There’s speculation that Canada’s housing market is heading towards a similar foul-up as much of Europe, with housing prices becoming unaffordable for many unless they inherit a home.
never be able to afford a home unless they inherit one.
In a country like ours, known globally for its opportunities, this grim forecast comes as a surprise. However, experts are not denying the possibility.
The magnitude of the housing supply crisis
“It’s a valid question,” says Kevin Hughes, deputy chief economist with the Canada Mortgage and Housing Corporation (CMHC). “Housing affordability and the housing crisis have been in the news for several years now.”
To understand the extent of the housing supply crisis, CMHC recently updated its Supply Gaps Estimate report to determine how many housing units beyond current trends would need to be built by 2030 to restore affordability. The number CMHC came up with is 3.5 million.
“That’s a lot,” stresses Hughes. “I’m not saying it’s a realistic goal. But it’s what we’re looking at.”
It would be an unprecedented increase in construction, creating numerous spin-off issues around infrastructure, traffic, and the environment. “We can’t look at housing in isolation of these other factors,” Hughes asserts.
What’s realistic?
Reading between the lines, achieving such a high level of supply may not be feasible, despite ongoing government initiatives. According to the CMHC report, Ontario and British Columbia remain Canada’s least affordable housing markets with the majority of the housing supply gap.
Increased population density is a potential solution for cities facing housing shortages. “There are roughly 4,000 people per square kilometre in Montreal, and Toronto is about the same,” explains Hughes.
Yowza. No wonder France is experiencing a major lack of housing supply.
Similar trends around the globe
In cities worldwide with similar issues, experts have observed trends like:
- greater numbers of compact housing units being built,
- more focus on public transit over cars in the downtown core,
- increased cohabitation and communal living,
- more people commuting greater distances,
- a significant percentage of young people living at home who’d normally have moved out,
- mortgages being held for longer periods, even well past retirement.
“We’re already seeing density increasing,” affirms Hughes.
Many possible future paths — including those like Europe’s
Canada is shifting towards a new normal. The future may involve more supply, increased density, and people moving elsewhere. “The variables aren’t mutually exclusive. It could go many ways with many variables. Nothing is inevitable, and none of this will happen overnight. There are many possible paths,” says Hughes.
“I’ve heard that,” confirms Valerie Dooley, a sales rep with Forest Hill Real Estate in Toronto who’s lived in Europe. “Multigenerational living is common in countries like Italy. I think we’re starting to move more in the same direction.”
Another outlook
Despite perceptions, Re/Max Canada president Christopher Alexander states that homeownership rates in much of Europe remain high. “Canada still has many affordable markets,” he points out.
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