Housing starts: close to a 30-year high

Despite the pandemic that crippled the construction industry this spring, residential housing starts in centers with a population of 10,000 could approach the record high of 2004. In fact, with 42,415 units under construction in 2020, excluding those in December, it is expected to surpass 43,534 units of 2019. There were 46,721 units in 2004, still the highest level in the last three decades. The statistics come from CMHC and APCHQ.

While this intense activity in residential construction continues, the vacancy rate for rental units has been rising since this summer. The sudden economic crisis affecting employment, as well as the pandemic that is slowing down the demand for housing from immigration, tourism and students are all factors that are contributing to the vacancy of thousands of units.

The boom in construction is also having the effect of increasing the scarcity of available labor, especially to meet renovation needs. In 2020, the new housing price index for the building portion (i.e. excluding land) is up 7%, which is well above general inflation. The increase in labour and materials costs is more remarkable than ever.

For the past three years, the number of rental housing starts, at about 20,000 per year, has equalled and even exceeded housing starts for houses and condominiums combined. Even so, the vacancy rate was close to 1.8 per cent in 2019 in a full employment economy before the pandemic, the highest in 15 years. According to CORPIQ, the vacancy rate is now between 2% and 3% and is currently conducting a survey to verify this.