Canada housing crisis: Surging condo construction not enough

In its latest report the cmhc saying that apartment construction though surged to record levels in places like Toronto Vancouver Calgary Edmonton Ottawa Montreal and that more than offset the decline we’ve seen in the construction of single homes as well of course we know that Canada dealing with

A major housing crisis so the more condos apartments homes that can be built as fast as possible the better it will be let’s bring in aled aworth he is a deputy chief Economist at the Canada mortgage and housing Corporation great to see you thanks for your time today

Good to be with you Todd let’s start with the apartment construction these condo buildings as well on the rise big surge last year what does that mean yeah well it’s good news I mean obviously these are relatively more affordable units compared to the single detached

And we just need a lot more supplies so we need everything more apartments are particularly helpful they’re essential for people getting into Home Ownership they’re an important source of Rental Supply and just getting more Supply is really really helpful yeah and we need a lot more we need a lot more right yeah

Absolutely tell me as well about uh the issue with single homes single detached homes and why that’s kind of plateaued or it we haven’t seen the same sort of thing that’s much more difficult of course to get lots of homes built you need land there’s a lot more effort

Involved there right and this is a little bit the concern that we have our our our belief is is that low is that high interest rates are having are had an effect on single detach starts so they don’t need as much planning don’t need as they can react quickly and our

Running hypothesis is that higher interest rates had a real effect on those single detach starts and they reacted quickly that’s why we the picture in Montreal doesn’t look so good because they tend to have these smaller structures so yes uh apartments are off setting that decline in single detach

Starts but we are a little bit concerned that high interest rates are going to some effect on apartment starts this year yeah and the the financing of these projects as well Alan I mean is it worth it for home builders uh it’s getting tough um you

Know first of all you need the materials you need the workforce um the cost of if you can get those then their cost is quite High um it’s getting to be a challenge and on top of that we have the financing cost interest rates are becoming becoming an issue you’re going

Through the whole regulatory system which can take years so it’s a tough picture we have a Graphic we’re going to bring up while we’re talking to you just to give our viewers a little bit of a sense of some of these apartments and The Surge we’ve seen in those uh six

Cities from Vancouver right through to Montreal and the unit change and we do see you know in Vancouver 27% change uh Toronto 5% change Calgary 133% change up in the case of Ottawa Montreal though as you’re pointing out even Edmonton uh it is negative in terms of the total

Amounts what’s going on there well in general what you see in Vancouver and Toronto maybe it’s easier to go that way is that you have these very large structures you know 40 50 60 stories they take a lot a lot of time to finance and what we think happened is they got

Their the money ready for those buildings in 22 21 even so they were they could still go ahead last year what generally is true in Montreal um to a certain extent in Edmonton and Ottawa is that they are smaller structures so Montreal is a place with a lot of

Density but it tends to be a lot of relatively smaller buildings five stories 10 stories those things tend to react very fast rapidly to higher interest rates and so the cutbacks have happened very quickly there but there was also a a lot of runup in Montreal a

Couple of years ago and I’m I’m not sure that they have the capacity to produce more as we bested earlier because of Labor shortages and the cost of materials and so forth hey do you think that we’re seeing a shift in in sort of the way people choose where they live as

A result of the fact that there just aren’t as many single detached or semi- detached homes being built so people are deciding instead of an actual home a house that they are okay to live in a condo long term well I I think this is almost getting inevitable uh single detacher

Just simply too expensive there was some change during Co where people were going to those um single detached housing in the outo suburbs maybe now with a return of work they they do realize the benefit of being closer to the city centers and inevitably in these places it’s condos

Rental um that are key and frankly we we particularly need a lot more rental buildings to uh to be built because home ownership even in the relatively more affordable condos is just becoming Out Of Reach so we need more condos more apartment more rental uh because it’s just too expensive

Canada’s housing crisis is raging and the CMHC’s deputy chief economist Aled ab Iorwerth warns that despite apartment construction surging, it’s not enough.

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