Canada Needs 5.8-Million New Homes By 2030
- S2A Modular & Associates
- Jun 23, 2022
- 3 min read
Updated: Sep 5, 2023
Modular Homes Provide a Possible Solution to Rising Costs and Labor Shortages
In June, the Canada Mortgage and Housing Corp (CMHC) announced that 3.5-million more homes need to be built by 2030 to reach housing affordability. The agency released a report that explains the need for a new approach to the housing supply crisis with the ongoing affordability concerns coupled with rising demand. According to the report, if construction continues at its current rate, the housing stock in Canada is expected to increase by about 2.3-million units by 2030. This would bring the country’s housing stock up to 19 million total units. However, an additional 3.5 million homes are required to achieve a total of 5.8-million new units to tackle affordability for all Canadians.
The current labor shortage in the construction industry and softening housing market conditions could hinder the country’s ability to raise the housing stock to 22 million by 2030. There are also issues with accessing supplies, and the cost of financing is rising. There were 81’500 construction job vacancies in the 1st quarter of 2022, which is more than double the vacancies reported in the 1st quarter of 2020. Meanwhile, home sales have dropped by almost 22% in May compared to 2021, and nearly 9% just between April and May of 2022. The average, non-seasonally adjusted home price slipped almost 5% to $711’000 during that period.
According to CMHC, housing affordability for all Canadians will require developers to ramp up production and make full use of land holdings to construct more units. The agency also reports that governments need to create regulatory systems more efficient, so projects are approved faster. Two-thirds of the supply gap is occurring in Ontario and British Columbia, two housing markets that have endured massive declines in affordability recently. Additional supply is also required in Quebec as affordability continues to decline in the province. In 2003-04, an average household had to allocate around 40% of their income to buy an average house in Ontario and almost 45% in British Columbia. As of 2021, that figure is closer to 60% in both provinces.
The country should consider increasing the production of modular homes across the nation, which could provide a solution for development and affordability. In modular construction, parts of a home are built in a factory and assembled on-site at a rapid rate compared with traditional structures. The method also boasts affordability benefits as fewer labor, supplies, construction, and utility costs. A modular home can be constructed in 3-months, compared to the 1-year average of traditional buildings, and can be sold for an average of 20% less than a traditionally built structure.
The Crisis Will Get Worse Before It Improves
To learn more about the ongoing housing shortage in Canada, go to CBC.ca:
“RBC's latest housing affordability report released Thursday reveals that the situation is the worst its been since the early 1990s, and will worsen before it gets better.
RBC's aggregate affordability measure for Canada went up 3.7 percentage points to 54 per cent in the first quarter of 2022, as home ownership costs rose across the country.
‘The Bank of Canada's 'forceful' interest rate hiking campaign will further inflate ownership costs in the near term, putting RBC's national affordability measure on a path to worst-ever levels,’ RBC senior economist Robert Hogue said in the report. ‘However, we see the burgeoning price correction eventually bringing some relief to buyers.’
RBC believes property values will fall more than 10 per cent in the coming year.”
From Canada Needs 5.8 Million New Homes By 2030 To Tackle Affordability Crisis, CMHC Warns
- CBC
Photo Source: WIX - (www.wix.com)
Have you or anyone you know been impacted by the housing shortage in Canada?
Written by S2A Modular & Associates Inc.
June 23rd, 2022
Comments