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Why Canada’s housing squeeze could be worse than we thought

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Ottawa’s ambitious goal of significantly increasing the number of new immigrants has raised concerns about whether Canada will have enough housing to accommodate them.

of housing shortage It is well known in the country that governments at all levels have announced plans to boost supplies.

Canada Mortgage and Housing Corporation Estimated in June To make housing affordable for everyone in Canada, we need to build 3.5 million more homes by 2030. This exceeds the 2.3 million units expected to have been built by then at current construction rates.

“Canada’s approach to housing needs to be reconsidered and done differently,” CMHC deputy chief economist Aled Abu Iorworth said in a report. “A radical transformation of the housing sector is needed, including government policies and processes, and an ‘all-out’ approach to increasing housing supply to meet demand.”

But what is that demand?

Benjamin Thal, deputy chief economist at CIBC, suggests in a recent report that the actual increase in Canadian housing demand is much higher than official estimates.

Ottawa aims to increase the number of new immigrants by 75% above pre-pandemic levels by 2025. But just because he says there will be 465,000 new immigrants in 2023 doesn’t mean the net population growth from immigration, he said, housing demand will increase by 465,000. .

Tal argues that it is not the number of new immigrants that should be used to calculate housing demand, but the number of new people coming to the country from abroad. He says it is.

During the 2021 pandemic, about 70% of new permanent residents were already living in Canada and did not need housing.

By 2022, that share will plummet to 42%. Tal officially said the net increase in new immigrants in 2022 will be 31,000 compared to the previous year, or 7.6% for him. However, as more immigrants came from outside Canada, the actual net increase in housing demand was he 131,700 or 108%.

The focus has also been on new immigrants, with non-permanent residents (NPRs) making up a large proportion of new arrivals, economists said.

“Statistics Canada’s population projections have underestimated the NPR for many years and will not fall below 1 million in 2022,” he said.

The number of non-permanent residents entering the country surged after COVID-19 travel restrictions were lifted by student visas, work permits, and emergency travel authorization programs in Canada and Ukraine. CUAET provides an eligible Ukrainian with temporary residency and her 3-year open work visa.

CIBC calculates that the number of non-permanent residents arriving in Canada has increased from 258,000 in 2021 to 700,000 in 2022, an increase of 170%.

In 2022, the total number of permanent and non-permanent residents arriving from abroad will approach 955,000. This represents an “unprecedented one-year volatility in housing demand that is currently not fully reflected in official figures.”

These trends are unlikely to abate in 2023 and could intensify further, Tal said. In 2022, approximately 340,000 CUAET visa holders have not yet arrived in Canada, with hundreds of thousands more applications waiting to be processed.

Plans reported by the federal government waive eligibility rules Reducing the backlog of visitor visas will also add to the demand.

“It is no exaggeration to suggest that the number of new foreign arrivals in 2023 could reach 1 million,” Tal said.

“This kind of influx suggests that existing policy instruments are easily inadequate to meet current and further increases in demand for housing.”


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Jobs are falling from high.Statistics Canada says Declining overall vacancy rate 850,300, down from 20,700 or 2.4% in November, down from a peak of over one million in May 2022 and the lowest level since August 2021.

Construction was the only sector to see an increase in job openings in November, with job openings up almost 17%. Vacancies in professional, scientific and technical services, health care and social assistance all fell during the month, and remained flat in accommodation and food services, retail and manufacturing.

The vacancy rate (the ratio of vacancies to total labor demand) fell to 4.8%, the lowest level since June 2021.

Both indicators are above pre-pandemic trends, suggesting labor demand remains strong, said BMO economist Shelly Kaushik. But probably not for long.

“We expect further declines in job openings in the coming months as businesses fully deal with the impact of the Bank of Canada’s aggressive monetary tightening,” Kaushik said.

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If your mortgage is weighing heavily on your mind, you’re not alone. Interest rates have increased eightfold since March 2022, bringing the prime rate to 6.7%. If you have a variable rate mortgage, your payments have increased significantly in a relatively short period of time.

Content Partner Barry Choi money wise A homeowner with a $500,000 variable rate mortgage (25-year payment schedule) reported an increase in monthly mortgage payments of over $1,000 during the last year.

Those who are worried about future interest rate rises, those who cannot keep up with their mortgage repayments, MoneyWise has several options Helps you try to avoid a mortgage default.


Today’s Posthaste was written by Pamela Haven. @pamheavenCanadian Press, Thomson Reuters and Bloomberg.

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