Housing supply in Canadian cities have seen continuous declines in the last decade and could reach a "crisis point," a new report says.
The report, released on Monday by Re/Max Canada, looked at the active listings in the month of July between 2012 and 2022 in eight major metropolitan areas across Canada. It found that seven out of these eight urban centres saw fewer active listings in July 2022 compared to the 10-year average for the month.
"Population growth and household formation have played a significant role in depleting inventory levels from coast to coast over the most recent decade, triggering chronic housing shortages in large urban centres that resulted in mini 'boom' and 'bust' cycles," said Re/Max president Christopher Alexander in a news release. "If we don't move now to build more housing in the current lull, it's expected that this same scenario will continue to resurface over and over again."
The Halifax-Dartmouth area had the greatest drop in listings. Compared to the 10-year average, the region had 65.5 per cent fewer listings in July 2022, although the report notes that home-buying activity has levelled off thanks to higher interest rates and slowed migration from other parts of Canada.
The Ottawa-Gatineau region saw a 41.9 per cent decline in listings from the 10-year average, while listings in the Montreal area were down 40.16 per cent. Re/Max warns that thanks to increasing migration from Ontario to Quebec, as well as interest from American buyers, "current levels of inventory will not support future growth" in Montreal.
The number of listings in Calgary were 26.1 per cent lower than the 10-year average, while in Winnipeg, it was 23 per cent lower. Re/Max notes that because of migration from Ontarians and British Columbians seeking cheaper housing, Calgary's housing inventory "fell to its lowest level in a decade."
Greater Vancouver saw the number of listings drop by 16.1 per cent compared to the 10-year average. The region saw an average of 12,792 listings in July between 2013 and 2022, which is still far lower than the 10-year July average of 14,352 between 2003 and 2012.
It's a similar story in the Greater Toronto Area. The July 2022 listings were 6.8 per cent lower than the 10-year average of 16,458 units. That's also far lower than the 10-year average between 2003 and 2021, which saw 21,243 listings. Re/Max also notes the population in the GTA grew by 21 per cent between 2006 and 2021.
"We've been here before. The actions we take now will determine our future. At present, there is inadequate supply to accommodate future growth," the report says.
The Hamilton-Burlington region in Ontario was the only market to report an increase over the 10-year average. The region saw 3.2 per cent more listings in July 2022 compared to the 10-year average, as buyers from Toronto, as well as new immigrants, continue to drive population growth.
Back in June, the a report from the Canada Mortgage and Housing Corporation said Canada's housing supply need an additional 3.5 million homes than what is already projected to be built by 2030. But Alexander believes Canada will "probably need more than the CMHC estimate to create the desired level of affordability."
"During this window of softer demand, building efforts should be ramped up, not down. The offshoot effect is straining rental markets and contributing to ever-rising levels of homelessness throughout the country," he said.
The Re/Max report says policymakers need to take actions that accelerate residential construction, such as cutting development fees, easing zoning restrictions and approval processes and even leveraging partnerships between governments and developers.
"The trouble is that housing development is a slow process, and experience tells us the only thing slower might be government processes," Alexander said. "Removing barriers and cutting red tape is necessary. A crisis is looming, but the outcome is not cast in stone. There is a short runway to reverse course before the impacts become very real for Canadian homebuyers and renters."
