Even before the onset of the pandemic, Canada’s housing supply was struggling to keep up with demand. Then, over the past year and a half, the drop in interest rates coupled with increased household savings and changing needs sent a tidal wave of Canadians rushing to buy a home.
As a result, buyers bought up the stock of existing homes for sale, while others depleted newly built home inventories — especially those in high demand, like single-family and other low-rise homes.
To keep housing inventory at relatively stable levels, Canadian homebuilders continued constructing new homes as demand intensified throughout the pandemic.
A new report from RBC senior economist Rober Hogue has highlighted the resilience of the residential construction industry, which has seen housing starts over the past 12 months reach the most substantial level since the mid-1970s and the number of homes under construction at an all-time high.
In the past 12 months, Canadian builders poured the foundations (defining a housing start) for the highest number of housing units (260,500) than at any time since 1977 — representing a 26%, or a 53,600-unit increase, relative to the 2015-2019 average pace of 206,900 units.
As it stands, there are close to 320,000 housing units under construction nationwide, which Hogue says is by far the highest number and a 12% (or more than 30,000-unit) increase from the end of 2019. About three-quarters of the total are apartments — mostly condos but also rental.
With housing starts at an all-time high, you might be wondering why move-in ready supply remains low. The problem is the average timeline to complete a new build has more than doubled over the past two decades, from 9 months to 21 months, depending on the type.