Canada Is Now Completing 18 Homes For Every Person The Population Grows

Canadian homebuilding lagged in the past, but it now far exceeds population growth. CMHC data shows home completions started to outpace population growth last year. By the fourth quarter, there are now 18 homes completed for every person the population grows. Curiously, home prices have been soaring in growth.

Canadian Homebuilders Are Still Hammering Out Homes

Canadian real estate developers are busy delivering a massive amount of supply. There were 50,938 homes completed in Q4 2020, down 11.2% from the previous quarter. Despite the minor setback, new home completions are up by over 12.9% from the same quarter last year. Developers have been so busy, there are shortages from labor to lumber. It was the largest Q4 for completions since 2018. Before that, a Q4 hadn’t seen this many completions since 2008. 

Population Growth Is Virtually Non-Existent In Canada

Population growth isn’t moving at nearly the same pace as construction. Canada’s population grew by 2,767 people in Q4 2020, down 89.1% from the previous quarter. That works out to a decline of 98.7% from the same quarter a year before. A lack of immigration is the primary reason this number fell so sharply. 

Canada Completed 18 Homes Per Person Added To The Population

The trend of higher and higher completions per person just reached something rarely seen outside of an overhang. The ratio works out to 18.4 homes per person added to the population. It’s about 7x the quarter before, which was already a substantial 2 homes per person. For context, the average household is 2.9 people in Canada. In an optimistic scenario, annual completions are now larger than the average targeted household formation growth. It’s… a lot of supply, to say the least. 

Canadian New Home Completions Per Person

The number of new homes completed per person added to the population in Canada.
Source: CMHC; Statistics Canada; Better Dwelling.

There’s a lot of things that come to mind when looking at these numbers, but home prices are at the forefront. We’re told home prices should slow as more supply is delivered, or even fall. Now we’re seeing deliveries of homes far exceed household formation, but price growth is accelerating.

It’s no wonder Canadian banks have started saying this has nothing to do with supply. It also makes a lot of sense now that the government said homes are affordable for foreign incomes, but not great for Canadians. Investors are likely waiting on significant inventory to sell when borders reopen.

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  • GTA Landlord 3 years ago

    The number of investors buying new homes is between 40 to 60 percent. Probably a ton of deadweight inventory waiting to sell after a pull back. No one lists when prices are rising.

    • Ian Brown 3 years ago

      In Vancouver, even a buyer that’s an end user thinks they’re an investor for some reason.

  • Ahmed 3 years ago

    Even at optimal household formation numbers, the number of homes being completed is much higher than needed.

    They should keep building, but the government is kidding themselves if they think it’s going to bring prices down.

    • D 3 years ago

      >they should keep building
      That’s sound nice but as we know most of these homes are poorly built. If people think the Chinese ghost cities were total scams then they need to take a look at what home builders in Canada are pumping out. In Australia the quality of homes and apartments are so poor that they’re literally falling apart and cracking.

    • Joe B 3 years ago

      Spot on. As long as investors keep scooping up new supply and cornering the market, prices will remain highly inflated. The Government is in a tough spot because if they try to curb price manipulation, it means they have to admit there was a problem in the first place that happened under their watch…

  • Peter 3 years ago

    If prices are rising 10% per year, there’s no point even filling the units. Might as well buy as many as possible. Negative real rates are a heck of drug.

    This government is reckless enough they would try to inflate their assets for as long as possible so they can print fake growth to use in ads.

  • Robert 3 years ago

    Immigration targets (if successful) will bring over million people in next few years. Also most of “new supply” is shoebox condos. Would be great to get some stats on how many family size homes getting built. I’m sure it’s well below immigration targets

    • Jimmy 3 years ago

      A million isn’t enough we are on pace for 350,000 housing starts a year.

      Need more like two million in next two years to keep up.

  • D 3 years ago

    Doesn’t matter, the economy is projected to grow this year so all is well while Canadians continue to suffer.

  • Bala 3 years ago

    let’s say
    number of new houses completed= 1;
    population growth = 0
    new houses completed/population growth=∞.
    home per new person of 18 in Q4 2020 is expected as the border has been shut for immigration..

  • Ashley 3 years ago

    Many parts of Toronto and Vancouver might just become Ghost Cities, similar to what happened in China. Good thing about China, it was not totally reliant on real estate as is Canada.
    Builders kept building because prices were going up and people kept buying because prices only go up. Eventually chinese govt. had to step in to deleverage as this was becoming an economic disaster. I hope Canada has a plan to deleverage aka soft landing, as Canada neither has another sector nor the scale to absorb the slack.

  • Dale Ritch 3 years ago

    I appreciate your wonderful website.

    According to my calculations (based on data in your blog), more than 108,000 housing units were completed in the last two quarters of 2020 in Canada.

