Canada’s housing policy is failing citizens and newcomers alike

2023/06/30 Leave a comment

Need also to question the demand side of the equation, which includes high levels of permanent and temporary residents:

Canada recently reached a milestone of 40 million people after growing by more than one million people in one year for the first time in 2022. But while we’re adding people at record levels, the same can’t be said about homes.

According to recent research, while the number of people Canada-wide has accelerated in recent years, the number of housing units completed has stagnated and even fallen to levels well below previous peaks. Specifically, from 1971 to 1980, Canada’s population grew by 283,737 people annually on average while an annual average of 226,524 housing units were completed.

By comparison, from 2013 to 2022, Canada’s population grew by 427,439 people annually on average yet only 196,872 housing units were completed annually on average. Put differently, during the 1970s, roughly four housing units were constructed for every five new people in Canada, compared to slightly less than one housing unit constructed for every two new people in recent times.

In short, fewer homes are being built for a larger, faster-growing population.

These dual trends spell trouble for many Canadians, especially those already struggling to find affordable housing. The severe imbalance between the number of homes available and the number required have squeezed many renters and would-be homebuyers who increasingly find themselves bidding for a dwindling supply of available units.

The result? Higher rents and home prices, and not just among the “usual suspect” communities in the greater Toronto and Vancouver areas, but in small- and medium-sized cities across the country. Last year, communities including London, Ont., Waterloo Region, Peterborough, Ont., Hamilton, Ont., Kingston, Gatineau, Quebec City and Halifax all saw their rental vacancy rates (a measure of rental unit availability) fall below 2 per cent, which places them in the same league as Toronto, Vancouver and Victoria. And when vacancy rates fall, rents rise.

Canada’s shortage of housing has negative consequences for almost everyone, from the most vulnerable individuals and families to employers struggling to find workers. It also hurts newcomers to Canada – the single largest group contributing to Canada’s population growth. Most new arrivals to Canada rent their homes, leaving them especially exposed to rapidly tightening rental markets. Rising rents and worsening availability hamper their prospects – and indeed the prospects of all renters or would-be homeowners – of achieving upward mobility, arguably one of Canada’s main draws.

Thankfully, solutions are available, although policymakers must act big and act fast. There’s tremendous opportunity to open up more neighbourhoods to help achieve the levels of homebuilding required to adequately house a growing Canada. Several cities have already started implementing policies making it easier to add housing units. For example, Edmonton is overhauling its zoning bylaws to allow more housing options citywide, including duplexes, secondary suites and small apartments in current low-density residential areas. Similarly, Toronto City Council recently adopted plans to allow up to four units per lot citywide without the need to rezone. And elsewhere in Ontario, British Columbia and Nova Scotia, provincial and local governments are making similar changes.

However, such policies are only the first of many necessary steps, and their effects will only be felt over the longer term so there’s no time to waste.

As Canadians and policymakers ponder our 40 million demographic milestone, they should give honest consideration to Canada’s worsening housing situation. In the right circumstances, a growing population can bring numerous benefits – economic, cultural and more. By not allowing homebuilding to keep up with population growth, however, governments across the country have hampered prosperity for both existing Canadians and newcomers. Governments, especially municipalities, must change the way they plan for and approve the millions more homes we need today and in the future if we’re to restore the promise of a thriving Canada with upward mobility.

Josef Filipowicz and Steve Lafleur are senior fellows at the Fraser Institute.

Source: Canada’s housing policy is failing citizens and newcomers alike

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Canada’s housing and immigration policies are at odds

2023/04/12 Leave a comment

More commentary on the disconnect between immigration and housing (and other infrastructure and services):

Housing affordability has metastasized from a Toronto and Vancouver problem to a national crisis. Double-digit rent increases have hit traditionally more affordable communities coast to coast, and the cost of home ownership remains persistently high amid rising interest rates. One of the main reasons for the lack of affordability, according to our recent report, is the misalignment between Canada’s different levels of government.

Over all, Canada’s system of decentralized federalism has served us well. Allowing different levels of government to make decisions that suit their own contexts is usually the right approach when it comes to program delivery. A century ago, Louis Brandeis, then a justice on the U.S. Supreme Court, famously referred to states as “laboratories” for policy experimentation. This holds true for Canadian provinces, and on the whole, the structure is healthy for a medium-sized country spread out over the world’s second-largest land mass.

Many factors have contributed to eroding housing affordability, but the fundamental problem is a growing mismatch between supply and demand. While residential construction in Canada has plateaued, falling well short of historical highs, our population is growing faster than that of any other G7 nation.

Canada’s population growth averaged 422,000 additional inhabitants per year (July to July) between 2012 and 2022, compared with 335,000 annually over the previous decade. This trend is accelerating, with net growth of more than 500,000 inhabitants in three of the past five years, including a record 703,404 between 2021 and 2022.

Meanwhile, housing completions have stagnated over the past five decades. Between 2012 and 2022, an average of 195,000 homes were built annually, down from 199,000 annually the decade before – and 229,000 annually during the 1970s, Canada’s home-building highpoint.

Which brings us back to Canada’s system of governance. Population growth is controlled in large part by the federal government, and home building primarily by provincial and local governments.

Since the early 1990s, immigration has replaced net births (births minus deaths) as Canada’s primary driver of population growth. Unlike birth rates, which governments can only indirectly influence, immigration numbers are determined by government policy. For example, Canada’s most recent Immigration Levels Plan aims to add 465,000 new permanent residents in 2023, then 485,000 in 2024, and 500,000 in 2025 – the highest immigration levels ever.

Provincial and local governments, meantime, are tasked with planning for and approving enough housing to keep up with this record population growth. They do so through a series of land-use and growth plans, starting at the provincial or regional level and ending with local plans and bylaws governing how much building is permitted to happen, and where.

In short, the federal government (and, to varying extents, provinces) wield a formidable lever over housing demand, while provinces and municipalities largely control the housing supply. Unfortunately, these two sets of policy levers – immigration policy versus growth planning – are essentially set in isolation of one another.

Immigration levels plans, which are updated every year, are partly informed by a series of federal-provincial/territorial agreements. However, none of the current agreements even mention the word “housing,” focusing instead on concerns such as labour market needs and language requirements. These are important considerations, but newcomers also need places to live.

Meanwhile, provincial and local growth planning takes years to implement and update. For example, the Ontario government updated its 2006 growth plan for the region surrounding Toronto in 2019, and again in 2020, giving municipalities until 2022 to adjust their local plans accordingly. However, municipal plans can take years to translate into updated zoning bylaws, if at all, and since there is no strict enforcement of growth plans’ housing targets, they amount to a best guess as to how communities might grow.

Further, the length of time it takes to create and execute local plans means their population growth assumptions are often outdated before or during their implementation. While immigration levels plans are updated annually, major provincial directives – such as Ontario’s 2022 target of getting 1.5 million homes built over the next decade – are already a step behind.

Federal, provincial and municipal policy makers all need to get on the same page. Canada’s housing shortage won’t end until immigration policies start reflecting the reality of our housing markets, or until land-use and growth planning accurately reflects population growth. Without better co-ordination, the housing crisis will likely get worse.

Steve Lafleur and Josef Filipowicz are policy analysts who research housing and taxation. This article is part of a project they undertook with the Macdonald-Laurier Institute.

Source: Canada’s housing and immigration policies are at odds

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