GUEST SUBMISSION: Housing reform is moving the needle, but Canada still isn’t even close to building enough homes, according to speakers, industry leaders and experts, policymakers and economists at Housing Summit 6.0 hosted last week by the Residential Construction Council of Ontario (RESCON).

While policies have been introduced and housing has been made a political priority, progress to date remains vastly insufficient to close the enormous housing supply gap, they say.

“Good stuff has happened. We’re going in the right direction, but we’ve got to do more,” explained Ian Lee, associate professor at the Sprott School of Business at Carleton University.

“Is housing reform working in Canada? I’m going to give a qualified yes and a qualified no. It is sort of working.”

The numbers tell the story.

Canada is currently producing roughly a quarter-million new homes annually. Yet estimates from the Canada Mortgage and Housing Corporation suggest the country needs somewhere between 400,000 and 470,000 homes each year to restore affordability and close the accumulated housing deficit.

Canada is not building enough homes

In other words, despite years of promises and reform, the country is still building significantly fewer homes than it needs.

“The numbers clearly show that we are not building enough,” said Lee. “It is crystal clear that we are still falling behind.”

The shortfall did not emerge overnight. For much of the past decade, population growth surged while housing construction failed to keep pace, Lee noted. Immigration targets increased, international student numbers expanded and interprovincial migration intensified. While the federal government has since moved to moderate population growth and adjust immigration targets, the backlog created during those years cannot be erased quickly. 

Daniel Foch, chief real estate officer at Valery Real Estate Inc., said housing markets across Canada are increasingly splitting into two distinct realities. Ontario and British Columbia continue to grapple with severe affordability challenges, while many cities in Alberta and Atlantic Canada remain comparatively accessible.

Many markets outside the two provinces are sitting at or near record highs in home prices, he said, but Ontario and B.C. continue to wrestle with affordability challenges that have pushed many prospective buyers out of ownership altogether.

"The markets that continue to grow and continue to attract new residents are the ones that remain affordable," Foch said, noting that many younger Canadians have migrated to cities such as Calgary and Halifax in pursuit of homeownership opportunities unavailable in the GTA.

In many of these markets, housing prices remain closer to traditional affordability benchmarks of four to five times household income. In Toronto and Vancouver, those ratios are still considerably higher.

The consequences extend beyond housing itself.

Fading dreams of ownership

A growing number of young professionals have begun questioning whether homeownership is a realistic goal, Foch noted. Others have concluded that renting and investing elsewhere represents a better financial decision.

"There are many people who are renters not by necessity but by choice," he said. "They're making a conscious economic decision not to own a home because the economics are far better for renting."

With rents substantially lower than the monthly cost of carrying an equivalent ownership property in many parts of Toronto, particularly in the condominium segment, renters are increasingly directing their savings into equities, businesses and other investments rather than stretching their finances to enter the housing market, he said.

According to Toronto Regional Real Estate Board chief market analyst Jason Mercer, affordability in the Greater Toronto Area has improved substantially since the peak of the interest-rate tightening cycle.

“Affordability is no longer the major obstacle it was during the peak of the interest-rate tightening cycle,” he said, noting that lower borrowing costs and softer home prices have significantly improved purchasing conditions throughout the GTA.

Meanwhile, mortgage rates have moderated and home prices have softened, he said. The income required to purchase an average home has fallen significantly from the highs reached in 2022 and 2023.

Under normal circumstances, such improvements would likely trigger a substantial rebound in sales activity, but Mercer said many buyers remain cautious, as economic uncertainty, concerns about employment, lingering inflation worries and questions about future interest-rate movements continue to sideline would-be purchasers.

Growing sense of precarity

Abacus Data founder David Coletto described it as a growing sense of precarity. Even as inflation cools and borrowing conditions improve, many households still feel uncertain about their future. 

He said housing remains one of the country's top concerns, particularly among younger adults worried about whether they will ever be able to buy a home, start a family or establish long-term financial stability.

"The lack of agency, the lack of control, is very much a part of this feeling of precarity," he said.

Perhaps most telling is the public's assessment of government performance. Research presented at the summit showed that only about one in five Canadians is satisfied with how governments are handling housing. In Ontario, that figure was even lower.

Coletto said the findings suggest housing will remain a significant political issue as municipalities across Ontario, British Columbia and Manitoba head to the polls and provinces prepare for upcoming elections.

Perhaps the most striking finding presented by Coletto was how housing insecurity is influencing major life decisions.

According to Abacus Data, seven in 10 Canadian households are delaying significant milestones because of financial uncertainty. Canadians are putting off moving, changing careers, starting families, retiring and making other major commitments as they struggle to assess an increasingly unpredictable future.

Housing affordability and housing insecurity rank among the largest sources of anxiety, surpassed only by broader cost-of-living concerns.