Canada’s Mortgage and Housing Corporation’s (CMHC) estimation that 3.5 million new homes are needed by 2030 to retain affordability is “already obsolete,” a CIBC report says.
The CMHC projection used a base population of 38.9 million, the CIBC report notes, which is 1.2 million short of the country’s actual population.
CIBC says that to fix the housing shortage by 2030, closer to 5 million new homes will need to be built.
“Is there any kind of overall plan which would indicate how the government is hoping to get to the 3.5 million deficit in homes?” Sen. Elizabeth Marshall asked during a Dec. 5, 2023 meeting.
“No, there is not a plan,” said Ms. Bowers. She said that more time was needed to finish an assessment and that it was “very difficult” to estimate how many houses could be built.
“There are many factors that contribute to housing production including things like interest rate trajectories, the availability of skilled labour, local conditions that really impact housing delivery,” said Ms. Bowers.
The CIBC report says the problem won’t be resolved until accurate population numbers are worked into the equation.
It says that most forecasting of population growth does not take into consideration non-permanent residents (NPRs), who need housing while living in Canada.
“You cannot build an adequate supply of housing for population growth that you fail to forecast.”
It takes municipalities about 10 years to get through the planning, preparing, and development stage, according to the report.
A decade ago, it was forecasted that Canada’s population would be around 38.7 million, but it was a “big miss,” CIBC said.
“The reality is that today municipalities are facing 1.4 million more people than they were told they needed to plan for,” it said. “That’s a shortfall of almost three years of housing supply.”
In addition, the report said that recent population projections fall short of actual growth.
“The 2023 projection was for a population of 39.4 million, 700,000 fewer than the current population (as of the end of Q2 2023),” the author wrote.
A 2022 forecast by Statistics Canada says by 2030, the population will be 42.8 million but could reach 44.15 million in a “high growth” scenario, something the CIBC said was “significantly below the actual population count” given the current population and growth trend.
It’s not the first time that the government has not been working with accurate data, which has contributed to the housing shortage and crisis.
Two years ago, the government was warned that increasing immigration could impact housing affordability.
“Rapid increases put pressure on health care and affordable housing,” public servants warned. “Settlement and resettlement service providers are expressing short-term strain due to labour market conditions, increased levels and the Afghanistan and Ukraine initiatives.”
CIBC said that while the cap on international students was a start, it was not enough.
“Even if the cap works as designed, the strong pace of growth of other NPRs would keep Canada’s population growth closer to the 2 percent annualized growth,” the report author wrote. “That represents about six million additional international arrivals, over the next seven years.”
