Morning Update: Inside Canada’s busted housing market

Good morning. It’s a mad, mad, mad, mad real estate world – and it doesn’t seem like we’ll get a reprieve anytime soon. More on that below, along with a pair of international elections and hot tips for a cool sunset photo. But first:

Today’s headlines

• Hour after the U.S. Supreme Court ruled presidents have immunity from prosecution for official acts in office, Donald Trump tried to set aside his hush money conviction
• Canada is failing to protect human rights activists from mining companies operating overseas, a UN watchdog says
• WestJet faces a logistical nightmare getting planes back in the air in the wake of its mechanics’ strike

Real Estate

Not in this market

When it comes to finding a place to live, Canadians are in a triple bind: It’s outrageously expensive to buy, increasingly difficult to rent and super challenging to build (particularly the kinds of homes we urgently need). The statistics are heart-stoppingly bleak, so I’ll restrict myself to just a few. Canadians who make the median household income will spend 63 per cent of their annual salary on ownership costs – which climb to 84 per cent in Toronto and 103 per cent (!!) in Vancouver. Rental vacancy is near-zero, and rents in the past year hiked 9 per cent. Canada needs to build 320,000 units a year for the next six years just to meet the new demand for housing. We’re not doing anything close to that.

According to a new Globe and Mail story, “From any angle, Canada’s housing market is badly broken.” And because it can be hard to focus on the trees instead of the deeply depressing forest, my colleagues plucked out specific examples of just how bad the situation has become. Here’s a taste of what they found.

We can’t buy

Forget trying to purchase a house in major Canadian cities – according to a recent study by Royal Bank, of the nearly two million new households expected to form by 2030, more than half won’t be able to buy a home at all. That outlook is even worse if you’d like to have a family. Between 2016 and 2021, Toronto increased its stock of homes with at least three bedrooms by just 0.6 per cent, which shakes out to a measly 2,585 units. But the city did add more than 10 times as many units with zero bedrooms. That’s right: The fastest growing category of Toronto homes is bachelor pads.

We can’t rent

Canadians shut out of the housing market are hard-pressed to find a rental instead. In Red Deer, Alta., for instance, the apartment vacancy rate plummeted from 13 per cent seven years ago to 0.8 per cent last fall. Part of the demand can be chalked up to the province’s growing population. Nearly 50,000 new residents arrived in the first three months of 2024 – two-thirds of them immigrants, and the rest escapees from elsewhere in Canada, especially Ontario and B.C., where the cost of living is ridiculously high. Of course, their search for cheaper digs helped jack prices in Alberta. Rents jumped nearly 16 per cent over the past year, the most among provinces. And because Alberta doesn’t have rent-control guidelines, tenants can expect those costs will keep going up.

We can’t build

In Vancouver – a city where, again, the typical household doesn’t earn enough to pay for an average home – multi-unit developers are hamstrung by zoning restrictions and onerous rules. But even the modest complexes that already exist are under threat, courtesy of downzoning policies that now find them too dense. It would be costly and time-consuming to rezone 1000 Cypress, an eight-unit apartment building on Kitsilano Point – so the whole complex is being torn down and replaced with three single-family homes. Given skyrocketing construction costs, who knows whether those houses will actually get built. But if they do, they’d likely go for $10-million a piece.

So what can we do? For starters, we can give gentle density a shot. We can fund rental projects that are actually affordable. And we can look to unused federal land to house a whole lot more people.

The Shot

Brad, Lance and Fabio admire the view

After all that dismal housing news, you deserve something soothing. Globe readers sent in their finest sunset photos – check them out here, and find Globe photographers’ secrets for a quality shot here.

The Week

What we’re following

Thursday: British voters head to the polls for what pretty much everyone expects will be a Labour Party landslide. As Paul Waldie writes, that’s a remarkable turnaround for the leader, Keir Starmer.

Thursday: With legendary hot dog–scarfer Joey Chestnut out of the running, Canadian Darrien Thomas is ready to tuck in at Nathan’s Hot Dog Eating Contest in Coney Island.

Friday: The Calgary Stampede kicks off with chuckwagon races, rodeos, a massive parade – and water that’s slowly flowing through the city’s system.

Sunday: After the far-right National Rally scored big in the first round of parliamentary elections this weekend, France heads back for its second round of voting to determine who gets a seat.