Housing supply

Shortage of Housing Supply in Canada: Skilled Labor Capacity

OTTAWA – In June 2022, Canada Mortgage and Housing Corporation (CMHC) released Housing Shortages in Canada: Estimating What is Needed to Solve Canada’s Housing Affordability Crisis by 2030 (ESG 2030), which has taken initial steps to estimate the supply of additional housing needed to restore housing affordability by 2030.

A significant challenge to achieving these goals by 2030 is the amount of skilled labor needed. Using the housing supply targets outlined in ESG 2030, CMHC released the tracking report Labor Capacity Constraints and Supply in Canada’s Major Provinceswhich examines the skilled labor capacity in Ontario, Quebec, British Columbia and Alberta to meet this level of housing supply needed.

The report examines an optimal scenario, which projects starts with “maximum” labor capacity and compares these projections to the affordable supply targets established in ESG 2030 and CMHC’s housing starts baseline forecast. The best case scenario is based on the highest percentage of people in our population working in residential construction and the lowest number of residential construction workers per dwelling under construction over the past 25 years.

According to the report, under the best-case scenario, housing starts will fall well below 2030 affordable housing supply targets in Ontario, British Columbia and Quebec, while Alberta will be able to meet its affordable housing supply target by 2030.

This report further reinforces the fact that to solve Canada’s housing affordability problem, we need an “all on deck” approach to increasing housing supply to meet demand. This will include leveraging innovative ideas and initiatives used in the current housing industry and through the federal government National Housing Strategyas shown in the Suggested Solutions section below.

Report key findings:

  • At the current pace, there is insufficient labor capacity to address significant housing shortages, primarily in Ontario and British Columbia (BC).
  • In the best-case scenario, the labor capacity only exists to increase housing starts activity in the four major provinces between 2022 and 2030 by an annual average of 30% to 50% above CMHC’s baseline housing starts forecast:
  • Ontario by 36%
  • Quebec by 29%
  • British Columbia by 41%, and
  • 54% Alberta
  • Ontario, Quebec and British Columbia need to double their best labor capacity to adequately meet affordable housing supply targets by 2030.
  • Labor capacity issues are most critical in Ontario, which has the largest population and the highest price pressures.
  • Although the pandemic has shown that the workplace can pivot and handle higher construction volumes with fewer workers, this can still lead to construction backlogs, which will cause delays and delay the supply of new units to markets that need more supply.

Suggested solutions:

  • The federal government, through CMHC, creates and delivers programs, such as the Housing Acceleration Fund and the Rapid Housing Initiativeamong other things, in the context of National Housing Strategywhich aim to identify and propose innovative solutions to accelerate the construction of housing supply in many urban centers in Canada.
  • Focus on converting existing structures into residential units, especially existing commercial structures. This method has proven successful through the conversion of hotels, motels and offices under the Rapid Housing Initiative.
  • Increase the construction of multi-unit housing, as they offer less logistical constraints to move labor materials and equipment between structures than single-family homes.
  • Create more incentives to develop a new generation of skilled construction workers.
  • More targeted immigration programs to encourage skilled, temporary and/or permanent foreign workers to fill labor shortages, particularly in Ontario and British Columbia.