Supply chain crisis in housing exacerbated by skilled labour shortage

There were some interesting news headlines recently that reminded us of the fundamental relationship between supply and demand and prices: “Global supply chain delays, shortages could hike prices, limit options on shelves”; “Prices could go 20 per cent higher this holiday, thanks to supply chains in crisis”; “Bacon prices reach all-time high in Canada.” The key takeaway: Prices rise if there is insufficient supply to meet given demand.

Yet, when it comes to housing, for some reason, it is rare to see a headline declaring that a “supply chain crisis” is driving up home prices in cities across Canada.

Instead, some experts and pundits point to record low mortgage rates, homebuyers over-leveraging themselves, high immigration levels, foreign investors and buyers, developer profit-taking and even “regular folks who like the idea of buying a house and one day selling it for a huge windfall” (actual quote) as part of the problem. And successive governments have only tinkered around the edges and focused on the demand side of the equation.

Practical measures

However, we have not seen any meaningful and practical measures to address the supply side of the equation that is increasingly mired in growing bureaucracy and regulation, outdated zoning and urban growth boundary rules, and misguided policies that seem to have forgotten that housing is a fundamental human need.

Moreover, let’s not forget that there is a chronic and looming construction and skilled labour shortage that threatens to limit our ability to build the increased housing supply we need, even if regulatory and entitlements issues are addressed. This should not be news to our governments, given the countless studies and reports over the years bringing attention to this issue.

Looking specifically at the construction industry, BuildForce Canada reported earlier this year that 257,000 construction workers will retire by 2029, and even after accounting for new workers joining the industry, it anticipates a shortfall of nearly 82,000 construction workers by 2029. Similarly, EllisDon – one of the largest construction and building services companies in Canada – forecasts that the industry will be short 100,000 tradespeople in 10 years.

Four immediate steps

All of these findings are troubling, and we cannot wait any longer to start addressing these challenges. So, we need to push our governments at all levels to tackle the structural obstacles to increasing housing supply – not only the bureaucratic, regulatory and policy obstacles, but also the labour shortage obstacles, in particular. Specifically, we believe there are four steps that our governments can and should take immediately:

• Adapting our immigration system to prioritize, attract and retain the skilled labour that we desperately need by changing the points system to elevate the importance of a skilled trade on your application;

• Providing research and development funding, grants and incentives to encourage and catalyze innovation and modernization of the housing construction industry, which is still largely building homes the way we did 40-plus years ago;

• Renovating our outdated public education system to ensure our children are exposed equally to the full range of learning and job opportunities, including skilled labour and trades, in order to ensure our future labour pipelines reflect our real labour needs; and

• Bringing all stakeholders together in a national or provincial roundtable or conference on the “Supply Chain Crisis in Housing and Affordability,” in order to explore solutions and start coordinating efforts.

There is no magic bullet to solve the complex issue of housing affordability. But at its core, we have an imbalance of supply and demand in this country where insufficient supply is the problem; not excessive demand. And with the population of the Greater Toronto Area expected to reach nine million by 2030, the urgency to act has never been more acute.