Getting Housing Supply to Meet Demand
The dream of homeownership is slipping away for millions of Canadians.
Imagine doing everything right by scrimping and saving and it’s still not good enough.
In places like Toronto or Vancouver, the average sale price is over $1 million.
Luckily, we don’t see those astronomical prices in Manitoba, but even in Westman, we’ve seen the average sale price jump 7.9% in the past year.
Anyone who tells you they have an easy answer, or a quick government solution, isn’t being forthright.
While foreign investors and real estate speculators have contributed to the rise in prices, it is not the only reason for these dramatic increases.
It is also prudent to point out that with interest rates being as low as they are, individuals could be approved for larger mortgages, another factor leading to increased prices.
That being said, a large part of the challenge is we have a supply and demand problem. Anyone from a political party who does not admit that is not telling the whole story.
In some parts of the country, there is massive demand.
People want to be close to where they work. They don’t want to deal with traffic or congestion. Maybe the schools or recreational infrastructure are good.
Regardless of the reasons, the demand is there, and the supply is not.
The fact is we aren’t building enough homes. And when I say homes, I am not just referring to single-dwelling housing. It’s condos, apartments, townhouses, and seniors housing, etc.
It is also important to note that even the rental market is squeezed and, due to general inflation, rental prices have also risen. This is causing hardship for many, particularly for students, seniors, and those on fixed incomes.
Depending on who you ask, you’ll get different reasons for why new builds have not kept up to demand or why it is difficult to build in the first place.
The cost of materials has shot through the roof. The price of lumber and other materials took a dramatic jump last year and almost everything is more expensive.
The logistical challenges pre-pandemic were already starting to grow and now they are on overdrive.
There are simply not enough Red Seal tradespeople or workers who want to make construction their choice of profession.
Trades colleges are filled to the brim and there are not enough new workers entering the profession to replace those who are leaving.
There are also increased upfront costs and time needed to approve any new developments. Not every contractor has the in-house capacity to deal with the regulations they must abide by.
I am confident there are other reasons that are part of the equation why it is difficult to get more homes built, such as city planning reasons, zoning issues, and the financial risks associated with it all.
The list could go on and would vary depending on the province or municipality.
Over the next couple of weeks, I will be outlining some very specific proposals to help get more homes built.
If actions are not taken, the problem will continue to worsen for the foreseeable future.