The data from Canada’s latest Housing Market Index (HMI), published quarterly by the Canadian Home Builders’ Association (CHBA), fell yet again this quarter to new record lows for housing purchase/start prospects of all housing forms for ownership. CHBA’s single-family HMI reached a low of 23.3 out of 100, while the multi-family HMI was 16.8. The dismal scores reflect the steady erosion of home builder sentiment amid continued trade-war impacts and a lack of government focus on housing policies that support the homeownership goals of the vast majority of Canadians.
Fewer housing starts for homeownership
Housing starts data underscores the problem: there have been nearly 10,000 fewer housing starts for homeownership across Canada so far this year compared to last year, due to lack of consumer confidence, increased construction costs, and punitive taxation at all levels of government that continues to keep the next generation of Canadians out of homeownership. This despite the federal government’s stated need to be building more homes to address Canada’s housing shortage, and even though most Canadians still want to—and should be able to—own their own home. The federal government’s focus to direct housing policy towards purpose-built rental and government-subsidized social housing units is fine but without more policy action to support homeownership, the outlook is bleak, and this needs to change.
The next generation of Canadians rightly expects that if they have well-paying jobs, they should be able to buy a home, and more policy action can support that. Not correcting declining homeownership rates only furthers the divide between haves and have-nots. Budget 2025 is an opportunity to address this (see CHBA’s Pre-Budget Submission here), but it is unclear if such measures are forthcoming.
Layoffs within the sector beginning in earnest
After months of depressed market activity for housing for ownership, made worse by the promise of a GST rebate for first-time buyers that still isn’t available and has kept would-be buyers on the sidelines, layoffs within the sector have begun in earnest in the hardest hit provinces. Builders have held on to employees and tradespeople as long as possible through the downturn, given the difficulty in rehiring, but conditions are now bad enough that 41% of HMI-surveyed builders across Canada stated that they or their subcontractors have had to lay off workers without plans to rehire. Ontario is particularly dire, with the single-family HMI at 11.7, the multifamily HMI at 4.4, and a resultant 64% of builders having to do layoffs. The latest residential construction payroll data shows the largest 12-month employment loss since the sub-prime crisis in 2009, excluding the pandemic.
“Make no mistake: if we don’t make changes to our housing policies that better support the construction of housing for ownership, including reducing taxation at all levels of government, we will continue to steadily see homeownership rates dropping in Canada. What’s more, there is no chance of doubling housing starts to 500,000 units per year if middle-class Canadians can’t afford buy any form of home of their own,” said CHBA CEO Kevin Lee.
Declining homeownership impacts everyone
Given the ongoing challenges to build and sell homes, the HMI shows 39% of all builders have already shifted, or are looking to shift, to rental developments, continuing a policy-driven trend that is moving Canada towards a country of renters rather than owners. Canada needs housing of all forms, and the trade-off of building housing for rental rather than for homeownership, which has been occurring in recent times, flies in the face of what Canadians want, deserve, and with more policy change could have. We need more social housing and more rental housing, but we also need more housing for ownership. In 2021, about 70% of housing built was for ownership. Now that number is down to about 50%.
A fall in homeownership rates impacts everyone. When people can’t move into a home they own, they stay in rental units, which drives up rental demand and prices, which in turn puts more people in need of housing assistance. Having a healthy housing continuum, including for the more than 95% of Canadians who live in non-government-subsidized market-rate housing, is extremely important. Focusing only on government-subsidized housing and rental housing will continue to create problems across the continuum, from homelessness right up to homeownership. It will also mean those with the means to afford a home will continue to get richer, while those restricted to rental will have their financial futures restricted, increasing the divide in economic well-being between owners and renters.
How to get homeownership back on track to improve affordability for all
Through 2023 and 2024, the federal government, through its budgets and new “Canada’s Housing Plan,” was taking extensive measures to support market-rate housing, including housing for ownership. But 2025 has seen that momentum stall. At the same time, the GST relief should be expanded to apply to all buyers of new homes so that those in starter homes can move up, and those in family-oriented homes can downsize, to both freeing up housing and creating more housing stock. In provinces like Ontario, where the starts are dwindling and layoffs are increasing, this is critical. But to get to 500,000 housing starts, GST relief is required everywhere, along with other measures. Housing starts for ownership will not get back on track without this type of change to taxation, along with change to development taxes at the local level that have increased over 700 percent over the past two decades.
“Supporting affordable (social) housing is important, of course. But it should not be an either/or scenario where the government picks between housing for lower income Canadians versus market-rate housing for middle-class Canadians, including those seeking homeownership,” said Lee. We need much more of all kinds of housing to address the housing crisis, and if homeownership rates continue to fall, pressure on rental and social housing will only grow. Patience is running out for Canadians who expect they should be able to own a home, and they don’t see action that will directly support them,” said Lee.