Lack Of Housing and Decreased Affordability
Canada's affordable housing supply crisis has been recognized as a severe problem for quite some time now. Still, a recent report by Scotiabank highlights how atrocious the numbers have become.
According to the Canadian Big Six bank report, Canada’s housing supply is currently the worst of any G7 country. The G7 is an inter-governmental political forum comprising Canada, the United States, the United Kingdom, France, Germany, Italy, and Japan. Compared to the other countries, Canada has the lowest number of housing units per 1’000 residents. Canadians also spend approximately 60% of their entire income on housing, a massive leap from the 40% reported in 2004.
The lack of available housing directly impacts the decreased affordability of housing. The number has been declining since 2016, so it is affected by several factors besides the pandemic.
The plan to address the exacerbating issue is to try and create 100’000 new units of housing for Canadians. However, this plan was enacted to keep the 2016 housing supply levels steady. This plan would still leave Canada with the most miniature housing and lowest affordability of the G7 countries. According to Scotiabank, the needed figure is closer to 2 million new homes.
Since 2016, numerous problems have contributed to the housing supply crisis. Foremost was the pandemic, which halted construction and forced many contractors in the construction industry to switch jobs. Now that work is resuming; there aren’t nearly enough workers left in the construction industry for the jobs to be completed. Additionally, there have been ongoing supply disruptions, and inflation and interest rate hikes have made it even harder to get construction underway.
In a report by the Canada Mortgage and Housing Corporation, the amount required to restore affordability by 2030 is much higher. According to the report, 22 million units are needed to create a home for everyone living in Canada by 2030.
Canadians Allocating Most of Their Income to Housing
For more information about how Canada is handling the affordable housing crisis, go to Fool.ca:
“It’s recommended that about 30% of your wages go towards caring for a home. But right now, Canadians are much higher than that number. In 2003 and 2004, CMHC states Canadians spent about 40-45% of their income on housing. As of 2021, that’s now closer to an incredible 60%!
To reach that 30% goal for housing supply, it would mean reaching an average of 3.5 million homes built by 2030. Two-thirds of these homes would need to be built in Canada’s most expensive locations, Ontario and British Columbia.”
From Canadian Housing Now the Worst in Affordability Among G7 Countries - Motley Fool
Photo Source: WIX - www.wix.com
Would you consider purchasing a modular home in Canada if it was less expensive than what is currently available on the market? Or would you prefer to wait until it gets less expensive to purchase traditionally built homes?
Written by S2A Modular & Associates Inc.
July 7th, 2022