Canada’s Housing Crisis: Rethinking the Construction Model
Introduction
The ongoing debate around Canada’s housing crisis often focuses on affordability rates, interest fluctuations, and migratory patterns. However, a critical component of this discussion—how homes are actually constructed—merits deeper consideration. The latest C.D. Howe Institute report highlights a crucial disconnect: Canada’s housing shortfall is not just about low output; it’s rooted in an outdated construction system that has not evolved to meet the pressing demands of modern housing needs.
Understanding the Root Causes
Canada’s housing production framework is characterized by fragmentation and risk aversion. In its quest for rapid, affordable, and large-scale housing, the country is inhibited by a construction model that clings to traditional practices, despite the urgent need for innovation and efficiency. The C.D. Howe report argues that the true constraint lies not in the number of homes that can be built but in our collective unwillingness to modernize the underlying systems.
Permitting Purgatory: Delays Before Construction
Before even delving into issues such as labor shortages or innovative building techniques, we must address a significant bottleneck at the municipal level: the permitting process. In Canada, obtaining a general construction permit takes almost 250 days—placing the country 34th out of 35 OECD nations and significantly slower than other G7 economies. This bureaucratic delay not only hampers immediate housing projects but creates a nine-month lead time against any policy effort aimed at accelerating housing delivery.
Such inefficiency is particularly galling given that Canada is in desperate need of solutions to its housing affordability crisis. As the saying goes, “time is money.” Reducing approvals could not only expedite construction but also enhance the profitability of housing projects, incentivizing builders to increase output.
Ambition vs. Capability
To restore housing affordability to pre-2019 levels, Canada needs to produce between 430,000 and 480,000 new homes annually. In stark contrast, the country only constructed just over half that number in 2023. Such a profound gap is exacerbated by rapid population growth, revealing a structural shortfall that demands urgent attention.
The disparity between housing starts and population growth, especially in urban centers, is not just a statistic; it is felt in the daily lives of Canadians. This issue emphasizes the need for scalable solutions, rather than isolated fixes.
Labor Inputs Alone Will Not Save Us
One might assume that increasing the workforce would automatically lead to higher productivity. However, between 2020 and 2023, the residential construction workforce grew by 26%, yet productivity declined. The old adage that “more hands make less work” appears to hold true, as the sector continues to rely heavily on traditional, weather-vulnerable practices.
The Silver Tsunami: A Workforce in Transition
The impending retirement of approximately 245,000 skilled workers by 2032 poses another challenge. This translates into a need for nearly 300,000 new hires, compounded by population growth. Without a shift toward more efficient building practices, training initiatives will struggle to close this gap.
The Tools Exist, Yet Change is Stalled
Globally, there are examples of innovative housing solutions that Canada could learn from. For instance, Sweden primarily utilizes off-site construction, employing factory-assembled segments to expedite building timelines. Yet in Canada, initiatives like UBC’s prefabricated Tallwood House and Siksika Nation’s 3D-printed units remain the exception rather than the rule.
Why is Canada lagging behind? The answer lies in institutional inertia—new building techniques face hurdles like extended permitting timelines, convoluted inspections, and regulations that vary drastically between provinces.
The Capacity is There but Unused
The C.D. Howe report introduces the concept of the production possibility frontier. Canada possesses the workforce, materials, and demand but lacks the coordination to effectively utilize these resources. Research suggests that modular construction can reduce building times by 50% and costs by 20%. Yet, these advantages remain largely untapped due to misaligned regulations and a preference for traditional building methods.
Modular Housing 101: Diverse Methods for Modern Solutions
Many envision modular housing as limited to shipping-container homes, but the reality is much broader. There are various techniques:
- Volumetric (3-D modules): Complete room-sized boxes that arrive on-site ready to stack.
- Panelized systems: Wall, floor, and roof panels transported and assembled on-site.
- Hybrid systems: A mix of on-site assembly and factory-built components.
- Mass-timber systems: Bolted together panels that provide quick assembly and low site noise.
These various methods all face unique regulatory barriers and would benefit from a tailored approach in policy design.
Striving for Reform
Government interventions alone cannot rectify the housing crisis; broader structural reforms are essential. Shortening permitting timelines for projects utilizing certified off-site methods and updating financing models to account for new construction types are paramount. Furthermore, insurance and mortgage policies should reflect the reliability of prefabricated systems rather than penalizing them.
Real-time productivity benchmarks comparing various building methods will also enable more informed policy decisions, allowing for data-driven approaches rather than reliance on assumptions.
The Risk in Refusing to Change
Canada’s housing problem cannot be addressed without rethinking the construction sector. The existing system, designed for bespoke housing solutions, cannot meet the demands of a rapidly growing population. The C.D. Howe Institute’s report not only critiques the current model but also sets forth a pragmatic agenda for modernization through operational clarity.
Emphasizing Productivity Over Cheap Money
The ongoing economic shifts—from post-COVID high-interest rates to escalating costs—call for an urgent focus on productivity. We spend significantly less on research and development compared to our southern neighbor, yet expect better outcomes. The time has come to prioritize building efficiencies and technological advancements in residential construction.
Conclusion: Addressing the Urgency
Canada’s own housing authority states unequivocally that without increased housing construction at a fast pace, affordability will remain out of reach. The stark reality is that Canada must double its pace of construction to rectify the current crisis—not just for the sake of policy, but for the well-being of residents across the nation.
To tackle the housing crisis effectively, we must stop merely discussing affordability and start implementing changes that enhance our building systems. The crisis is real, and so too must be our commitment to change. Let’s begin cultivating a housing landscape built for the present and future needs of Canadians—a future where everyone can find a place to call home.