    Thus, it appears likely that more than 200,000 housing units were completed in 2020. Since there is no population growth due to the pandemic a huge amount of unoccupied housing units have been added to the countries housing stock.

    Please keep in mind that most of these housing units are condos in downtown urban areas.

    Furthermore, it seems likely that the trends have continued into the first four months of 2021 and we will have another 200,000 empty units added in 2021.

    Finally, the Pearson Airport has been further closed to flights from the Indian subcontinent and Doug Ford is demanding the complete closure of non-essential flights into Pearson.

    I suggest that the long-due correction (crash?) in the Toronto housing market will begin in the condo area with cancellation of thousands of condo units leading to massive layoffs in the construction industry and a recession in Ontario.

    There is hope for the millenials after all but not because of politicians or the Bank of Canada!

  • Dale Ritch 3 years ago

    I calculated approx. 108,000 completions in Canada in the final two quarters in 2020 based on data in the blog.

    It appears that more that 200,000 housing units, mostly condos in downtown urban areas, were added to the housing stock in 2020 with virtually no increase in demand.

    No reason not to assume that continuing trends will see another 200,000 housing units added to the housing stock this year with no further increase in demand as the lockdowns at the airports will continue and intensify.

    I suggest that the long awaited real estate correction in Toronto will start in the downtown condo sector with cancellations of condo projects and mass layoffs of construction workers causing a recession in Ontario.

    There may be some hope for the millenials after all!

    • Ashley 3 years ago

      This would bring down the Canadian economy with it, something govt. has been trying to avoid by pumping real estate and marketing immigration. There isn’t another sector/industry that can absorb extra workers from construction layoffs. Even attracting high skilled immigrants will be a challenge given changes at US and re-opening of Australia.
      I guess this is where Universal Income Benefit and $101 billion will help.

    • Average Man 3 years ago

      Let the bodies hit the floor!

    • World Class 3 years ago

      I think the issue is what’s stated above – is that a high percentage of completions are going to investors who do not care if they are negative cap or empty. Real estate, especially in Toronto and Vancouver, has been a risk-free investment for 10+ years. The banks carry no risk, investors carry no risk, as government has signaled that they will prop up prices and Canadians are almost universally bullish on real estate. I fully believe the problem now is worse in Canada than it ever was in the US with speculation – as it seems like everyone you talk to believes this is the track to investment riches. Most people who invested in real estate in the past counted on returns from renting, now retail investors could care less and are looking at the 30-50% YOY increase as a way to get in.

    • Kris 3 years ago

      Millenials don’t want to live in shoebox sized condos. We need more single family sized homes and units. 500 sqft feels like a prison cell.

  • David Gibson 3 years ago

    The real reason for the “startling” increase in house prices is the hugely inflated LAND values.

  • Joe sixpack 3 years ago

    If we build it they will come !


  • Paul Wood 3 years ago

    Hmmm, I love how stats can say anything you want them to. You are quoting a statistical fallacy known as half-numbering. You’ve cherry-picked one data point (birth/death rate) and ignored significant additional factors (like 41,000 new immigrants for Q4 / 2020. That sure makes your headline look far more interesting than it is…

    • Slow Bus 3 years ago

      They can only say whatever you want if you don’t read the statistics. Population growth isn’t the same as birth and death, and the author even explicitly states that.

      Household formation, including immigration, is projected to be 150,000/year. Canada is delivering 200,000/year.

      Formation goals weren’t even met this year, but they still delivered 200,000

  • Jimmy 3 years ago

    Wait a minute. 18.4*2.9=53.36.
    Based on paper napkin math we are building housing 50 people for each new person added to the population.
    The industry and government not to mention general consensus is that we need to build more housing.
    I guess the best thing to say is to be careful what you whish for.

    • Ethan Wu 3 years ago

      I think you mean per average household formation, not per person. Per person is correct.

  • Scott Mc 3 years ago

    What the article doesn’t say is the government approved over 400,000 new folks in 2020 and has stated they want 440,000 in 2021. Lift the flight restrictions and there is a need for a lot more than 50,000 homes…

    • Jason Chau 3 years ago

      What the government doesn’t say with those approvals, is there isn’t enough jobs for Canada to actually employ that many people. Housing jobs are outpacing any other sector.

      Immigrants are basically coming to sell another demographic of immigrants on housing.

    • Jimmy 3 years ago

      We are on annual pace of 350,000 housing starts. Let’s hope people come. If not we are going have more empty.

      They may come or may not? Can we keep up immigration at these levels indefinitely?

  • Jimmy 3 years ago

    Let me try again.

    For every one person the population grows by we are building enough housing for 50 new people.

    More logical?

Comments are closed.