CIBC: Housing demand is stronger than we’re told

Canada needs to be building more homes to meet demand which is greater than official figures suggest.

That’s the view of CIBC Economics which has looked into whether the number of new homes being built is correct. The simple equation is housing units completed divided by household formation, which should end up as just above 1 to allow for factors including demolition and secondary home demand.

However, the CIBC team says there is a key factor in housing demand that is not accounted for.

Looking at figures from Statistics Canada and CMHC, the economists found that between 2001 and 2016 StatsCan data shows evidence of overbuilding while CMHC’s data suggests balance.

But this is due to methodology, specifically that CMHC’s figures are adjusted for census undercounting while the StatsCan figures do not.

The report also notes that the way data is collected about student housing also underestimates demand.

That’s because the census information is based on permanent residences and while students may return to their parents’ homes in the summer, demand for accommodation during the academic year is higher.

Overall, the report estimates the underestimation of housing demand at around 300,000.

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