Canada’s housing problem?: This year has been the worst for the home market in Canada. A study from the Canada Mortgage and Housing Corporation (CMHC) that came out in June says that more than 22 million housing units will need to be built by 2030 so that everyone in Canada can afford to live there. This means that the current national housing plan will need to add 3.5 million more units.
The shortage is happening at the same time that Canada is trying to bring in a record number of new immigrants, which worries both Canadians and foreigners. People are worried that Canada’s prices will go up so much because the population is growing so quickly that it will be too expensive to own a home.
But does the rise in immigrants have anything to do with the property crisis? Overall, both the government and experts say no, but they still say to be careful and keep a good balance.
A key problem is affordability.
The cost of housing is one of the biggest problems in the housing issue. The average price of a home in Canada was $668,754 in July 2023, up 6.3% from July 2022, according to the Canadian Real Estate Association (CREA). This is out of reach for a lot of Canadians and foreigners. The majority of newcomers choose to live in Ontario and British Columbia, where the average price of a home is even higher. Homes in these states cost, respectively, $856,269 and $966,181.
15% of Canadians, according to a study from the Environics Institute that came out in October 2022, think that immigrants are driving up home prices and making them too expensive for others to buy.
However, a study from the Royal Bank of Canada (RBC) says that this isn’t true and that the housing shortage is because it costs more to build homes. The study says that since the pandemic began in 2020, prices have gone up by 51%. Prices are higher because there aren’t enough trained workers, there aren’t enough raw materials (which drives up costs), and input costs have gone up.
The study also says that labor costs are higher because there are a lot of open jobs in the construction industry. Many trained tradespeople in Canada are getting close to retirement, which will leave holes in the workforce that employers will have to work harder to fill. Because they have more choices, people who want to work are looking for higher wages. If there were more trained workers, there would be more competition for jobs, which could lead to lower production costs.
The government keeps on raising immigration levels.
The government of Canada also thinks that a lot of new immigrants are the key to ending the housing problem.
By the end of 2025, Canada wants to let in up to 500,000 new legal residents each year. This is Canada’s most lofty goal for immigration in its whole history. Also, by the end of 2023, the country wants to have 465,000 new permanent residents. TD said in a study that came out on July 26 that Canada’s population grew by 1.2 million people in the past year.
Housing is one of the most important things for both immigrants and Canadians. Sean Fraser, Canada’s Minister for Homes and Infrastructure, says that limiting the number of people who move to Canada is not the way to build more homes and bring down costs. Last month, Fraser told CBC that the only way out of the problem is to keep building the national labor force.
“When I talked to developers as the minister of immigration before today, they told me that finding enough workers to build the houses they need is one of the biggest problems that keeps them from finishing the projects they want to do.”
Marc Miller, who is Canada’s new minister of immigration, agrees. He has said that immigration can help solve some of Canada’s most important problems, like housing and the lack of healthcare workers in the country right now.
Even though there aren’t enough homes in Canada, Prime Minister Justin Trudeau has said that housing isn’t really the central government’s job, but rather the provinces’. He says they need to do more to build homes that are cheap.
The government of Canada does have a nationwide plan that aims to make it easier for people to find affordable housing. At the current Cabinet meeting in Prince Edward Island, housing is likely to be one of the most important topics of conversation. Experts on housing in Canada will speak to cabinet to give their thoughts.
Economists insist on balance
Economists in Canada also say that immigration can help solve the lack of homes. According to the CHMC report, the housing problem is caused in large part by:
- Long approval processes make it take a long time between when a project is proposed and when it starts.
- In the short run, problems with the supply chain and a lack of people with the right skills are making building more expensive and taking longer.
- The cost of building will go up because of a rise in supply.
However, the TD report says that Canada’s immigration plan is bringing in too many new people too quickly. This is especially true since the government is making it easier for more temporary residents to stay.
We estimate that maintaining a high-growth immigration approach will add another 500,000 housing units to the shortage in just two years, as stated in the report. The government’s recent plans to speed up construction are unlikely to be a stopgap in this short time because of the lag time required for a shift in supply.
It also says that Canada should look to its own people to fill holes in the workforce instead of continuing to let more people in. For example, there could be more cheap daycare spaces so that more women, who are usually the main caregivers in a family, could go back to work full-time. It also says that it should be easier for newcomers who are already in Canada to get the licenses or certifications they need to work in a skilled job.
Even though fast population growth can cause problems in the short term, economists and the government agree that Canada will not be able to solve its housing situation without more skilled workers in the workforce.
They say that bringing in trained immigrants to build more homes will help, but that it is not the only thing that can be done. Some economists say that Canada can use the workers it already has if they are given the right tools to get the right credentials or if their time is freed up from family responsibilities.
Still, because there aren’t enough people working in skilled trades and building, it takes longer to build homes and costs more to build them. Bringing in more people to Canada could help fill these job openings and increase the number of new homes being built, which would reduce demand and bring prices down.
Neither choice is an immediate answer. It takes time to build and launch a faster accreditation system, and it can take up to six months to process the applications of newcomers, even those who have entered the selection draws for the new Express Entry category for skilled workers.
Summary on Canada’s housing problem:
- Housing shortage,
- Immigration Impact
- Increased Cost of homes and labor
- Government promotes immigration solution
- Economists emphasize skilled workforce
- Balance needed for the housing crisis
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