Canada’s Housing Target Falls Short by 1.5 Million Units, CIBC Reports

CIBC's latest report reveals Canada's real estate market falling short of its housing target by 1.5 million units, impacting the nation's housing crisis.

The Canadian government is facing a significant underestimation of the number of new homes needed to combat the growing affordability crisis, according to research conducted by the Canadian Imperial Bank of Commerce (CIBC). While the national housing agency has stated that 3.5 million additional units are required by 2030 to address the affordability issue, CIBC economist Benjamin Tal's report suggests that the actual number needed is closer to 5 million.

Tal attributes this discrepancy to population figures that fail to accurately account for non-permanent residents. The housing affordability crisis has become a focal point for political rivals, with Prime Minister Justin Trudeau's government struggling to address the nationwide surge in housing costs. Despite efforts to implement policies aimed at boosting housing supply, the impact on the market has been limited. The government's push for economic growth through increased immigration has further exacerbated the imbalance between supply and demand.

The challenge of boosting supply is compounded by high interest rates and a slowing economy. Recent data from Statistics Canada revealed a 14% decline in the total value of building permits in December, reaching the lowest monthly level in over three years. The residential permits saw an even steeper decline of 17.9%, largely due to a significant drop in multi-unit permit construction intentions.

A significant portion of Canada's recent population growth has been driven by non-permanent resident programs, such as foreign students and temporary workers. The federal government's decision not to cap these programs, driven by demand from educational institutions and employers, has contributed to the housing supply-demand imbalance. In response, the Trudeau government has introduced a cap on the number of foreign students as its latest measure to address the issue.

The Canadian government is facing a more significant housing crisis than previously estimated, with the need for additional homes far surpassing initial projections. The challenges posed by the affordability crisis, coupled with the impact of immigration policies on housing supply, present complex issues that require urgent attention and innovative solutions.