32,000 more homes needed annually in Toronto to return to pre-pandemic rates: CMHC report

Construction is shown at the site of a new condominium project in downtown Toronto, Tuesday, Jan. 24, 2023.

Toronto will need to build nearly 32,000 extra homes per year for the next decade for housing costs to dip back down to pre-pandemic levels, according to a new report.

The Canada Mortgage and Housing Corporation (CMHC) released new estimates on Canada’s housing supply gaps on Thursday, showing that a return to housing affordability levels last seen in 2019 will require between 430,000 and 480,000 new housing units be built annually across the country until 2035—an approximate doubling of the current pace of construction.

The report says that if home building of both ownership and rental type properties continues at a “business as usual” pace, Toronto will see an average of 44,000 housing starts annually.

However, to reach prices seen in 2019, those housing starts will need to increase by nearly 70 per cent—or 31,511 units—to reach 75,565 annual starts.

Of the approximate 32,000 units, the CMHC report says more than 26,000 should be additional ownership starts, nearly 4,000 should be primary market rentals, and more than 1,100 in the secondary rental market.

The report adds that despite increased rental construction in recent years, the region is lacking homeownership options that match local incomes.

CMHC says home prices in Toronto grew by 6.7 per cent between 2019 and 2024, while rental costs jumped 4.8 per cent in the same period.

They add that home prices will continue to climb with increases as high as 62 per cent in 2035 if there is no action to increase supply. That change in price drops to nearly 20 per cent with additional supply.

As for the rest of Ontario outside of Toronto and the Ottawa-Gatineau region, the report says over 86,000 additional housing starts are needed annually to reach a total of 124,795 new builds every year for the next 10 years.