Expert: Lip Service Alone Will Not Solve The Housing Crisis
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.
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.