The rising costs of housing across Canada are significantly impacting workers' mobility and the economy, according to recent analysis from the Canada Mortgage and Housing Corporation (CMHC). The report indicates a clear relationship: for every 1% increase in housing prices within a destination city, there is an associated 1% decrease in the number of people moving to those areas.
Since 1990, the percentage of Canadian households moving each year has dramatically decreased, dropping from nearly 17.8% to just 10.1% by 2020. This trend encompasses various factors, such as the aging population and technological changes, but housing costs play a pivotal role. “This trend reflects many factors, including the aging of the population and technological changes, but housing costs have also played a role,” stated Aled ab Iorwerth, deputy chief economist at CMHC.
Ab Iorwerth emphasized the impact of high housing costs on both current workers and new entrants to the job market. He explained how these financial barriers constrain opportunities for skill development and diminish economic growth, particularly in major urban centers. “When choosing where to live and work, people in Canada do not solely focus on potential salary increases. They must be realistic about housing affordability when relocating,” he noted.
The situation forces employers located in cities with surging housing prices to offer higher wages to attract qualified workers, leading to increased operational costs and reduced productivity. For example, if Toronto, one of the country's most expensive cities for home purchases, doubled the number of new housing starts over the next decade, its population could increase by 3%.
The report reveals how cities like Calgary and Edmonton maintained relative affordability even amid rapid population growth, contrasting with Toronto and Vancouver, where accessibility issues persist. “Indeed, increased housing supply helps keep housing prices relative to income under control, attracting people,” ab Iorwerth explained. “If housing supply is sufficient, adaptability to demographic growth is possible. Conversely, insufficient housing will lead to price increases, limiting population growth potential.”
On the municipal level, there are efforts to combat illegal short-term rentals, which exacerbate housing shortages. Montreal's Mayor Valérie Plante recently announced stringent measures aimed at significantly curtailing short-term rentals, asserting, “Today my message is clear: illegal trade at the expense of Montreal tenants is over.”
Plante faced criticism from Quebec's Minister of Tourism, Caroline Proulx, who suggested the mayor was deflecting blame onto short-term rental markets. Proulx commented before Plante's announcement, claiming the mayor was seeking scapegoats for the locality's housing supply issues. Nevertheless, Plante's administration reported close to 4,000 short-term rental listings, with only about 2,000 legally registered.
To tackle this housing crisis, the city plans to hire additional inspectors to identify illegal rentals, with fines for violations increasing to $1,000 for the first infraction and up to $2,000 per day for repeat offenses. The mayor indicated this effort aims to restore available rental units to legitimate tenants.
Short-term rentals will continue to be allowed from June 10 to September 10, coinciding with Montreal’s high tourist season, but remain banned for the rest of the year. Only some 300 registered tourist residences in designated commercial areas will be permitted year-round operations.
Plante pointed out various tactics used by speculators to exploit loopholes, including false residency declarations and fictitious rentals. “There are individuals who have developed business models based on illegal rentals of housing,” she stated, highlighting instances of criminal organizations occupying entire buildings.
The city previously conducted pilot projects, leading to the discovery of numerous illegal rental schemes through 920 inspections, resulting in 126 infraction notices. This experience has prompted the city to seek ways to expedite penalty processes, as current regulations are too slow, sometimes taking nearly a year to resolve cases.
Although there are concerns about the economic impacts of tightening regulations on short-term rentals, firms like Airbnb have raised alarms. Alex Howell, spokesperson for Airbnb, criticized the city’s planned changes, warning they might lead to negative economic outcomes. Howell asserted, “These extreme rules will harm the economy, hurt local businesses, drive up hotel prices, and penalize responsible hosts who rely on supplemental income during this cost-of-living crisis.”
Despite Airbnb's assertions, the city remains firm on the necessity of addressing illegal short-term rentals as part of the wider strategy to mitigate the housing crisis affecting Montreal. The anticipated regulations signal increased scrutiny on how property is utilized within urban settings as local governments grapple with the pressing demand for fair and affordable housing.
The road to improved housing accessibility remains complex, with continued discussions on local and national levels needed to yield effective solutions. For Canadian workers, the hope is to see mobility increase as housing becomes more affordable, fostering both individual opportunities and broader economic growth.