Only 53 Single Family Detached Homes Started in the Last 2 Months
The latest CMHC data paints a bleak picture – Ottawa, and many other jurisdictions in Ontario, are simply not building single-family detached homes anymore.
Over the last 2 months, Ottawa has started only 53 single family homes – this is lowest print since the CMHC began recording data in 2001.
The chart above demonstrates that single family home construction in Ottawa has been trending down since the pandemic began.
There are many reasons for this:
Tough to Build in a High Interest Environment
High material cost, expensive financing costs, expensive land, “labour is hard to find” and “buyers cant really afford these homes” are some of the common reasons for the lack of building cited by construction experts, according to recent media reports.
This strange environment creates a dilemma for governments — on the one hand they need to quell inflation to get interest rates down, and they can do this by increasing immigration to suppress wage growth. But on the other hand, new Canadians also need to live somewhere, and this will cause housing demand to increase.
It is a delicate balance for policy-makers and the Bank of Canada.
Row Homes and Semis Hovering Near All-time Lows as Well
The story is not much different for row homes and semi-detached housing in Ottawa, with starts hovering near all-time lows:
As the chart above demonstrates, row home construction is down since the pandemic as well. This supports the notion that the construction industry is struggling at all levels, and that buyers simply aren’t able to enter the market at such high interest rates.
Apartment Construction Trending Up – But Urgency Lacking
Apartment construction has been trending up in recent years in Ottawa, but they’re certainly not seeing a “war time” construction industry materialize.
The chart shows that while apartment construction has been trending up over the last few years, we aren’t seeing the “surge” necessary to overcome the losses discussed earlier in the single family home and row home sectors.
Combined, these factors lead to the “structural” housing shortage that is often discussed in the media.
CMHC Estimates that Canada needs 5.3 Million Units by 2030
Given that the CMHC estimates that Canada needs 5.3 million units to restore housing affordability by 2030, its safe to say the 480 starts in Ottawa over the last two months aren’t going to cut it.
Policymakers need to get serious about their “war time” housing construction initiatives — as it’s clear, we’re not quite there yet.
