The following is the first installment in a multi-part series tackling Canada’s housing and immigration crises. The series will focus on their root causes, intertwined nature, and potential solutions.
That Canada’s current housing crisis is primarily a function of an incredibly misguided set of immigration policies should have been blindingly obvious quite some time ago.
The figure below compares the five-year increase in Canada’s population to the five-year total of housing completions from 1970 through 2015. (The figures for 1970 represent the 5-year totals for 1966-70, and so on.)
Graphic credit: Janice Nelson.
Note how there was essentially no trend in either series over this period. The average annual increase in population starts out at 322,000 in 1966-70, gets as low as 255,00 in 1982-86, as high as 386,000 in 1988-92, and ends up at 341,000 in 2011-15. The average annual housing completions starts at 171,000 in 1966-70, gets as low as 153,000 in 1981-85, as high as 242,000 in 1973-75, and ends up at 183,000 in 2011-15.
Note also how, allowing for the ebbs and flows of the housing cycle, there is a rough correspondence between the growth in the population and the number of housing completions to accommodate that growth.
Now, look at what happens when we extend this series out to 2023.
Graphic credit: Janice Nelson.
Some of us saw the problem from rising immigration numbers unmatched by material increases in housing completions quite some time ago.See here and here, for example. But it wasn’t until this year, and only after Canadian public opinion had turned decidedly negative against high immigration levels, that the federal government made a tentative, temporizing, reluctant admission that Canada’s current housing crisis may, in part, be a function of the fact that immigration levels may have gotten somewhat ahead of the country’s capacity to build new housing.
The federal government has announced its intention to dial back on some of the policies that had allowed non-permanent resident (NPR) numbers to grow so dramatically. We will have to wait until later this fall to see what the annual targets for new permanent residents (PR) will be for the next three years.
Recently Pierre Pollievre stated that a Conservative government would set immigration levels such that population growth would be below the rate of growth in jobs, housing, and health care.
Despite this acknowledgement that there may have been a short-term problem caused by immigration numbers getting ahead of housing construction, there still seems to be a dominant opinion that the problem is primarily a supply problem. The current crisis is presented as primarily one of sequencing. Canada should have put in place the policies that would have significantly boosted housing production before ramping up immigration numbers.
Implicitly, this argument posits that there was nothing inherently wrong with the objective to expand Canada’s population at a much higher rate than the average increase of 313,000 per year in the 50 years before 2016 if we had only removed the constraints holding back higher housing construction beforehand.
The principal target of these supply-side arguments is municipal zoning and “NIMBYism” that, it is argued, irrationally and unfairly constrains Canada’s ability to build homes at a faster rate. Hence the federal government’s national housing strategy ties housing funding to municipalities’ willingness to permit and speed up densification zoning. The federal government claims that its housing plan, embodying these measures is a “bold strategy that will unlock 3.87 million new homes by 2031.”
The most homes built in any eight-year period in Canada was 1.91 million—and that was back in 1972-79. Put aside for now the plausibility of building twice that number in the next eight years. The point I want to make here is that this reflects an unextinguished belief that Canada can build its way out of its housing crisis.
To be fair to the current federal government, they are not alone in this belief. The Conservative’s housing policy, announced seven months before the government’s housing plan, focuses on constraints to building more houses, and would tie federal infrastructure funding to housing starts in municipalities. Nor are the proponents of growing Canada’s population through higher immigration levels going away. They too assert that we can build our way out of our housing crisis.
This notion that Canada can build its way out of its housing crisis and that we can grow our population at a significantly higher rate than the pre-2016 rate is a dangerous delusion. To the extent that it continues to animate Canadian immigration and housing policies, it will further impair the standard of living and quality of life in Canadian communities. The damage done by this will fall disproportionately on younger Canadians who bear the greatest burden of unaffordable housing.
I will lay out the argument for why this is so in a series of forthcoming articles tackling this important topic.
