortages.
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Prime Minister Justin Trudeau recently acknowledged that Canada's real estate market “just isn't working…Ask anyone you know and they'll say it hasn't been working for decades.” The Liberals have been in government for almost a decade. They were slow to get the shovels into the ground. Still, their recent escalated efforts are promising. Edmonton is proving that governments and industry can move the earth to build homes when they combine their efforts.
Murtaza Haider is Associate Dean for Graduate Programs and Director of the Urban Analytics Institute at the Ted Rogers School of Management at Toronto Metropolitan University. Stephen Moranis is a real estate industry veteran. They can be accessed on the Haider-Moranis Bulletin website at www.hmbulletin.com.
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