{"id":1048,"date":"2023-08-29T00:11:14","date_gmt":"2023-08-29T00:11:14","guid":{"rendered":"https:\/\/www.realestateleads.ca\/blog\/?p=1048"},"modified":"2023-09-25T20:16:55","modified_gmt":"2023-09-25T20:16:55","slug":"drop-in-housing-starts-projects-badly-for-home-affordability","status":"publish","type":"post","link":"https:\/\/www.realestateleads.ca\/blog\/drop-in-housing-starts-projects-badly-for-home-affordability\/","title":{"rendered":"Drop in Housing Starts Projects Badly for Home Affordability"},"content":{"rendered":"
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It\u2019s a complex answer to give, but it\u2019s the right one if anyone is to ask what is the way to improve housing affordability and address the housing crisis in Canada. It\u2019s increasing housing supply, because as has been explained a thousand times the key reason why housing is overpriced is because demands is outstripping supply nearly a thousand times over. That\u2019s not going to change given the direction the country is taking, and let\u2019s be clear \u2013 it\u2019s not a bad direction to be taking. But the numbers that we\u2019re going to see with population growth are going to go hand-in-hand with a worsening housing crisis if nothing is done to increase supply.<\/p>\r\n\r\n\r\n\r\n

What\u2019s needed to make that happen is housing starts, and while there\u2019s been more traction gained there in the last year nation wide for sure it\u2019s not anywhere near what is required. But the first thing that needs to be said is any big increase in the number of housing starts is easier said than done. Labour shortages mean that there simply isn\u2019t the number of qualified tradespeople available for the work, and then there\u2019s one of the biggest roadblocks to building affordable homes these days \u2013 the astronomical increases in the price of building materials.<\/p>\r\n\r\n\r\n\r\n

All on top of the slew of taxes and fees required that grow quite regularly in municipalities across Canada. All of which creating an environment where we\u2019re going to have people who in any other instance would qualify for a mortgage and are looking to buy a home. But there\u2019s no home for them to buy. At least not one they can afford. We\u2019ll take this week\u2019s entry to expand on why the decreasing number of new housing starts makes affordability even more unlikely in the future.<\/p>\r\n\r\n\r\n\r\n

Economic Underpinning<\/strong><\/h3>\r\n\r\n\r\n\r\n

Housing starts fell last month (July \u201923) and there are many who believe a further slowdown will present itself as economic conditions soften. This trend will not help ease affordability challenges in Canada\u2019s pricey real estate market, and especially for those who are looking to be 1st<\/sup>– time homebuyers. Recent CMHC data backs this up, showing how annual housing starts declined by 10% in July compared to previous months.<\/p>\r\n\r\n\r\n\r\n

A number for that? Only 255,000 of them as of last month in what experts say is a current reality where 1.5 million new homes are estimated to be needed by the start of the next decade. This data continues the trend of \u2018gentle easing\u2019 in housing starts, but in contrast to that aggregate new construction continues to be historically high.<\/p>\r\n\r\n\r\n\r\n

The consensus seems to be that a more significant slowdown is coming too, and again that is in large part borne out of construction industry labour shortages, high borrowing and material costs, weak homebuilder sentiment, and softening economic activity being what\u2019s expected. A further expectation is that the Bank of Canada will be taking some degree of comfort in weak sales and housing starts data, especially in the aftermath of a colling economy, stagnant GDP, and core effects of inflationary pressure.<\/p>\r\n\r\n\r\n\r\n

Resilient Price Pressures<\/strong><\/h3>\r\n\r\n\r\n\r\n

What we can see in that is how the painful medicine of interest rate hikes is working to cool down economic growth and bring price pressures to heel. If economic conditions continue to soften it may be a situation where the BoC will keep it\u2019s policy rate at 5%. If that\u2019s the case and housing starts continue to decline then it becomes fairer to state that current trends in home building really aren\u2019t doing much to improve affordability for home buyers.<\/p>\r\n\r\n\r\n\r\n

And we can also expect to see lower housing starts in other regions negatively weighing on future supply too. Everything that this trend possibility portends for the future can \u2013 and should \u2013 put a negative focus on decision makers who seem to think that the market will rebalance itself naturally and on its own. That said, buyer prerogative plays a role in people finding homes unaffordable too, as there is more affordable housing in Canada but it\u2019s not anywhere near the few major metro urban areas where most people want<\/em> to live.<\/p>\r\n\r\n\r\n\r\n

And as well all know, want<\/em> and need<\/em> are two entirely different things.<\/p>\r\n\r\n\r\n\r\n

__ Sign up for Real Estate Leads<\/a> here<\/a> and receive a monthly quota of qualified, online-generated buyer and \/ or seller leads that are made available to you exclusively. At no time will another realtors receive these leads, even if they are working in the same region of the country as you and are also a Real Estate Leads subscriber. You have the opportunity to speak with these potential clients first, and their responses to voluntary online surveys are among what is used to determine the viability of our leads. You\u2019ll quickly see all it can do for your client prospecting efforts.<\/p>\r\n","protected":false},"excerpt":{"rendered":"

It\u2019s a complex answer to give, but it\u2019s the right one if anyone is to ask what is the way to improve housing affordability and address the housing crisis in Canada. It\u2019s increasing housing supply, because as has been explained a thousand times the key reason why housing is overpriced is because demands is outstripping […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1048","post","type-post","status-publish","format-standard","hentry","category-general-topics"],"yoast_head":"\nDrop in Housing Starts Projects Badly for Home Affordability - Real Estate Leads Blog<\/title>\n<meta name=\"description\" content=\"Drop in Housing Starts Projects Badly for Home Affordability - Real Estate Leads Blog\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.realestateleads.ca\/blog\/drop-in-housing-starts-projects-badly-for-home-affordability\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Drop in Housing Starts Projects Badly for Home Affordability - 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