Commonwealth_ The Canada Mortgage and Housing Corporation (CMHC) has highlighted that high housing costs are severely limiting the mobility of the Canadian population, particularly in cities where job opportunities are concentrated. According to the federal housing agency, the high prices of homes and rentals are becoming a major barrier for Canadians looking to move to cities with better employment prospects, leading to broader economic consequences.
CMHC’s analysis reveals a direct relationship between housing costs and population movement. Specifically, the agency found that a one percent increase in housing prices in a city leads to a corresponding one percent decrease in the number of people relocating there. This indicates that as housing becomes more expensive, fewer people are willing or able to move for work, limiting their career opportunities and impacting cities’ growth potential.
Since 1990, the percentage of Canadian households moving each year has significantly dropped. The rate has fallen from nearly 17.8 percent to just 10.1 percent in 2020, with fewer individuals or families willing to relocate, even within municipalities. Several factors, including population aging, technological advancements, and crucially, rising housing costs, are responsible for this shift. CMHC’s deputy chief economist, Aled ab Iorwerth, pointed out that while population aging and technological changes play a role in this decline, the increasing unaffordability of housing is a major contributing factor.
The issue of unaffordable housing affects both current workers and newcomers to the workforce. For many, the high costs associated with moving to a new city can outweigh the potential benefits of new job opportunities. Ab Iorwerth emphasized that Canadians, when considering job offers, must factor in not just the potential wage increase but also the cost of housing. In many cases, the high cost of housing in destination cities makes it difficult for workers to relocate, potentially causing them to miss out on career opportunities that could enhance their skills, improve their productivity, and contribute to the country’s overall economic growth.
This dynamic also has consequences for employers in cities with expensive housing markets. In order to attract skilled workers to these cities, employers are increasingly forced to offer higher salaries to compensate for the higher cost of living. While this might seem like a solution, it also raises business expenses and diminishes productivity, as companies face greater financial pressures and may not see an equivalent return on investment in terms of the value brought by new hires.
Among Canada’s largest cities, Toronto stands out as one of the most expensive places to buy a home. Despite the high costs, CMHC’s analysis suggests that increasing housing starts in the city could significantly impact its growth potential. If Toronto were to double its housing construction over the next decade, it could potentially increase its population by three percent. The research indicates that expanding the housing supply could alleviate some of the pressure on housing costs and make the city more accessible for individuals and families looking to move there for work.
Interestingly, while cities like Toronto and Vancouver are often cited as the prime examples of housing unaffordability, other cities in Canada, such as Calgary and Edmonton, have remained relatively more affordable despite experiencing faster population growth over the past two decades. These cities offer valuable lessons on how population growth and housing affordability can be managed effectively. In contrast, the struggles of Toronto and Vancouver underscore the urgent need for greater efforts to increase the availability of affordable housing in major urban centers.
CMHC’s findings highlight the growing problem of housing affordability in Canada and its far-reaching implications for both individuals and the broader economy. As Canadians face rising housing costs, their ability to move to cities with better job prospects becomes increasingly restricted, limiting their personal economic opportunities and hindering the growth of major urban centers. In order to address these challenges, it is essential for governments, businesses, and communities to focus on increasing the supply of affordable housing and developing policies that help alleviate the financial barriers to relocation. This, in turn, could foster a more dynamic and economically productive population, driving growth and opportunity for all Canadians.
