Real estate has dominated Canadian news outlets in 2021.
Whether it’s the impact of the pandemic on homebuyers, the lack of new affordable housing developments in Toronto, or the ballooning costs of housing everywhere, real estate remains one of the most important issues to most of the country.
It seems hardly a week passes without a story about a new record being broken. While the market has briefly slowed down intermittently throughout 2021, the larger story is one of near-constant growth.
As of September 2021, the Canadian housing market continued to show 15 to 20 per cent growth, with no signs of cooling down, Robert Kavcic, a senior economist at BMO Capital Markets, told The Canadian Press.
“One can’t help but feel as though the Canadian housing market is walking on tinder again, with demand holding at historically high levels, listings getting quickly absorbed, and price growth running steady near a 20 per cent pace,” Kavcic said. “There has been no relenting in price pressure. In fact, the dial might be turning hotter again as we speak.”
To better understand the state of Canadian construction, here are the responses from KBNJ Consulting’s President Tom Jakobek to some of the biggest housing and construction stories from 2021.
Toronto’s Lack of Affordable Housing
This has undoubtedly been one of the biggest housing stories in Canada, even before the pandemic made the situation even worse.
According to an October 2021 story from Construct Connect, new home groundbreakings in Canada appeared to be “tailing off.” While construction starts in Toronto were down 4 per cent, cities in Toronto’s periphery “are having an excellent year for starts pickups,” the article said.
Jakobek said that Toronto is not doing as well as its surrounding urban areas because of the high land costs, “but more importantly because of the costly building materials and government development taxes.”
“Toronto is artificially unaffordable,” Jakobek said.
Slight Drop In Hotel Construction
Back in August, a report from Lodging Econometrics found that the total construction pipeline in Canada stands at 253 projects with a combined 33,240 rooms. That was down 43 projects, or 15 per cent year-over-year.
The story from Hospitality Net wrote that an increase of vaccinations would lead to easing pandemic restrictions and economic growth, not only for hotel construction, but for the travel and hospitality industries as well.
“This is actually an encouraging sign for the pandemic economy,” Tom Jakobek said. “Construction benefits are less important than the benefit of additional jobs and the stimulation of local economies. Our governments need to understand that.”
Indigenous Construction Gets Organized
Not every pandemic story about housing and construction has been negative.
In September 2021, a group of Saskatchewan Construction Association (SCA) members announced the formation of the Indigenous Owned Construction Companies Group (IOCCG), according to Construct Connect.
The new group defines its purpose as “an association to represent Indigenous-owned construction companies that seek to increase the socio-economic impact of construction activities for Indigenous peoples.”
“This is a great example of stories we should celebrate: when local communities form productive partnerships with local talent,” Jakobek said. “Indigenous construction companies are good for everyone, and especially for the individuals involved.”
Green Building Stalled By Gov’t Rules
The growth of development charges and insufficient building incentives have stifled the efforts of many municipalities to encourage “green” construction projects, The Financial Post recently reported.
The article cited Toronto as a prime example, where incentives for green building have been outpaced by increases in development charges, like new fees for planning and parkland dedication.
Jakobek said the story shows how many cities have used the Covid-19 pandemic as an excuse to raise construction costs.
“Charges and fees are not based on a cost-recovery basis,” Jakobek said. “We need to keep construction costs affordable.”