Canada two
most expensive cities to live in
are
not building enough new houses
and this
According to the Deputy Chief Economist
Canada Mortgage and Housing Corporation
.
Aled ab Iorwerth said data already shows an influx of people moving
And
to Alberta's capital, and the situation will only get worse unless more supply is created in two cities that are regularly ranked as the most expensive in Canada.
“It’s already happening,” Ab Iorwerth told the Financial Post after speaking at the Veritas Great Canadian Real Estate Conference this week.
CMHC said the Toronto region's housing stock was about 2.5 million homes in the third quarter of 2024, but just over three million homes would be needed by the fourth quarter of 2035 to maintain current affordability levels. Vancouver's 1.1 million home inventory would have to grow by 24 per cent over that period to keep pace with the current population.
without even attacking accessibility
.
“Edmonton and Calgary are relatively more affordable, and unless Vancouver increases its housing supply, people will move,” Iorwerth said.
Average sales prices in the Toronto region fell about four per cent in September from a year ago but were still at $1,077,602 last month, according to the local real estate board. Vancouver remains the country's most expensive city, with a base price of $1,142,100 in September, down 3.2 percent from a year ago.
In Alberta's capital, the average sales price is up 2.8 per cent from last year but is still just $452,849.
Even in more affordable cities like Montreal, where the median price of an existing home rose seven per cent in September from a year ago but is still just $632,500, economists predict the lack of new construction will push people out.
“Even in the case of Quebec, you have the problem that if Montreal doesn't increase its housing supply, people will move to places like Trois-Rivières and Quebec City,” Ab Iorwerth said. “It's concerning because I think people should move to where there are job opportunities and where there are better careers. They shouldn't base decisions about where to live on the cost of housing.”
The economist noted that in Vancouver and Toronto, the regulatory burden, including issues such as approval delays and land-use reviews, is high enough to create problems for construction.
“In addition, the development fees are quite high,” the economist said.
The CMHC study found that Toronto leads the country in development spending, with Vancouver coming in second.
Government fees can account for more than 20 percent of housing construction costs in some major Canadian cities. Crown Corp. said prices could be 24 percent lower in the country's largest city, excluding fees.
The economist noted that affordability issues exist across the country and can be addressed by increasing supply across Canada.
“If we want to restore housing affordability in Toronto and Vancouver, we need to significantly increase housing supply,” he said during his presentation. “People are starting to move because of housing prices. Edmonton doesn't need to build more housing than it plans to build, but if Vancouver and Toronto don't get their act together, Edmonton will have to build a lot more housing because people will leave Toronto and Vancouver.”
Ab Iorwerth also said the labor market could be a pressing issue for Canadians with housing debt and stressed that CMHC is closely monitoring the refinancing of two million mortgages in the next two years.
“That's because everyone took out five-year mortgages in 2020 and 2021, and now they're being renewed, and obviously they're going to be at higher rates,” he said. “One positive thing is that interest rates are lower than they were a year ago.”
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