Building Permits, October 2023

The total value of building permits in Canada increased 2.3% from September to $11.2 billion in October, led by gains in the non-residential sector. On a constant dollar basis (2012=100), the total value of building permits was up 2.2% to $6.4 billion in October.

Institutional projects lead non-residential construction intention gains

The total value of non-residential sector permits increased 5.3% to $4.1 billion in October, with gains being concentrated in Ontario (+16.0% to $2.0 billion). This was attributable to a significant increase in construction intentions in the institutional component (+29.2% to $1.4 billion). In October, the largest permit issued was for the construction of a new hospital wing in Toronto.

Construction intentions in the industrial component (+11.9% to $973.8 million) also saw gains in October, while the commercial component (-10.5% to $1.8 billion) posted its second consecutive monthly decline. Permit values in the commercial component have been trending down since the record high of $2.9 billion in March. Year over year, the value of commercial permits issued in October ($1.8 billion) was 11.9% less than the value of those issued in October 2022 ($2.0 billion).

Total value of residential permits relatively unchanged compared with previous month

The total monthly value of residential building permits edged up 0.6% to $7.1 billion in October, following a 2.8% gain in September. In October, gains in residential permit values for Ontario (+7.4% or +$199.9 million), Alberta (+14.8% or +$125.5 million) and Quebec (+7.0% or +$89.0 million) offset declines in the remaining seven provinces. Year-over-year residential construction intentions were up 16.1% in October compared with October 2022. Across Canada, 18,100 new dwellings in multi-unit buildings and 4,600 new single-family dwellings were authorized.

Source: Statistics Canada

Short-Term Rentals Are Adding to Canada’s Housing Crisis, Report Finds

Short-term rentals are contributing to Canada’s ongoing housing affordability crisis, a new report suggests. Canada currently has 235,000 short-term rental (STR) listings on platforms such as Airbnb and Vrbo representing the equivalent of 1.4% of Canada’s overall housing stock or 4.9% of the country’s long-term rental stock, the Dec. 4 report from Desjardins found.

“Studies overwhelmingly show that neighbourhoods with a high prevalence of STR listings have faster‑rising rents, lower vacancy rates for long‑term rentals and higher home sale prices,” said Desjardins senior director of Canadian economics Randall Bartlett and colleague Kari Norman.

Canada, like many other countries, is in the throes of a housing affordability and rental crunch. Canada Mortgage and Housing Corp. estimates that Canada will need to add roughly 3.5 million units to the current pace of construction by 2030 to bring housing prices back within reach.

Renting isn’t much better. National rents have been on an upswing, hitting $2,178 in October after bottoming just below $1,700 in spring 2021, said the latest report from rental platform High interest rates have been blamed for forcing people who cannot afford the mortgage payments to rent rather than buy, straining the supply of rental units in the market.

Desjardins estimates the national vacancy rate was 1.9% in 2022 — significantly below the long-term average of 2.7%. 3% is considered the balanced market rate. Tight vacancy rates are prevalent across the country, not just in major urban centres such as Toronto and Vancouver, the economists said.

STRs also have a role to play in the squeezed rental markets. “The shift away from long‑term rental (LTR) agreements removes units from the rental housing stock. This puts upward pressure on the rents paid by local residents by constraining supply. In addition, investors looking to purchase homes for use as full‑time STRs are in direct competition with would‑be owner-occupants. These impacts have commonly been dubbed the ‘Airbnb effect,’” Norman and Bartlett wrote.

The Airbnb effect caught the attention of the the federal government in its Nov. 21 budget update. Finance Minister Chrystia Freeland announced that expenses related to STR income would no longer be eligible for income tax deductions in areas where STRs are prohibited or properties break the rules on licensing, permitting or registration requirements.

The Desjardins economists, however, aren’t convinced this will do much to ease housing pressure. “While every little bit counts, we’re skeptical that these amounts will be enough to level the playing field between STRs and LTRs,” Norman and Bartlett said.

They aren’t the only ones. In a column for the Financial Post, accountant Kim Moody warned that the new regulations would force owners to not report income.

Despite these concerns, more cities and provinces are implementing short-term rental regulations. Toronto requires people renting for fewer than 28 days to obtain a license from the city. Other cities including Ottawa require permits to ensure that social housing units aren’t used as STRs. And in some jurisdictions, condo boards are allowed to ban STRs in their buildings. Vancouver has a policy that only allows short-term rentals in primary residences.

