Is There Really a Housing Shortage?

This is a picture of Team UCC, at a recent team lunch. 😊

Most of us anyways. There were a few key team members away on vacation. And they were greatly missed!

It’s not often that we are able to all together as a group. But it’s a lot of fun when we do!

It was a great afternoon.

My only regret is ordering a salad.

How do you go to the Loose Goose, and not order to the Chicken Wings??

I’m still mad at myself for that!

In the picture on the right, I was going on and on about something real estate related.

When you get a bunch of mortgage people in the room, the conversations often become about real estate, lol…

Most recently, a hot topic real estate debate I’ve been hearing is whether there really is a housing shortage in Canada.

For several years now we’ve been told that there is a real estate shortage.

The argument is that there are more people immigrating to Canada, than housing being built, therefore there’s a shortage.

All of the sudden, now that the housing market has cooled, the narrative is changing.

There are a lot of people out there saying that if houses aren’t selling and builders aren’t building, then obviously there are enough houses for those that need a roof over their head.

Truthfully, these are both very simplistic arguments.

It’s not only about the number of people coming to Canada versus the amount of new housing being created or available.

One factor to consider, is the area that people are moving to.

And one thing I can assure you, is that Ontario is an outlier compared to the rest of Canada, in terms of where the immigration flow is greatest.

And to take it a step further, of that immigration into Ontario, the bulk of it is in the Greater Toronto Area.

So that’s probably where the “not enough houses” narrative came from from.  If you’re in these pockets where the population is growing the fastest, then yes, new housing inventory is likely not keeping up.

But most recently, even in the GTA, real estate isn’t selling.

This is what has led many to conclude that maybe we don’t actually have a real estate shortage.

But hold on.  Again, that’s a very simplistic view.

The main reason housing isn’t selling is because of affordability.

Or lack thereof.

As affordability has changed, we’ve seen people who would have liked to purchase a property, be forced out of the buying market, and into the rental market.

And as you would expect, year-over-year rent inflation has been through the roof. It is extraordinarily high.

What we’ve also seen, is people whose first choice was to live in the GTA, decide to live elsewhere.

So, it’s not that housing is no longer in demand…

But rather, more and more people are now choosing locations that are more affordable, relieving some of the stress on the bigger markets.

AND activity has shifted from the buyer/seller market to the rental market.

If there wasn’t a supply imbalance, then you wouldn’t see rent prices increasing as much as they have.

That shows that there is more demand, than there are rental properties.

Similarly, during the pandemic era when affordability was high, it was that same supply/demand imbalance in the buy/sell market, that drove housing prices way up.

Ultimately, if there was enough housing available in the areas that people want to live, then there would likely be price stability in both the rental market and the buy/sell market.

At least that’s my own personal, simplistic point of view.

Everyone’s situation is different, but it’s never a bad thing to own something that has less supply than there is demand.

In this case, that “something” is a housing in Ontario.

And if you need a mortgage for that “something,” I know somebody you can call. 😊

Until next time,
Vince

Taking it one step further, you need to consider the type of housing being built.

Most recently, the ration of condo to single family homes has been very lopsided. There have been significantly more multi-unit type dwellings than detached homes being built.