As spring reveals its blossoms, it brings forth a renewed perspective on the real estate landscape, highlighting the interplay between seasonal shifts and the ever-evolving dynamics of the housing market.
And indeed, there has been growth in the spring market. According to the latest Canadian Real Estate Association (CREA) housing statistics report, Canada’s real estate market posted an 11.3% growth in national home sales on a month-over-month basis in April 2023. All signs of a possible recovery in the housing markets for this year have been evident in recent months, and if the lively post-Easter weekend spring market is any indication, then it seems it could come to fruition. However, the problem of supply and demand in housing persists.
A Perennial Problem
Demand outpacing supply has become a perennial problem, especially when it comes to affordable housing units. In a 2022 report, the Canada Mortgage and Housing Corporation (CMHC) stated that on top of the forecasted 22 million housing units required to help achieve housing affordability, an additional 3.5 million affordable housing units are needed by 2030 to better cater to the needs of the people. Further, Dalhousie University’s analysis of Canada’s National Housing Strategy (NHS) found that the NHS’s programs and policies have had little effect on affordability, with most of its programs focusing on market housing and private sector developers.
And while the national government announced last year an additional funding of roughly $7.8 billion for the NHS (bringing the total budget to $82+ billion), a review conducted by the Parliamentary Budget Officer (PBO) in early 2023 estimates that spending is closer to $89 billion, only a fraction comes at a net fiscal cost, and only a portion is net-new spending.
In my own backyard, the frustration is palpable: Torontonians are increasingly frustrated with the housing affordability crisis. In a May 2023 Ipsos poll commissioned by the TRREB, respondents gave the city council failing marks in addressing the housing affordability crisis (“D,” 23%, and “F,” 31%), and 89% implored the next mayor to make housing a top priority.
The progressively worsening housing affordability crisis is an alarm bell. While the real estate market may be blooming, the accessibility of housing for all Canadians remains an essential concern that warrants immediate attention and action – not mere lip service.
Causes of the Affordability Crisis
Limited supply of new construction, speculative buying, Canada’s welcoming immigration policy, building of luxury homes instead of affordable ones, and the lack of skilled tradespeople in the construction industry are all factors that have led to this crisis. The current inflationary environment and high borrowing costs have also contributed to and exacerbated the state of housing in Canada.
An often overlooked but significant area of major concern that has impacted supply and spiraling development costs is the increasing time it takes to get projects approved. Residential Construction Council of Ontario (RESCON) president Richard Lyall, recently wrote in a recent Canadian Real Estate Wealth Magazine article that “the approval timeline for a project in Toronto was a whopping 32 months in 2022, up from 21 months in 2020.”
Addressing these multifaceted causes requires a comprehensive approach involving policy interventions, strategic urban planning, and collaboration between various stakeholders to foster a sustainable and inclusive housing market that adequately meets the needs of all Canadians.
Government Efforts to Date
The federal government has taken several measures to address the housing affordability crisis and alleviate its impact on Canadians. These initiatives include the introduction of the First-Time Home Buyer Incentive, the implementation of stricter mortgage qualification rules and stress tests, taxation of foreign buyers and speculators, and new taxes for vacant properties, in an effort to cool the market and discourage speculative behaviour.
Pursuing Sustainable Solutions: A Multifaceted Approach for Accessible Housing
While the government's commitment to tackling the housing affordability crisis is clear, the housing challenge demands a multi-layered approach and continued collaboration between federal, provincial, and municipal authorities, along with innovative approaches to achieve sustainable, accessible, and affordable housing.
Below are some practical ideas that I feel can help pave the way toward a more affordable housing market:
- Embrace innovative housing solutions: Incentivize developers of alternative housing models such as co-housing, co-operative housing, tiny homes, 3D printed homes, and modular construction with tax breaks, density bonuses, expedited permitting, and fee waivers or reductions. These solutions promote efficient land use and utilize available technologies to make homes more affordable.
- Update zoning and bylaws: Review and update local zoning regulations and bylaws to explicitly permit and encourage the construction of laneway housing and secondary suites. This can involve allowing for increased density, relaxing minimum lot size requirements, and accommodating parking needs.
- Encourage adaptive reuse and infill development: Promote the transformation of unused buildings, such as empty offices or industrial spaces, into homes to maximize their potential. Additionally, encourage the development of housing on vacant land or the revitalization of underutilized areas in cities, known as infill development, to further boost the availability of housing.
- Improve transportation infrastructure: Invest in transportation infrastructure, including public transit, to improve connectivity between urban centres and suburban areas. This can help ease the pressure of housing in high-demand urban areas and create opportunities for more affordable housing options in surrounding regions.
- Collaborate with private and non-profit sectors: Foster partnerships with private developers and non-profit organizations to leverage their expertise and resources in building affordable housing units. This could also include providing incentives and support to encourage their involvement in addressing the housing shortage.
Plans and budgets alone will not solve Canada's housing crisis. We need real action and collaboration from all levels of government, community organizations, and stakeholders in the housing sector. With a comprehensive strategy, sustainable policies and practical solutions, we can take meaningful steps to ensure all Canadians have a fighting chance to access safe and affordable homes.
This article was produced in partnership with STOREYS Custom Studio.