The demand-supply conundrum in real estate

Recently, Prime Minister Justin Trudeau spoke about the housing crisis in Canada. He mentioned the National Housing Strategy his government initiated in 2017 but added that housing is far from a primarily federal responsibility. He stressed that provinces and municipalities must step up to help solve our demand-exceeding supply problem. And a problem, it is – and will continue to be as our population explodes. In June, we surpassed the 40-million milestone, and we could hit the 50-million mark in the next 10 years. It begs the question, where are these people going to live?

Immigration at all-time high

In the spring, I watched an interesting podcast addressing Canada’s population surge and the challenges it places on our real estate industry. Last year, we welcomed more than a million newcomers into Canada, an all-time high in a single year. Many of the immigrants who land in Canada head for our cities. Today in the GTA alone, nearly four of every five residents are first- or second-generation newcomers.

Of course, immigration is important to our country to counteract our low birth rate and aging population and help to replenish our labour force as baby boomers retire. Immigrants add dynamism to our economy and social cohesion for an increasingly diverse make-up. In addition to housing, we need the infrastructure necessary to provide the quality of life we enjoy for everyone. We need more social and community services, parks, hospitals, schools and the like. The conundrum is that we need more skilled workers to build homes and infrastructure, but as we welcome hundreds of thousands more immigrants each year, we need even more homes and amenities.

Certainly, with our three levels of government responsible for varying aspects of our lives, we must rely on more coordination to ensure that housing needs are being met. Provinces and municipalities could help more by streamlining the paperwork and red tape that goes into obtaining approvals for new home builders.

Alternative delivery models

Although municipalities and provinces must act, so too must the federal government do more, especially to address affordability. David Wilkes, president and CEO of the Building Industry and Land Development (BILD) Association, says the federal government could help by adjusting price thresholds for the GST/HST new housing rebate program as promised, which would have an immediate positive effect.

In the interim, we may have to rely on alternative housing delivery models to satisfy the needs of renters and others who may not be able to afford market homes or condos. We also need more lowrise homes for seniors who want to age in place. The answer may be to bring in some public-private initiatives that have worked in the past.

With the influx of immigrants, our built environment had better expand in a hurry. Whatever happens, owning real estate in Toronto and the Greater Toronto Area is a solid investment, whether you live in it or rent it out.