PBO Estimates 2.6 Million Canadian Households to Experience ‘Core Housing Need’ by 2027

December 12, 2024 TruthUSA

An estimated 2.6 million Canadian households will be in need of new housing by 2027, according to a report from the Parliamentary Budget Officer (PBO).

The report says a total of 2.4 million households are already in “core housing need,” which means their home is either in need of major repairs, does not have enough bedrooms for the household size, or is costing them 30 percent or more of their before-tax income.

The PBO says the increasing need is being driven by higher interest rates and inability of the housing stock to keep up with higher immigration levels.

By 2027, the number of families in need of housing will have increased by 926,000 since Ottawa’s National Housing Strategy (NHS) was first launched in 2017. The NHS aims to bring together private and non-profit sectors to create more affordable housing, and has goals of cutting chronic homelessness by 50 percent, building 160,000 new homes, and removing 530,000 families from housing need.

The federal government rapidly increased immigration rates beginning in 2020, resulting in the country’s population increasing from 38 million in July 2020 to an estimated 41.7 million by October 2024.

Available housing has not kept pace, leading to asking rental prices rising from an average of $1,769 per month in September 2020 to $2,193 in September 2024. The average home price in Canada increased from $581,000 to $718,000 over the same period.

According to the report, over the course of the NHS’s 10-year term, the federal government will spend an annual average of $6.1 billion on programs to address housing affordability. This number is a 133 percent increase from the average of $2.6 billion spent in the 10 years prior.

The report said while spending has increased for all NHS programs, the largest share of additional funding has gone to the Canada Mortgage and Housing Corporation’s “Financing for Housing” programs to support the supply of new rental housing, and the repair and renewal of existing rental housing. The programs received a $1.3 billion per annum increase in spending compared with the prior 10 years and accounted for 36 percent of the spending increase.

Meanwhile, the “Assistance for Housing Needs” programs, which provide support targeted to low-income households that would otherwise be in housing need, have seen their funding go up by $499 million per year and accounted for 14 percent of the increase.

Without NHS programs, there would be about 78,000 more households in need of core housing by 2027, according to the report. It said most of that reduction is attributable to federal contributions towards the provinces’ and territories’ capacity to provide income-adjusted housing to lower-income households.

The report also estimates that the federal government will give up an average of $11.4 billion in tax revenue annually to support housing affordability.

“Over the term of Canada’s NHS, total expenditures to support housing affordability are estimated to be 76% higher than the prior 10 years,” the report said.

Housing affordability has been a priority for the Liberal government in recent years, introducing related policies such as lifting the GST on purpose-built rental projects to incentivize developers to build more rentals, adding $15 billion to the apartment construction loan financing program, making an additional $400 million investment into the Housing Accelerator Fund, and introducing a Tax-Free First Home Savings Account.

Ahead of the Fall Economic Statement set to be released on Dec. 16, the federal government announced it will double the loan limit for the Canada Secondary Suite Loan Program to $80,000, and launch the program in early 2025, while also allowing homeowners to refinance with insured mortgages to help cover the cost of adding a secondary suite.

“This is just one of many measures in the 2024 Fall Economic Statement to build more homes, faster,” the government said.

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