November 14, 2022
Real Estate News
RYPM
Builders needed
to construct homes, say officials at construction plants, who welcome new
immigration targets
Finding enough workers to assemble pre-built walls and
floors at the Etobicoke plant where Paul Askett manages manufacturing is a
grind.
He's hoping that a record wave of new Canadians
expected over the next three years will help. Demand for the
factory's product — installed in Ontario housing — is surging,
but Askett says the assembly floor crew is usually short by about 10 per
cent.
"It's definitely been a hurdle. That's for sure. The
pandemic has kind of changed everything for us," said Askett, the
vice-president of manufacturing for Brockport Home Systems.
This construction business is one of many sectors struggling
to find workers, with about one million jobs sitting vacant across the country.
To help, Canada has just announced record
immigration targets — 1.5-million new Canadians within the next three
years — with plans to bring in 500,000 people in 2025. Federal
officials say that will help boost the economy, but the targets have also
spiked anxiety about where all these new citizens will make their homes, given
the country's ongoing housing crisis.
Newcomers need more than just housing
Askett says he's encouraged by the new targets as his
company often hires and trains new Canadians.
"For us it's definitely positive news," he
said. "Yeah, we look forward to any newcomers because we can coach,
we can train and advance people and hopefully give them gainful
employment."
Vancouver property tax expert Paul Sullivan, of Ryan ULC, a
global business tax software and real estate consulting firm, says Canada needs
a better plan to both boost a battered economy and ensure there's
enough housing and services for incoming Canadians.
"We build approximately 265,000 homes per year. And
here we are talking about 500,000 immigrants coming in per year. We're under
supplied before we even talk about this immigrant influx," said Sullivan.
"It's not just houses, it's daycares, it's transit, it's
hospitals. What's the plan, guys? Like, you can't just keep throwing people at
it."
New immigrants won't impact home prices: expert
While some worry that a record influx of new citizens will
spike house prices even higher — data experts say that fear has no solid
foundation.
Murtaza Haider, director of the Urban Analytics Institute at
Toronto Metropolitan University, studies the data around immigration and real
estate in Canada.
Haider says previous studies suggest the federal plan to up
immigration by about 150,000 to 200,000 extra people per year (living in
households of three or four), will have little impact.
"My guess is that most new immigrants will … not
have cash or enough savings to go and start buying homes," he said.
"I don't expect them to exert pressure on housing
prices as much, but more so on the rental demand."
Haider said it takes about two or three years for new
immigrants to become active in the ownership cycle.
"So if we're bringing in half a million immigrants in
2023 and another half a million in 2024, I would assume that they would be
putting pressure on ownership or owned housing in the year to 2026, 2027."
He said past studies — and the experience during
lock downs when housing markets overheated during the pandemic, when
immigration was frozen — prove immigration is not what spikes housing
costs.
"By December 2020 we had an unprecedented increase in
housing prices in Canada at a time when there was almost zero immigration
because airports were closed."
Housing shortage goes back decades
Haider believes the real cause of the housing
shortage is a systemic failure to ensure enough stock was constructed, a
problem he says goes back decades.
"Governments have woken up to the realization that we
have not built enough housing at the bottom," he said.
BuildForce Canada, an organization that studies labour force
data for the construction industry, forecasts that
the Canadian construction industry will need more than 1.2-million workers and
need to recruit 171,850 workers by 2027. They expect to be short by 29,000
workers once baby boomers retire.
The construction industry will be short nearly 29,000 workers
by 2027
Between 2016 and 2021, immigrants made up four-fifths of
Canada's labour force growth. More than half of recent immigrants — 748,120 of
the 1.3 million people admitted to Canada between 2016 and 2021 — entered the
country under the economic category.
"Immigration is the primary driver of population growth
in Canada. Now, in order for us and our economy and businesses to grow, they
need more workers," said Haider.
Ricardo Tranjan, a political economist and senior researcher
with the Canadian Centre for Policy Alternatives, says vigorous immigration is
crucial to more than just the construction industry; newcomers infuse the
economy with life, he says, and Canada has always relied on immigration to
meet labour force needs.
"The labour shortage that we are seeing right now
— which is one of the factors that is impacting the rise in inflation
— is in part due to the fact that in the past couple of years we have not
welcomed enough immigrants into the country. So the fact that we are going to
have high targets and try to attract more, it's good news."
Census figures released last month revealed that immigrants
and permanent residents now account for 23 per cent of Canada's population
— an all-time high.
According to Statistics Canada, immigrants who arrived
between 2016 and 2021 are younger on average than the rest of the population
and have been critical to filling jobs.
Initial pressure will be in rental market
Economists say any pressure on housing markets from incoming
Canadians initially shows up in rental markets, and Tranjan said
stricter vacancy and rent controls could help alleviate soaring rents.
"Canada has very loose legislation around increases in
rents in many provinces," he said.
"Rents can go up by any amount from one year to
another. Almost no provinces have rent controls on vacant units and
all of that really drives the prices up."
Tsur Somerville, professor at the Sauder School of Business
Strategy, says that historically, newcomers settle in cities like Toronto,
Montreal and Vancouver, where housing markets are already stressed, so concern
about what increased immigration means for housing is not out of place.
"If you bring in a lot of people who are competing in
the market, folks at the bottom, the poorest folks are going to be the ones who
really get hurt," he said.
Though some municipalities are already streamlining building
approvals, or now allowing laneway homes to increase density, more rental
units are needed, according to experts and builders.
But builders say they can't help ease the housing crunch
without workers.
Tad Putyra, president of Great Gulf Low Rise, the parent
company of the chronically short-staffed Etobicoke pre-fab plant
Brockport Home Systems, says the pre-built walls and floors they
manufacture help offset the lack of skilled trade workers on
construction sites because the product can be built no matter the weather,
but not without workers.
That's why he applauds Canada's record-high immigration
targets, saying it's good for business.
"You know it's a chicken and egg situation," he
said. "We need people to build the houses which eventually will be
occupied, you know, by the people who build them and vice versa."
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