Housing Crisis or Opportunity?
According to the Canada Mortgage and Housing Corporation (CMHC) update released in September, we will need 3.45 million additional housing units, beyond current build projections, to satisfy affordability needs to 2030. To clarify that headline, this is the number of units, beyond the 1.5 million units that are already expected to be built, needed to bring housing into CMHC’s “affordable” range. While there is definitely a housing affordability problem in Canada, as interest rate hikes have helped to push housing costs to 50 per cent of disposable income nationally, in Ontario and British Columbia that ratio is a staggering 60 per cent. Many readers may recall the convention in the 1970’s that housing costs should be 30 per cent of disposable income, or that this ratio fluctuated in the 35-40 per cent range for much of the last 20 years on a national basis. Depending on immigration and population growth assumptions, the current housing start forecasts indicate that availability and affordability is likely to, at best, stay similar to the current environment and are perhaps more likely to get worse. To achieve the affordability objectives laid out by the CMHC, we estimate that housing starts would need to more than triple from just over 200,000 per year currently, to roughly 700,000 per year, starting immediately.