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Housing crisis has been brewing for a long time and the biggest concern is that governments are moving too slow
Buy/sell, rent/lease residential &
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After more than two decades of talking about it, housing affordability has finally reached a breaking point in Canada.
That’s one of the top themes emerging from Urban Land Institute (ULI) and PwC Canada’s annual Emerging Trends in Real Estate® 2024 report, based on an annual survey of Canadian real estate companies.
“Ten years ago we said housing affordability is going to be so out of reach that the dream of owning a home is gone and most people are going to have to rent, and I think we’re seeing that now,” said PwC Canada real estate leader Frank Magliocco.
“It’s been brewing for a long time and the biggest concern I have is that governments move slow, and we need to move fast on this or else we’re digging ourselves into a big hole,” he added. “I would say we’re at a breaking point, it seems.”
Updated projections from the Canada Mortgage and Housing Corp. (CMHC) show a significant gap between projected supply — which now sits at 18.2 million units available by 2030, down 400,000 units due to a shortfall in housing construction — and demand, which is pegged at 22 million units needed to restore housing affordability by 2030.
For the first time, participants in the survey identified the need to make a better distinction between efforts to provide affordable homes for low-income Canadians and efforts to provide attainable housing for a broader spectrum of buyers and renters, and to address the two issues separately.
“What we’ve seen in terms of a trend as it relates to this is pretty much a migration of people … to more affordable places,” said Magliocco, noting that buyers are continuing to leave cities like Toronto, Montreal and Vancouver where homes are priciest in favour of neighbouring communities or other provinces like Alberta.
In Ontario, the Kitchener-Waterloo-Cambridge stands out as benefitting the most from the migration out of Toronto, he added.
Based on input from participants representing both commercial and residential real estate interests, the report highlights four key areas where urgent action is needed to help address housing attainability.
First, government housing policies at the municipal, provincial and federal levels need to align.
Second, more emphasis needs to be placed on solving the labour shortage, through initiatives such as targeted immigration and efforts to attract young people and diverse groups to the trades.
Third, more debt capital is required to help make purpose-built rental projects viable, with interviewees indicating that debt capital for acquisitions, refinancing and development/redevelopment is expected to be undersupplied next year.
And finally, innovative and bold approaches are needed to increase supply, from creating new home ownership models to designing more efficient building methods to changing building codes to allow multiple units within traditional single family dwellings, for example.
“These are all levers we need to pull in order to help address the housing crisis we have right now,” said Magliocco. “Polices are good and thoughts are good, but when you get down to it, if they’re not aligned and you don’t have the regulation to support it, you’re back to square one.”
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