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While government policies are beginning to improve housing market conditions, experts at RESCON's Housing Summit 6.0 warn that Canada is still a long way from solving its affordability and supply crisis. Despite recent gains in affordability, the country is not building enough homes to keep up with demand or eliminate the accumulated housing deficit.
While things are moving in the right direction, the key message from speakers at RESCON's Housing Summit 6.0 was that the country still has a long way to go.
Canada's housing market may finally be moving in the right direction, but industry leaders, economists, policymakers and housing experts agree the country remains a long way from solving its affordability and supply crisis. That was the overarching message from speakers at Housing Summit 6.0, hosted by the Residential Construction Council of Ontario (RESCON) on September 23, where presenters examined market conditions, policy reforms and the long-term outlook for housing in Canada.
Housing Construction Lags Behind Demand
While government measures are beginning to show results and affordability has improved in key markets, speakers repeatedly emphasized that the progress made so far is not enough to close the nation's substantial "We're going in the right direction, but we've got to do more," said Ian Lee, associate professor at Carleton University's Sprott School of Business. Lee offered what he described as a "qualified yes and a qualified no" to the question of whether housing reform in Canada is working.
However, he noted that despite policy changes introduced by governments at all levels, housing construction continues to lag well behind demand. Canada currently builds roughly 250,000 homes annually, while CMHC estimates between 400,000 and 470,000 new homes are needed each year to restore affordability and eliminate the accumulated supply shortfall.
"The numbers clearly show that we are not building enough," Lee said. "It is crystal clear that we are still falling behind. " The challenge is especially significant because population growth over the past decade has vastly outpaced housing production, creating a deficit that cannot be erased quickly even if construction activity accelerates. Despite those concerns, the summit highlighted several signs that the housing market is beginning to stabilize.
Affordability Conditions Improve Substantially
Jason Mercer, chief market analyst at the Toronto Regional Real Estate Board (TRREB), told attendees that affordability conditions have improved substantially over the past two years. One key measure illustrates the shift: the income required to purchase a $1-million home in the Greater Toronto Area has fallen from well above $200,000 annually during the peak of the interest-rate tightening cycle to roughly $140,000 to $150,000 today.
"Affordability is no longer the major obstacle it was during the peak of the interest-rate tightening cycle," Mercer said. Lower borrowing costs, softer home prices and improving financing conditions would normally trigger a significant rebound in sales activity, he said. Yet many buyers remain cautious because of continued uncertainty surrounding inflation, economic growth and interest rates. Sales levels remain in the 60,000 to 70,000 range annually, well below what demographic trends would typically support.
Mercer suggested a substantial amount of pent-up demand continues to build and could be unleashed once consumer confidence improves. The outlook is less uniform across the country, according to Daniel Foch of Valery Real Estate Inc., who highlighted growing differences between housing markets in Ontario and British Columbia and those in other regions.
Market Differences Shape Migration Patterns
"The markets that continue to grow and continue to attract new residents are the ones that remain affordable," Foch said. He pointed to cities, such as Calgary and Halifax, that continue to attract younger Canadians seeking home ownership opportunities increasingly out of reach in Toronto and Vancouver. In many Canadian markets, average home prices remain within the traditional lending benchmark of four to five times household income.
In contrast, Toronto and Vancouver remain near double-digit price-to-income ratios. Foch said affordability remains the defining issue shaping migration patterns, investment decisions and future market performance across the country. Ontario Minister of Municipal Affairs and Housing Rob Flack outlined several steps the Ontario government has taken to improve housing conditions and increase construction activity.
Ontario Government Unveils Construction Reforms
"Government has to create the conditions so builders can do what they do best, and that's build homes," Flack said. The province has introduced a series of legislative reforms aimed at accelerating development approvals and reducing barriers to construction, he said. Measures include deferring development charge payments until occupancy, streamlining site-plan requirements, updating building code provisions and implementing broader planning reforms.
Flack also pointed to the province's partnership with the federal government to temporarily eliminate the HST on qualifying new homes, a measure long sought by the residential construction industry. While some observers questioned whether the rebate would generate meaningful demand, Flack said early results suggest it is already having a significant impact.
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