A new report says the housing supply in Canadian cities has been in steady decline in the past decade and could reach a “crisis point”.
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 found that seven of these eight urban centers saw fewer active listings in July 2022 than the 10-year average for that month.
“Population growth and family formation have played a significant role in depleting coast-to-coast inventory levels over the last decade, resulting in chronic housing shortages in large urban centers resulting in mini-cycles of ‘boom’ and ‘collapse’,” said Rey/ President Max Christopher Alexander In a press release. “If we don’t act now to build more housing in the current period of calm, this same scenario is expected to continue to emerge over and over again.”
The Halifax-Dartmouth area experienced the largest drop in listings. Compared to the 10-year average, the region had 65.5 percent fewer listings in July 2022, although the report notes that home buying activity has leveled off thanks to higher interest rates and slower immigration from other parts of Canada.
The Ottawa-Gatineau region saw a 41.9 percent decline in listings from the 10-year average, while the Montreal region saw listings down 40.16 percent. Re/Max warns that thanks to increased immigration from Ontario to Quebec, as well as interest from US buyers, “current stock levels will not support future growth” in Montreal.
The number of listings in Calgary was 26.1 percent lower than the 10-year average, while in Winnipeg, it was 23 percent lower. Re/Max notes that due to immigration from Ontarians and British Columbians looking for cheaper housing, Calgary’s housing stock has fallen “to its lowest level in a decade.”
Greater Vancouver saw a 16.1 percent drop in listings compared to the 10-year average. The region saw an average of 12,792 inclusions in July between 2013 and 2022, still well below the July average of 14,352 in the 10-year period between 2003 and 2012.
It’s a similar story in the Greater Toronto Area. July 2022 listings were 6.8 percent below the 10-year average of 16,458 units. This is 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 grew by 21 percent between 2006 and 2021.
“We’ve been here before,” the report says. “The actions we take now will determine our future. At the moment, there is insufficient supply to accommodate future growth.”
The Hamilton-Burlington region of Ontario was the only market to report an increase over the 10-year average. The region saw a 3.2 percent increase in listings in July 2022 compared to the 10-year average, as buyers from Toronto and recent immigrants continue to drive population growth.
Back in June, a report from Canadian Mortgage and Housing Corporation Alexander said Canada’s housing supply needs 3.5 million more homes than is already projected by 2030. But Alexander believes Canada “may need more than the CMHC estimate to establish the required level of affordability.”
“During this window of weak demand, construction efforts should be intensified, not reduced. The branch effect strains rental markets and contributes to rising levels of homelessness across the country,” he said.
The Re/Max report says policymakers need to take action to speed up residential construction, such as lowering development fees, easing zoning restrictions and approval processes, and even taking advantage of partnerships between governments and developers.
“The problem is that housing development is a slow process, and experience tells us that the only thing that might be slower is government processes,” Alexander said. “Removing barriers and cutting red tape is essential. There is a crisis looming, but the outcome is not set in stone. There is a short runway to reverse course before the effects become too real for Canadian homebuyers and renters.”