Workin' down the Housing Shortage
Last week, I wrote about the federal government plan to scale back the share of non-permanent residents as a share of the population. If implemented as announced (which is still an if - it’s not clearly happening yet in the data), Nova Scotia’s population growth should slow considerably.
It also happens that new construction activity (housing starts) has jumped in 2024, raising the chance that we soon start building enough housing to meet population growth for the first time in ~7 years1.
In fact, if the current pace of construction could be maintained, we could start meaningfully working down the accumulated shortage.
Big caveat: I’m using housing starts in these charts (completions are no longer available for Nova Scotia due to recent CMHC data cuts). People don’t live in poured concrete foundations - they live in completed homes - and completions can be years away (which is the whole problem of relying excessively on large buildings for new housing).That said - lets roll this forward! One of the key assumptions is how many people will live in each unit, for now we’ll start with a simple 2 people per unit.
From 2017 to today, we’re short housing for about 45,000 folks - or just over 20,000 units. If we keep up the current pace (~8,500 units annually), we could eliminate nearly three-quarters of the historical shortage by the end of 20262.
If housing construction accelerated from here, we could maybe even full clear the backlog by the end of 2026. Or not, because it also depends on the innocently seeming population per unit assumption. Recall, I used 2 in the previous charts.
A reasonable range could be from 1.5 pop per unit to 2.3 pop per unit. These assumptions change both the start point (our historical shortage) and the amount of units needed to resolve it. In reality, its unlikely that these are fixed variables. As the shortage gets solved, prices and rents should ease, allowing more people to live alone or move out of their parents place.
I think the key takeaway is that we should not be despondent about the housing shortage, that we have a real shot at making great improvements within a few years, but also that we need to keep the foot on the gas - given where we are and the uncertainties involved with forecasting these things.
Aside from a 2021 blip
The pre-covid pace of ~4,000 units would hardly make a dent - showing the need to keep construction up