PBO: Canada not on track to meet housing needs by 2035

Key Takeaways:

• Canada will add about 2.5 million housing units by 2035, but an additional 690,000 units are needed to close the national housing gap — requiring 3.2 million completions in total.
• To meet that target, the country would need to build an average of 290,000 homes per year, surpassing the record 276,000 completions of 2024 for 11 consecutive years.
• Suppressed household formation — people delaying moving out due to affordability challenges — is projected to reach 714,000 by 2035, underscoring the depth of unmet demand in the housing market.

The Whole Story:

Canada will fall well short of the housing it needs by 2035, according to a new report from the Parliamentary Budget Officer.

The analysis projects that while 2.5 million new homes are expected to be built over the next decade, an additional 690,000 units would be required to close the housing gap and restore vacancy rates to historical norms.

That means Canada would need 3.2 million net new homes by 2035 — an average of 290,000 completions annually. Meeting that target would require builders to surpass the record 276,000 completions of 2024 every year for 11 straight years.

“Based on our estimates, the projected pace of construction will not be sufficient to eliminate the housing gap,” the report stated.

The PBO defines the gap as the number of homes required to meet demographic demand, account for “suppressed” household formation — people delaying moving out due to affordability — and return the vacancy rate to its 2000–2019 average of 6.4 per cent. The office projects that suppressed household formation alone will reach 714,000 by 2035.

The report comes as Ottawa faces mounting pressure over the housing crisis. Immigration policy changes introduced last year will slow household formation, but even with completions running above average, supply will not keep up with underlying demand.

The findings also highlight differences with Canada Mortgage and Housing Corp., which earlier this year pegged the housing shortfall at 2.6 million units. CMHC’s calculation is tied to affordability goals, while the PBO’s is based on balancing supply and demand through vacancy rates.

The budget officer cautioned that simply building more homes will not be enough to address affordability pressures everywhere. Regional disparities, income growth, interest rates and the types of homes built will also play a role in determining how effective new supply is at easing the crisis.