Canada started building only slightly more homes in June than it did in May, the Canada Mortgage and Housing Corp. (CMHC) said on Wednesday.
Compared to May, the annual rate of housing starts was largely flat with a 0.4 per cent increase, but it rose 14 per cent compared to this time last year.
The national numbers mask stark regional disparities, however.
“Through the first six months of the year, national housing starts have increased marginally compared to 2024, however, new home construction varies significantly across Canada,” said Kevin Hughes, deputy chief economist at CMHC.
Over the first six months of 2024, Edmonton started building 8,448 homes. That compares to 10,868 in the first six months this year — a jump of 29 per cent. Calgary also saw a significant improvement in the first six months of this year with a 32 per cent jump in housing starts to 14,712 compared to 11,178 in the first half of 2024.
“Calgary and Edmonton have just been streets ahead of other cities and (especially) a lot of cities in Ontario, for instance, in making their zoning bylaws simpler as well as less restrictive,” said Carolyn Whitzman, senior housing researcher and adjunct professor at University of Toronto School of Cities.
One of the biggest laggards when it comes to housing starts is the country’s largest city. In the first months of 2024, Toronto started building 22,529 homes. This year, that number has dropped to 12,575 — a 44 per cent decline.
“Edmonton is one of the fastest cities in Canada when it comes to approving new housing and communities in the GTA (Greater Toronto Area) are amongst the slowest. And that is certainly playing a role here,” said Mike Moffatt, founding director of the Missing Middle Initiative at the University of Ottawa.
“Toronto doesn’t seem to be waking up and smelling the coffee,” Whitzman said, adding that cities such as Calgary and Edmonton end up with more housing starts because they prioritize building “missing middle” housing.
In many Canadian cities, strict zoning laws mean developers can build either single-family homes or condo towers. Homes that are neither — such as sixplexes and fourplexes — are often referred to as the “missing middle” by advocates and researchers.
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“Most of the homes that we’ve built over the last 40 or 50 years have been one of two varieties. They’ve been either single detached homes or they’ve been highrise condos. And both of those markets are having problems right now in our more expensive cities,” Moffatt said.
He added, “Single detached homes have become so expensive, (many) middle class families can’t afford them. And highrises serve a particular market and that’s not really in demand right now.”
A large part of Edmonton’s success comes down to its approach to zoning, Whitzman said, an issue where Toronto seems to lag. Last week, the city council voted against a zoning bylaw that would limit mid-block infills to a maximum of eight units.
“Toronto is still betting on big, big, big condos that aren’t doing well,” she said. “Last week, a proposal that had been agreed on with the federal government to OK six units as-of-right with no parking minimums got restricted to a relatively small part of the central city. That gives you a sense of different kinds of approaches that different cities are taking.”
Whitzman was referring to a Toronto city council decision that allowed the building of sixplexes in only nine city wards, with suburbs having the choice to opt in.
In the rest of southern Ontario, the housing starts data is a mixed bag, with cities such as Hamilton and Ottawa building more than they did last year while others are building less.,
Meanwhile, British Columbia has started building more houses in two of the most expensive markets in the country.
Vancouver saw 3,079 housing starts last month, compared to 1,767 in June last year, marking an increase of 74 per cent. Meanwhile, Victoria saw an increase of 187 per cent in housing starts. Whitzman said provincial support for the housing sector can be a major driver of housing starts.
B.C. is betting big on prefabricated or modular housing. In September last year, B.C. released a catalogue of pre-approved housing designs for prefab housing.
Pre-fabricated housing or prefab construction is a method of building where the bulk of the construction happens off-site, often in a facility like a factory. Either a fully-constructed modular home or parts of a house are then shipped off to the location, where it is assembled and connected to utilities.
“[B.C. has] got a much better sense of housing targets (compared to Ontario). It’s providing much more funding to non-market developers. Some of the development in B.C., I can say with confidence, is non-market development, assisted by B.C.,” Whitzman said.
Next week, Vancouver city council will consider rezoning 4,294 parcels of land in central parts of the city to allow larger buildings, including highrises.
While the country is building more houses than it did last year, experts still worry it is not nearly enough.
“It’s hard to get excited about June’s housing starts. They were up 14 per cent year-over-year, which sounds impressive, but it adds up to about 2,700 units. That’s not the kind of growth the country can really celebrate at this point,” said Clay Jarvis, mortgage expert at NerdWallet Canada.
The slight 0.4 per cent increase compared to last month is meager, he continued. “Any increase builders can notch in the current economic climate is somewhat of a win, but it’s not moving the needle.”
Jarvis added that U.S. President Donald Trump’s trade war is also going to add more pressure on developers counting costs.
“It’s hard to see starts taking a leap while the trade war with the U.S. drags on,” he said. “Developers were already facing high building costs before Trump’s tariffs were announced, and now they don’t know how much it’ll cost to complete their projects. That’s a lot of risk to take on when there are millions of dollars at stake,” Jarvis said.
Tale of two cities: Why Edmonton builds homes faster than Toronto
