The Canadian Mortgage and Housing Corporation (CMHC) recently emphasized the urgent need to restore housing affordability to pre-COVID levels. This goal comes in response to the significant rise in housing prices during the pandemic, which has left many Canadians struggling to find affordable housing. Here’s a closer look at the key points raised by CMHC and what it means for the future of Canada’s housing market.

The Housing Affordability Crisis: How Did We Get Here?

The COVID-19 pandemic triggered a shift in housing demand as many Canadians moved out of major cities, seeking larger living spaces in smaller urban areas or suburban regions. This migration increased housing demand in previously affordable areas, driving up home prices and rents. The result? A nationwide affordability crisis that has left millions of Canadians unable to secure adequate housing.

Data from CMHC reveals that over 2.7 million Canadian renters—more than one in four—are living in housing they cannot afford. Moreover, the pandemic accelerated social immobility, with fewer Canadians moving homes as affordability dwindled. CMHC’s data indicates that rental turnover rates fell from 13.6% in 2022 to 12.5% in 2023, suggesting that people are staying put due to rising costs and limited housing options.

CMHC’s Solution: A Bold Call for More Housing Supply

To address this affordability crisis, CMHC estimates that 3.5 million additional housing units will be needed by 2030. This is on top of the 2.2 million units already expected to be completed within that period. If this ambitious goal is met, housing prices in areas like Ontario could fall significantly, with average home prices potentially dropping from $871,000 to $499,000.

The largest portion of this housing need is concentrated in high-demand provinces like Ontario and British Columbia, which together require over 2.42 million new housing units to restore affordability. Large urban centers such as the Greater Toronto Area and Metro Vancouver will play a crucial role in this effort, as their high housing costs deter the skilled workforce essential for local economies.

Challenges to Achieving the Goal

While the CMHC’s goal is ambitious, experts warn of significant hurdles. The construction sector faces ongoing challenges, including a labour shortage in key trades like electricians and bricklayers, coupled with rising material costs. According to Mike Moffatt, senior policy director of the Smart Prosperity Institute, it will be “extremely difficult” to meet CMHC’s housing targets under current conditions.

Additionally, building more homes alone won’t resolve affordability. CMHC emphasizes that policy reforms and innovative financing solutions will be essential to making housing more accessible, especially for lower-income households. For instance, building more affordable multi-unit housing and increasing access to affordable rental options are crucial components of the overall plan.

The Road Ahead

Restoring pre-COVID housing affordability will require a combined effort from the public and private sectors. The CMHC stresses that it’s an “all-hands-on-deck” situation where all stakeholders—governments, builders, developers, and financial institutions—must work together to address the housing supply shortfall. While the target of 3.5 million new units is daunting, it is seen as a critical step toward creating a more equitable housing market for all Canadians.

This initiative, if successful, could mark a turning point for housing affordability in Canada. With significant policy shifts and increased collaboration, CMHC’s vision could pave the way for a future where housing is no longer out of reach for the average Canadian family.

Sources:

CMHC Report on Housing Affordability【13】
Global News Coverage on CMHC’s Housing Supply Gap【14】