Here’s what housing supply looks like in major Canadian cities
Trying to get a foot in the door of Canada’s housing market is a struggle right now.
The soaring housing prices in the last few years mean you need to make a lot more money yearly to be able to afford a home here.
Even though it’s been in free fall since March and was expected to reach the bottom downturn this spring, the Canada Mortgage and Housing Corporation (CMHC) says challenges in the housing market still persist.
And at the heart of these challenges is housing supply.
“We need more supply and we need the right type of supply to help ensure that everyone in Canada has a home that they can afford and meets their needs,” reads the CMHC’s latest report.
The organization released its Housing Supply Report on Wednesday, giving Canadians insights into the landscape of residential construction, new home inventories, and housing starts across the country.
Our latest Housing Supply Report is out now.
On average, #housing construction in Canada’s largest cities remained high in 2022.
However, demand is exceeding the level of construction. Also, we’ve yet to see the full impact of high interest rates in our data. pic.twitter.com/OXW4Mf4EHU
— CMHC (@CMHC_ca) April 19, 2023
What the CMHC found is that supply isn’t keeping up with demand.
“Our analysis found that current new home inventories are at historic lows. While housing starts remained strong in 2022, new supply was not enough to keep up with demand,” reads the report.
Here’s a breakdown of the state of housing supplies in major Canadian cities.
Metro Vancouver
The report found that residential construction remained high and stayed stable in 2022, despite industry challenges.
While new construction of apartments was nearly unchanged, there was a significant drop in condo construction, which was offset by a surge in construction of new rental apartments.
New housing projects increased in Coquitlam, keeping pace with transit-oriented development and growth in the municipality, reads the report.
Edmonton
The CMHC says new purpose-built rental apartment construction increased in 2022.
Growth was driven by projects near the downtown core and in developing neighbourhoods outside the centre.
Construction of new semi-detached homes was an exception to the growth and saw a 24% drop compared to 2021. Single-detached and townhome construction saw gains of 8.3% and 4.5% respectively.
Calgary
In Calgary, residential construction hit a record high in 2022, beating the previous record in 2014.
Townhome and apartment construction had the strongest gains as both segments saw a year-over-year increase of 23%, according to the report.
New rental construction was at its highest level on record, based on data going back to 1990.
Toronto
While housing construction activity in Toronto increased in 2022, the supply of newly completed homes available for purchase was at the second-lowest level on record.
The CMHC says this was due to the Ontario construction labour strike in mid-2022. Supply-chain delays and skilled-trade labour shortages disrupted building activity during the year.
Purpose-built rental apartments were the only housing type that decreased in 2022 (down 7% from 2021). This was the second year in a row that rental apartment construction decreased.
Ottawa
Ottawa had an increase in new housing projects, which was due to an increase in rental apartments and condominiums.
Both types of apartments accounted for more than 50% of housing projects in 2022, according to the report.
Single-detached housing construction decreased by 22%, falling slightly below the previous five-year average. Row house projects decreased by 9% but remained above average.
Montréal
The decrease in housing projects in Montréal, varied by dwelling type, reads the report.
Freehold housing construction decreased by 38%, the greatest decrease among all dwelling types and the lowest level ever recorded.
Although rental apartment construction declined by 28% in 2022, it remained the most-built type of housing structure last year in the city.
CMHC
Location, location, location
A study conducted by the University of British Columbia using CMHC data found that almost 80% of new housing projects between 2016 and 2021 in these major cities were in neighbourhoods with few amenities.
Fewer than 10% were in high-amenity neighbourhoods, the study found.
Broken down by city, Toronto had the highest level of new housing projects in high-amenity areas, while Calgary and Edmonton didn’t have any in high-amenity areas.
If you do want to live near parks, shops, pools, and gyms, the study says apartments are the place to be with 36% built in medium- and high-amenity areas.
New single-detached, semi-detached, and row units were located almost exclusively in low-amenity areas (95% to 98%).
Researchers from @UBC looked at where #housing was being built in Canada.
They found that almost 80% of new homes in Canada’s largest cities were in low-amenity neighbourhoods, and fewer than 10% were in high-amenity neighbourhoods.
2/3 pic.twitter.com/kmfL8alqxm
— CMHC (@CMHC_ca) April 20, 2023
How increased interest rates are affecting homebuyers and developers
The CMHC says low interest rates in the first quarter of 2022 contributed to home prices reaching record highs in many Canadian cities.
“As interest rates increased in 2022, homebuyer purchasing power dropped in the second half of the year,” explained the organization.
This shift has led some developers to be more cautious when it comes to starting new condo projects.
“Low vacancy rates and rising rents sparked interest in purpose-built rentals in all CMAs except Toronto,” reads the report.
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