Canada does not have the labour capacity to build the 3.5 million new homes that would be needed to achieve housing affordability by 2030 and Ontario is likely to see more new households formed than houses built in that time, according to a sobering new report from the national housing agency.
The Canada Mortgage and Housing Corporation had set the 3.5-million target figure in a report in June, but follow-up research unveiled Thursday found that there will only be enough labour to increase the number of starts in four major provinces — Ontario, Québec, BC and Alberta — by 30 to 50 per cent.
While Alberta could meet its needs under such a scenario, the other large provinces would fall well short.
“Ontario, Québec and B.C. will have to double the number of starts that they can produce under best-case scenarios,” to meet the target, the report found.
Dana Senagama, CMHC economist and author of the report said the agency knew Ontario and B.C. were facing challenges, but was surprised by the severity.
“The biggest surprise was the magnitude in terms of the challenge that lies ahead for all these large provinces going forward,” Senagama said.
If current rates of new construction continue, the CMHC said the country’s housing stock is expected to increase by just 2.3 million units by 2030, reaching close to 19 million units total.
BuildForce Canada, a construction sector industry group, projects these market challenges could persist through the forecast period due to a strong residential construction market and a growing pipeline of major projects that is not expected to slow until 2026. Demographic trends will also be a factor, BuildForce executive director Bill Ferreira said in an interview.
“The latest census data points to the fact that 20 per cent of Canada’s population is between the ages of 50 and 64,” Bill Ferreira said. “And only 16 per cent are under 50. So when we start looking and projecting out over the next 15 years, we know more people will be leaving the labour force to retire than coming into the labour force.”
CMHC based their measure of capacity on how much the labour force could produce at current wage and skill levels. The agency then used the share of residential construction workers in the population and the minimum number of workers required for a housing unit under construction to come up with estimated labour capacity.
According to Ferreira, the federal government has introduced a number of new incentives to try and encourage skilled trade businesses to support trades workers with training.
“The reality is that this is probably the most challenging yet certainly the most supportive environment that the construction industry has seen for probably the past 20 years.”
Still, Ontario, the only province where projections show more new households than housing starts through to 2030, has the biggest skill shortage.
While other provinces might benefit from expanding the labour pool, in Ontario “the gaps are too large,” the CMHC report found.
The report concluded that building “up” in the form of apartments and converting existing structures into residential units were possible avenues to close the gap, as were programs to bring in more immigrants with construction-related skills and better pay for such workers.
Kevin Lee, chief executive of the Canadian Home Builders’ Association, said prefabricated construction was another possible solution.
“Whether we call it prefabricated construction or factory-built construction, the idea is that you’re building either modules or panels in a factory that can then be shipped on site,” Lee said in an interview.
This method of building has been popularized by the “tiny home” trend, but Lee says that it is possible to build a typical detached home and multi-family buildings this way as well. The challenge is the overhead costs.
“Because of the overhead costs related to having a factory, it can be a little bit more difficult to sustain. But because of the labour shortage we’re facing now, it’s going to make more and more sense to invest in this way of building,” he said.
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