Solving the housing crisis is a marathon not a sprint

In a previous article, we raised the fact that, with the current resources, Canada has the potential to build many more units than we currently do. But this raised the question of how long it would take for housing units to be built and become available for low- to middle-income households.

Recent CMHC research shows how this could take up to 30 years! This is much too long for Canadians looking for a more affordable housing option now.

The multi-unit housing construction process can take 7 years to complete

Housing construction is a process that starts with the design and development of a project. This phase can take 3 to 5 years to complete, depending on the type of housing developed. This includes developing all of the plans, documents and studies needed to move to the review, permitting and approval process.

Our Municipal Land Use and Regulation Survey shows the review and approval process by municipalities takes, on average, a full year in Canada for multi-unit housing. This timing may be significantly longer in larger urban centres where housing demand is the highest. Vancouver and Toronto show the longest approval delays across Canada, followed by Montréal.

Next comes the actual construction. One of our recent Housing Supply Reports (PDF) (see Table 3) investigated how long it takes to build housing across the country. For multi-unit housing, it found that the construction period takes 1 to 2 years from housing starts to completion. This means delivering a multi-unit housing structure in Canada — including purpose-built rental apartments — takes about 7 to 8 years on average.

Filtering makes housing more attainable, but can take up to 20 years

Most readers would think this is where we're delivering an affordable housing unit, but this would be misleading. About 95% of housing in Canada is market housing, designed to be at or close to market rent or price once completed.

Completions of a housing unit is where filtering starts. Filtering is a process through which a market housing unit becomes gradually more attainable for low- to middle-income households over time. Our most recent research (PDF) explains how filtering works. It shows that it takes up to 20 years to feel the full effect of additional market housing supply on lower housing prices.

All-in-all, from design of a project to filtering that makes housing attainable, it takes 25 to 30 years before new housing supply is delivered and its full impact on lower rents or prices is felt. This is far too long for Canadians looking for an attainable housing unit option. It's much too long to see the end of our current housing crisis.

The figure below illustrates the full process of delivering market housing and how long it takes it for housing prices to adjust to new supply in Canada.

Social and affordable housing will help, but won't fix it all

Now, the easy response would be: "Let's build social housing — instead of waiting 30 years, it'll 'only' be 7!" It's a fair assumption, but it underlines a common misconception. Any addition of social housing would be beneficial, but could that "fix" the crisis? Let's investigate this.

On average, the Organisation for Economic Co-operation and Development (OECD) countries have about 7% of their housing stock that's identified as social housing (PDF). In the European Union (EU) it's about 8%. In Canada, based on the Census and CMHC's calculations, social housing is about 3.5% of the overall housing stock. There is room to improve.

575,000 additional social housing units needed to meet the OECD average

If Canada was to reach the OECD average for social housing as a percentage of total housing stock, it'd mean 575,000 additional social housing units available to Canadians. This is double the number of social housing units that currently exist in the country.

If we were to reach the EU average, it would represent about 750,000 additional social housing units. While adding that many affordable housing units would definitely help Canadians, it's significantly below any estimates of additional housing supply required to solve the current housing crisis, including our own.

Time and a balanced mix of housing construction at all price points is needed

These figures shouldn't discourage us — as I put in a previous article, incremental progress goes a long way when it comes to restoring housing affordability in Canada. But we need to acknowledge (and somewhat accept) there is no silver bullet to fix the housing crisis. Market housing takes time to become cheaper, and social housing isn't the cure some would want it to be. We need a balanced mix of housing construction at all price points to progress towards normalizing our housing sector.

We also need to be realistic on timing. Our latest Rental Development Survey shows that rental developers typically plan their investments over a 10-year horizon. When we analyze or plan for housing supply, we should adopt the same time-horizon to assess results: 10 years. But some changes may help accelerate both volume and timing of delivering attainable housing options for Canadians — there are 3 potential areas to focus on.

1. Attracting new long-term funding sources, such as pension funds and large not-for-profit organizations, in housing construction financing may help complement the significant investments made by governments over the last decade. While this may not accelerate the pace of housing construction, it will ensure enough housing is delivered over time to respond to Canadians' housing needs.

2. We need to keep streamlining regulation to enable developers and the housing industry to build faster. Development and approval of housing is by far the longest phase of housing construction. While we can't shorten filtering easily, experience shows that when municipalities reduce red tape and streamline housing approvals, they can significantly accelerate the pace of housing construction.

   For instance, Kelowna uses artificial intelligence tools to speed up building permit applications while British Columbia has announced investments in developing a new digital building permits tool. They have also removed zoning barriers for small-scale, multi-unit homes. This allows such homes to be built on lots zoned for single-family or duplexes in some areas.

3. Let's get real on boosting housing construction productivity. This requires adopting building techniques and technologies that exist and have proven to be useful in other countries, but that aren't yet adopted widely in Canada. This includes modular housing, high-rise wood frame buildings and even 3D printing multi-unit housing.

   It also includes the increased use of robotics, artificial intelligence and building information modeling (BIM) to:

   • automate some off-site building processes, and
   • optimize space designs, accelerate regulatory compliance and improve project planning and building accuracy

These changes will require changing the skillset of residential construction workers. This can be done through training new candidates to the trades and retraining those who are currently active in the labour market. While this may take some time, it will help fix the current housing crisis and will help all Canadians.