Image of the day: Comparison of supply elasticity in different metro areas

In Montreal and Edmonton, when there's more demand, more housing gets built

From CMHC, Examining escalating house prices in large Canadian metropolitan centres, May 2018.

In Montreal and Edmonton, when there’s more demand, more housing gets built. In Toronto and Vancouver, housing starts aren’t very responsive to demand - the rate of homebuilding remains the same, and prices go up. Why is that?

An observation from the CMHC’s May 2022 Housing Supply Report: large projects take longer to plan and build. A city which builds a lot of smaller projects is going to be more responsive.

In CMAs where the primary type of apartment buildings built are smaller ones, the construction time is likely to be shorter. Construction time may be longer in centres where there is a predominance of buildings with several dozens (or even hundreds) of units. As a result, the supply of new housing for households can arrive more quickly in some urban areas than in others. This takes pressure off the real estate market more quickly.

With nearly half of apartment buildings containing more than 100 units, Toronto is by far the CMA where this type of structure is most common (table 4). Around 25% of buildings in Toronto are also more than 20 storeys high, a sign that tower construction is prevalent there (table 5). Buildings up to six storeys, generally the maximum threshold for wood/brick construction, account for only 48% of structures in Toronto, by far the lowest percentage of all CMAs analyzed.

Conversely, Montréal, Ottawa, Calgary and Edmonton had the highest proportions of buildings with fewer than 20 units, ranging from 51% to 66%.