Canada intends to build almost 4 million new homes in the next 7 years. Great, but how?

In April of 2024, the Trudeau government unveiled its housing strategy, which aims to build 3.87 million new homes by 2031. This is 2 million homes more than the 1.87 million forecasted by the Canada Mortgage and Housing Corporation (CMHC).

To meet these targets, each individual residential construction worker in the country would need to build almost three-quarters of a home every year. I built enough homes in my day to know that’s a pretty tall order. 

In fact, this is nearly double the current average number of homes built per worker, and a parallel challenge to an obvious labour shortage, which would be the significant strain that this target would put on current supply chain limitations.

The math doesn't add up!

Based on the average number of housing starts per worker from 2019 to 2023, if construction continues at this pace through 2030, the result would be only 2.13 million new homes - 1.74 million fewer than the government's target.

Looking back at historical data from Statistics Canada, the years between 2000 and 2004 marked the most productive period for residential construction. During this time, one worker typically contributed to over half (0.57) of a housing start.

If the industry were to reach this level of productivity again from 2024 to 2030, an estimated 3 million homes would be built by 2031. However, this would still fall short by over 849,000 homes of the government's promise.

The scenarios above would need to assume a 3.6% annual growth in residential construction jobs, a rate consistent with both the 2019 to 2023 period and the longer term from 1999 to 2023. Despite record-setting immigration, the demand for construction workers has remained steady, with more workers entering the service sector rather than residential construction.

While residential construction job growth has outpaced overall Canadian job growth, it hasn’t resulted in the increased number of homes needed. Between 1999 and 2023, the number of jobs in residential construction grew by 143%, from 265,130 to 645,995, while overall Canadian job growth during the same period was just 39%, increasing from 14.7 million to 20.5 million.

The year 2002 saw the highest number of housing starts per residential construction worker in recent history. During that year, one worker was responsible for 0.6 housing starts. However, from 2004 to 2009, housing starts per worker declined sharply, hitting their lowest point in 2009 when one worker was responsible for just a third (0.35) of a housing start.

In recent years, from 2022 to 2023, the number of housing starts per worker continued to decrease from 0.41 to 0.37. In 2023, with 645,995 workers, just 240,267 homes were built - the lowest rate since 2009, despite a substantial increase in the number of construction workers.

A report by BuildForce Canada, an organization focused on the construction labor market, suggests that nearly 500,000 additional workers would be necessary to restore the level of home construction seen in the early 2000s. According to another CMHC report, Canada’s current workforce should be able to produce over 400,000 housing starts annually.

Prefab homes helps meet housing demands

We at Ecohome have long been advocates of prefab home construction for many reasons – less material waste, quicker production, safer construction and higher quality homes can be built in the controlled environment of a manufacturing facility.

Prefab homes meet high standards of energy efficiency that the days long past when the construction practices were pretty shady. Canada has stuck it’s neck out with some noble targets to provide badly needed housing, they now need to formulate a realistic plan to meet those targets. We don't see how these targets can be met without the home building industry transitioning to prefab homes to meet demand.