Canada has 2.4 million households in what a new report from the Office of the Parliamentary Budget Officer in Ottawa describes as “core housing need.”
That number is expected to increase to 2.6 million by 2027.
The report authored by financial analyst Ben Segel-Brown and economic analyst Zachary Vrhovsek is based on a review of the federal government’s 10-year national housing strategy, which was launched at a news conference in Vancouver in 2017.
“Increasing core housing need is being driven by higher interest rates and the slow adjustment of the housing stock to higher immigration,” said the report, which was released Dec. 12 in response to questions from members of parliament and the House of Commons Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities.
A household is in core housing need if their home is either in need of major repairs, does not have enough bedrooms for the household size, or the cost of rent or mortgage — plus utilities, property taxes, etc. — exceeds 30 per cent of the household’s before-tax income.
A household is also deemed to be in core housing need if the local median cost of “adequate suitable housing” is more than 30 per cent of the household’s before-tax income.
Core housing need is a Canada-specific measure of housing need defined by the Canada Mortgage and Housing Corp. (CMHC) and applied across a variety of Statistics Canada publications.
Rapid Housing Initiative
The overall target of Canada’s housing strategy is to remove 530,000 households from housing need by 2027-28. That goal rests primarily on targeted assistance via rent subsidies, sustaining community housing and direct support for construction and renovation.
Other programs such as the Rapid Housing Initiative have been launched since 2017, which the authors account for in crunching the numbers. Overall, they expect these programs to assist about 606,373 households by 2027, of whom approximately 78,077 will be removed from housing need.
Without the housing strategy, the authors estimated there would have been 51,452 more households in need in 2024. At the same time, they project that by 2027, there will be about 926,000 more households in core housing need compared to the launch of the housing strategy in 2017.
That prediction is despite “real spending” on housing affordability per person being 30 per cent higher over the term of the federal strategy, at an average cost of $168 per person per year.
That’s an increase from $129 per person per year over the prior 10 years.
The report was released before Prime Minister Justin Trudeau announced his resignation Jan. 6 and prorogued, or suspended, Parliament until March 24. With an election expected in the spring or soon after, it’s not clear whether the strategy will continue.
East Hastings rental towers
That uncertainty concerns Kristen Devaney, chief financial officer of PCI Developments, which has benefited from the government’s low-cost loan program.
The company’s 14-storey rental housing project at 3600 East Hastings St. went ahead with a $46.6-million loan, while a $58-million loan helped finance the neighbouring 14-storey rental tower at 3608 East Hastings St.
That money came via the federal strategy’s Rental Construction Financing Initiative.
At least 30 per cent of the homes in each building rent for below-market value, said Devaney, noting the company has 6,000 rental units in the development pipeline.
“The financing programs under the national housing strategy have been very important in enabling us to deliver rental housing and homes at below market rent,” she said Monday.
“Any uncertainty about the financing programs through CMHC would introduce more risk and make it more challenging to get new housing projects off the ground. So ideally, the programs that are currently in place remain, but also continue to be improved upon, regardless of the federal political party that's in power.”
Devaney said building rental housing in today’s market continues to be challenging.
“It's been a tough few years for housing development, with inflation, escalating labour and material costs, higher interest rates — a lot of those remain challenges going forward,” she said.
“So we need the involvement of all levels of government, in addition to the efforts of the private sector to move new housing projects forward and deliver those units that are needed.”
Rent increases
The report noted costs for renters increased primarily because of higher rents for new tenancies. CMHC’s latest Rental Market Survey indicated the average increase in rent for turnover units in 2023 was 24.1 per cent.
That means a new tenant was being charged 24.1 per cent more than the former occupant of the same unit.
“Increased immigration contributes to higher rents but also, over the longer term, towards increased supply which moderates those higher rents,” the report said.
“Recent increases in rents are primarily attributed to the delay between increased demand from immigration and the adjustment of housing starts and, ultimately, the housing stock.”
Conversely, the report added, reductions in planned immigration across 2025-27 will reduce the upward pressure on rents, partially closing the gap relative to what would have happened if immigration had continued at historical rates.
$6.1 billion annually
More facts about the national housing strategy:
• Spending on programs to address housing affordability averages $6.1 billion annually over the term of Canada’s housing strategy. This represents a 50 per cent increase in the purchasing power of federal spending compared with the prior 10 years.
• Additional program spending has been primarily allocated to the CMHC’s Financing for Housing programs, which received a $1.3 billion per annum increase in funding.
• Total spending on housing affordability is estimated to be $17.5 billion annually, with 65 per cent attributable to tax expenditures.
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