The headline numbers may not capture the full story, and one industry leader says the gap between what Canadians want and what's being built appears to be widening
Policymakers and analysts sometimes tend to frame Canada’s housing starts data as a mixed picture, with some positive signs countering more concerning ones.
But that assessment is continuing to miss a much deeper problem, according to Canadian Home Builders’ Association (CHBA) chief executive officer Kevin Lee (pictured top): the fact that purpose-built rentals are skewing the overall housing starts picture and presenting a misleading perception of the overall housing starts outlook.
Lee flagged that reality in an interview last year with Canadian Mortgage Professional, and now says the needle has barely moved in the months since.
"The numbers are a little bit deceiving when you talk about housing starts," Lee told CMP this time around. "Purpose-built rental has taken off so much that it's been really covering the downfall in homeownership."
Without the rental construction boom, Lee said what remains is a sustained and significant collapse in homes being built for people who want to own them – a development that could have huge consequences for the housing market.
Canadians remain steadfast on homeownership hopes
Rising prices, huge affordability challenges and a chronic supply gap have caused many to wonder whether Canadians will eventually start to give up on their dream of homeownership.
Lee, though, said the data is unambiguous. The CHBA commissioned public opinion research through Abacus Data that found Canadians still strongly aspire to own their own properties and still expect governments to do something about it. That expectation, however, sits in stark contrast with what's actually being delivered.
Homeownership starts have been falling steadily, and Lee argued that that decline is a direct reflection of falling homeownership rates, a trend that often gets obscured when rental construction is bundled into the broader starts figure.
"This fall in homeownership starts, which is a direct reflection of falling homeownership rates, is something we really hope all governments will take still more action on, because it's not headed in the right direction," he said.
The risk, he said, is that policymakers look at aggregate starts numbers and conclude that the situation is difficult but manageable, while the specific segment of the market that most Canadians actually care about continues to deteriorate beneath the surface.
A capacity crunch in the making
Beyond the immediate slowdown, Lee warned of a longer-term consequence that he said is not receiving enough attention: the erosion of the construction workforce itself.
CHBA survey data shows that roughly 47% of member respondents have already laid off workers, a figure that climbs to 65% in Ontario. Lee said the concern goes beyond the immediate economic pain for those individuals.
"The problem with that is not only the obvious where it's not good when workers are getting laid off for the economy and obviously for those workers – but on top of that, we might not get them back if and when the market turns around," he said.
"And we already have a very tight labour market when things are in normal conditions. So if and when the market turns around, it's going to be hard. We're going to have even less capacity to build moving forward."
That prospect makes the case for government action more urgent, Lee argued. He pointed to several measures that could help: infrastructure deals between the federal and provincial governments to offset development charges, changes to the mortgage stress test, which he said continues to lock out buyers unnecessarily, and potential measures in the spring economic update. But he said the opportunity to generate momentum is not open-ended.
"We're looking for governments to take action now," Lee said. "Otherwise we just will have even less capacity to build in the future."
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