Provinces are stepping in, too. British Columbia passed the Short‑Term Rental Accommodations Act in October 2023 to try and return an estimated 16,000 commercial STRs to the long-term market. The act includes platform accountability: if a listing doesn’t include a valid business license, the STR platform must remove the listing at the request of the local government. Platforms are also required to share listing information with the province, which may then share it with local governments.

Quebec enacted the Tourist Accommodation Act in 2021. Owners of units to be rented for 31 days or less must request a notice of compliance from their local municipality and then apply for a registration number. Platforms are required to have proof of permits and remove listings without permits from the system.

But Desjardins said governments will need to do more including setting specific and measurable goals, allocating sufficient financial and human resources to implement and enforce regulations, demanding accountability and disclosure of data from STR platforms. “As hosting platforms evolve, STR policies aimed at non‑principal residence units will need ongoing monitoring, evaluation and adaptation. This could help ensure the future stability of the long‑term rental and housing markets in cities large and small nationwide,” they said.

Source: Financial Post
Source: The Star

B.C.’s Dramatic Plan to Tackle Housing Crisis Sparks Alarm About Unintended Consequences

As provincial governments across Canada struggle to bring down the cost of housing and increase its availability, British Columbia, where some of the country’s least affordable housing markets are concentrated, has spent the past year making a series of major policy changes aimed at getting people into homes.

The province’s NDP government has set housing targets, and moved to require municipal governments to meet them. It has put in place measures to ensure major transit nodes become dense neighbourhoods, and created a series of preapproved home designs that builders can use to construct four-unit multiplexes with relative ease. And it has done away with time-consuming public hearings on building projects that conform with cities’ official community plans.

These are just a few among 22 housing-related announcements and legislative actions by the province in the past year – most in the past two months, many of which have passed in the legislature quickly, with little debate. The breakneck pace of housing reform in B.C. has far outstripped efforts by other provinces and the federal government.

But while B.C.’s efforts have been lauded by some observers for tackling the housing crisis head on, the flurry of changes has provoked concerns among others, who worry the dramatic shift will have unintended consequences.

Among them is former NDP premier Mike Harcourt, who has blasted the government’s plans, especially for dense housing near transit, saying they are “arbitrary, top-down changes in local zoning and development controls” that will threaten existing low-cost apartments, heritage areas and overall regional planning.

Trish Mandewo, president of the Union of B.C. Municipalities, which represents cities in the province, has said that although civic politicians welcome housing reforms, the province’s efforts have been a mixed bag. “Our members are concerned these pieces are not quite thought through. We’re hearing about a risk of displacement,” she said, referencing fears that renters in older apartment buildings and houses could be ousted in favour of new development.

The provincial government has not said what measures, if any, cities will be allowed to put in place in order to make sure renters are compensated if their buildings are redeveloped. It’s also not clear how cities will pay for the infrastructure that needs to go along with new development, such as sewers, water service, roads, parks, hospitals, schools and libraries.

Even housing advocates who see positives in the province’s efforts say not enough is being done to protect renters and build social housing. “I think what they’re doing is big, and it’s a shame this qualifies as big because there are so many gaps,” said Alexandra Flynn, director of the University of British Columbia’s Housing Research Collaborative. “It’s very market-based. We’re not approaching this as, ‘let’s get everybody housed,’ but instead, ‘let’s build a lot of housing and hope that solves the problem.’”

B.C’s annual spending on new subsidized housing has risen from $38-million to $641-million since the NDP was elected in 2017. The province budgeted $4.2-billion in 2023 for all of its housing programs.

B.C. Premier David Eby told a packed housing convention in Vancouver last month that his government of “known radicals” is going to push for even more housing-related changes in the months ahead.

And provincial Housing Minister Ravi Kahlon said in an interview that he is equally resolute. He said the province’s housing actions to date are part of a strategy, and that he expects to introduce legislation in the new year to “reform Vancouver’s decision-making process” by amending the Vancouver Charter.

The province will also be kicking off its BC Builds initiative, which will focus on taking charge of new construction on vacant or underutilized properties that belong to various levels of government.

Source: Globe and Mail