Construction industry will face number of challenges in 2022
By Richard Lyall/RESCON
2021 was certainly a year for the history books – and one that I am glad to see in the rear-view mirror.
COVID-19 challenged residential developers and builders on many fronts – and the situation will continue for some time yet. However, our industry deserves full credit for managing to keep workers safe and continuing to build much-needed housing.
The Smart Prosperity Group figures we need nearly one million homes over the next decade to meet the needs of anticipated growth of 2.27 million people in the province. We are not anywhere near that number for a variety of reasons, a main one being that the development approvals process is too cumbersome and slow. Bold action is needed.
More Neighbours Toronto, a new organization of housing advocates who believe in building more multi-family homes, maintains Toronto and Ontario’s housing crisis has reached a breaking point.
A report by the organization notes that decades of inaction, policy failures, excessive regulatory capture, and political domination by exclusionary anti-housing interests have culminated in diminishing social and economic mobility.
In Toronto, the cost of the average dwelling has moved far beyond what a typical family can afford. Our cost of housing relative to income is by far the worst amongst G7 countries – even San Francisco, a city famous for its long-running housing crisis. Yet, we have the highest projected immigration targets. Where will people live and who will build their homes?
RESCON is taking action to bring the industry, government and stakeholders to the table by running a half-day virtual event on March 3 called Housing Supply Summit 2022: Solutions to Build More Homes. It will feature speakers who will share their experiences, knowledge and opinions on where we need to go from here. I encourage you to register for the event by clicking here.
The province enacted changes via the More Homes, More Choice action plan that aims to cut red tape and make housing more affordable. But more action is clearly necessary and must be aligned with other levels of government. We shall see what the newly minted provincial Housing Affordability Task Force recommends.
Apart from COVID-19 and the housing crisis, our industry is facing a number of other challenges in 2022, including inflation, material costs, supply chain disruptions and labour shortages.
A recent Canadian construction outlook published by Jones Lang LaSalle (JLL) noted that prices for aluminum, copper and steel have risen dramatically while lumber prices have also spiked considerably.
Part of the problem is that the cost of a 40-ton shipping container to cross the Pacific Ocean from China/East Asia has quadrupled from $4,500 a year ago to more than $21,000, the JLL report states. Containers are taking 73 days compared to 20 to 30 days pre-pandemic to cross the ocean.
These supply chain issues along with labour and logistics challenges have slowed down projects and created a pig-in-a-python effect for the industry. These are expected to settle out by mid-2022, providing COVID-19 doesn’t serve up more surprises.
To be sure, there are plenty of projects in the pipeline to keep our industry busy in 2022. And, with immigration numbers rising, there will be even more demand for housing. But inflation and looming rate hikes will make this a pivotal year.
As of Q3, Statistics Canada reported a job vacancy rate of 5.8 per cent in the construction sector. This is one of the highest rates of any sector, exceeding the 4.6-per-cent job vacancy rate for Canada as a whole.
Many of our construction tradespeople are nearing retirement and it’s projected the industry will face a shortfall of more than 100,000 workers over the next decade. Efforts are being made to fix this but there is no immediate relief in sight.
As a final note, I remind you to get your vaccines and booster shots, wear masks and practice social distancing. I did it all and still got Omicron – but at least I didn’t end up in hospital or worse. Omicron is extremely transmissible, and these are our only defences against the virus.
Please be safe in the new year.
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