Record Canada immigration target sparks housing anxiety, but experts say anxiety is unfounded

Finding enough workers to assemble the prefabricated walls and floors at the Etobicoke plant, where Paul Askett controls manufacturing, is a daunting task.

He hopes the record wave of new Canadians expected over the next three years will help. Demand for Ontario’s home-based factory’s products is skyrocketing, but assembly floor workers are typically about 10 percent short, Askett said.

Askett, Vice President of Manufacturing for Brockport Home Systems, said:

The construction industry is one of many sectors struggling to find workers, with nearly one million jobs vacant nationwide.

To help with this, Canada has just announced a record immigration target – 1.5 million new Canadians within the next three years – with plans to welcome 500,000 in 2025. Given the ongoing housing crisis in this country, it’s where all these new citizens build their homes.

Newcomers need more than housing

Askett says his company hires and trains new Canadians frequently, so he’s encouraged by the new target.

“For us, this is definitely positive news,” he said. “Yeah, we look forward to newcomers because we can mentor them, train people, advance them and hopefully give them paid employment.”

Vancouver property tax expert Paul Sullivan, a global business tax software and real estate consulting firm at Ryan ULC, said Canada needs to boost its battered economy and ensure there is enough housing and services for Canadians. He said there needs to be a better plan for doing so.

“We’re building about 265,000 homes a year. We’re talking 500,000 immigrants a year here. Before we even talk about this influx of immigrants, we’re in short supply,” Sullivan said. .

“It’s not just homes. Daycares, transits, hospitals. What’s the plan? Guys, we can’t just keep throwing people at them.”

New immigrants won’t affect house prices: experts

Some worry that the record influx of new citizens will drive home prices even higher, but data experts say the fears are unfounded.

Murtaza Haider, director of the Urban Analytics Institute at Toronto Metropolitan University, studies Canadian immigration and real estate data.

Most new immigrants don’t have cash or enough savings to buy a home. I don’t think they put that much pressure on house prices, but they put even more pressure on rental demand.– Murtaza Haider, Urban Analytics Institute, Toronto Metropolitan University

According to Haider, previous research suggests that the federal government’s plan to increase immigration by about 150,000 to 200,000 people a year (those living in households of three or four) will have little impact. increase.

“My guess is that most new immigrants… won’t have cash or enough savings to go buy a home,” he said.

“I don’t think they will put much pressure on house prices, but they will put more pressure on rental demand.”

Haider said it takes about two to three years for new immigrants to become active in the ownership cycle.

“So if we let in 500,000 immigrants in 2023 and another 500,000 in 2024, I think they will put pressure on ownership or owned housing in 2026-27. ”

He said past research and experience during the lockdown, when the housing market overheated and immigration was frozen during the pandemic, proves that immigration is not what drives housing costs skyrocketing.

“By December 2020, home prices in Canada, which had almost zero immigration due to airport closures, had experienced an unprecedented rise.”

Housing shortages have been around for decades

Haider believes the real cause of the housing shortage is a systemic failure to stock up on enough stock, and he said the problem goes back decades.

“The government realized we weren’t building enough housing at the bottom,” he said.

BuildForce Canada, an organization that studies construction industry workforce data, predicts that the Canadian construction industry will need more than 1.2 million workers and will need to recruit 171,850 workers by 2027. I’m here. .

Between 2016 and 2021, immigration accounted for four-fifths of Canada’s labor force growth. More than half of recent immigrants — 748,120 of the 1.3 million people admitted to Canada between 2016 and 2021 — entered Canada in the economic category.

“Immigration is the main driver of Canada’s population growth. Now we need more workers for us and our economy and businesses to grow,” Haider said.

Ricardo Tranjan, a political economist and senior fellow at the Canadian Center for Policy Alternatives, says positive immigration is critical, not just in the construction industry. Newcomers breathe life into the economy, and Canada has always relied on immigrants to meet its labor needs, he says.

“The labor shortage we are seeing now is one of the factors affecting the rising inflation, partly because we haven’t let enough immigrants into the country over the past few years. The fact that they are aiming high and trying to attract more people is good news.”

Immigrants and permanent residents now make up 23% of Canada’s population, a record high, according to census figures released last month.

According to Statistics Canada, immigrants arriving between 2016 and 2021 are on average younger than the rest of the population and play a key role in filling jobs.

The first pressure is on the rental market

Economists say the pressure on the housing market from Canadian immigrants will appear first in the rental market, and Tranjan said tightening vacancy and rent controls could help ease rising rents. said it is possible.

“In Canada, many provinces have very lax laws on rent increases,” he said.

“Rents can go up any amount from year to year.

Newcomers have historically settled in cities like Toronto, Montreal and Vancouver, where housing markets are already strained, says Tsuru Somerville, a professor at the Souder School of Management and Strategy.

“A lot of the people competing in the market, the people at the bottom, the poorest, are going to get really hurt,” he said.

Some local governments are already simplifying building permits or allowing back-street housing to be more densely packed, but more rental units are needed, according to experts and builders.

But builders say they can’t mitigate the housing crisis without workers.

Tad Petira, president of Great Gulf Low Rise, the parent company of Brockport Home Systems, a prefabricated factory in Etobicoke that is chronically understaffed, says the prefabricated walls and floors that his company manufactures are a result of skilled workmanship on the construction site. It has helped offset the shortage of trade workers in the United States. Products can be built regardless of the weather, but they cannot be built without workers.

That’s why he praised Canada’s record immigration target, saying it’s good for business.

“It’s a chicken and egg situation,” he said. “We need people who build houses. Houses will eventually be occupied by people who build houses, and vice versa.”