Our friends at the Canadian Housing & Renewal Association (CHRA) recently released a report on the impact of community housing on the economy. Our partners at CHF Canada contributed funding to the report. Here is a summary of the research.

Community housing is more than a social good,
it’s an economic necessity

Canada is struggling through a dramatically worsening housing crisis. Millions of Canadians, particularly those with lower incomes, have been experiencing rapidly rising housing costs, driven in large part by an extreme supply shortfall. This problem isn’t isolated to specific communities, regions, or provinces.

Approximately 2.6 million Canadians are in core housing need, with experiences varying across provinces and territories. Several factors have contributed to the scale of the current challenge. This includes a reduction in the share of our housing that is devoted to community housing.

In addition to a housing crisis, Canada’s economy also faces a productivity problem. Our labour productivity growth lags our international peers and has continued to decline in the post-pandemic period. To improve economic performance without further igniting inflationary pressures, Canada needs to find ways to boost its productivity.

Community housing and economic productivity

CHRA, Housing Partnership Canada, and our sector partners commissioned Deloitte to produce a study on the impact of community housing on Canada’s economic productivity. The analysis in this report, The Impact of Community Housing on Productivity, finds:

• There is a causal connection between the proportion of community housing within the overall housing stock and gains in economic productivity.
• Bringing Canada’s community housing stock to the OECD average by 2030 would boost economic productivity by a staggering 5.7% to 9.3%.
• The economic benefit would increase GDP by an estimated $67 billion to $136 billion, without adding to inflation since gains in productivity boost our economy’s ability to grow.
• CHRA estimates that gains to the economy will outweigh the costs within two years of hitting the target.
• The economic gains are from the productivity-enhancing benefits of having more community housing, rather than just the stimulus impact of building new homes. The impact is derived from addressing five productivity-depressing phenomena:
  • Geographical mismatch between workers and jobs that are the best fit;
  • Diminished human capital accumulation due to poor living conditions;
  • Neighbourhood effects that impact wellbeing and opportunities;
  • Diversion of income towards housing costs rather than upskilling; and
  • Depressed business investment and captive employment.

Video

Here is a video of the news conference in Ottawa for the release of he study. Taking part are Ray Sullivan (executive director of the CHRA), Kevin Albers (chair of HPC and CEO of M’akola Housing Society), Margaret Pfoh (president of the CHRA and CEO of the Aboriginal Housing Management Association), and Matthew Stewart (director of financial analysis for Deloitte Canada).

A Look at British Columbia

In the appendices to the report, there is a carveout on British Columbia that includes this analysis:

British Columbia’s positive productivity growth over the period was largely driven by the manufacturing, wholesale trade, retail trade, and construction sectors. The manufacturing, wholesale and retail trade sectors experienced the sharpest productivity growth, partly benefiting from the adoption of new technologies. The construction sector also saw an increase in productivity growth with the sharpest increase occurring in 2020, driven by gains in residential construction.

Community housing can play a role in increasing British Columbia’s productivity. If Canada’s community housing units as a share of total housing units were to increase from 2023 Q2’s level of 5.5% to 7% by 2030 this would require an increase of 371,600 units in Canada’s total community housing net stock. If each province receives the equivalent share based on their forecasted population growth, British Columbia’s community housing stock would receive 50,870 additional units by 2030. This is a 42% increase in the stock from 2023 Q2 levels.

Raising the share of community housing units from its current levels to the levels forecasted in 2030 results in a 5.7% to 9.3% increase in productivity by 2030. This productivity improvement is equivalent to $15.4 to $25.0 billion boost to GDP by 2030. Considering the opportunity cost of building community housing units instead of private homes, the additional units of community housing would contribute between $9.0 to $18.7 billion to British Columbia’s GDP by 2030.

Recommendations

The report provides five policy recommendations to boost community housing supply and tackle Canada’s productivity problem:

1. Increase investment in community housing to boost productivity and Canada’s GDP.
2. Commit to stable and predictable funding, financing, and tax incentives to build new homes and equip community housing providers with the resources to renew or acquire existing units over a long horizon.
3. Provide dedicated funding for urban, rural, and northern Indigenous housing.
4. Improve collaboration across provincial governments, municipalities, and builders to tackle the housing crisis.
5. Support Canadian innovation that builds housing more quickly, sustainably, and affordably.

Downloads

• Full Report [7.6 MB PDF]
• Policy Brief [1.6 MB PDF]