How The Canadian Housing Market Is Impacting Contractors

Canada's housing market is seeing a shift as the construction of new homes is picking up nationwide.

The housing market in Canada is witnessing a dynamic shift as the construction of new homes and larger apartment and condo developments gains momentum nationwide. While investment in housing has dropped in recent years, we’re seeing an upward trend once again when looking into the future as the population grows. With that, and an increase in remote work, the demand for both housing and skilled labour is on the rise and is expected to continue growing in the foreseeable future.

This dynamic shift underscores the critical importance of addressing housing needs and supporting the construction industry to accommodate the evolving demographic and economic landscape.

The construction of new homes—and larger apartment and condo developments—is picking up nationwide. Last year, investment in housing dropped by 10 per cent with higher interest rates discouraging developers from building new homes or taking on major renovation projects. As interest rates begin to stabilize, however, the decrease is expected to be smaller, with housing rates falling only 2 per cent in 2024. The industry is optimistic that investment in housing will be on a growth path in Canada by the end of 2025 and continue to rise into the future.

Demand for Housing and Contractors

An increasing demand for housing means an increasing need for skilled labourers in construction, electrical engineering, plumbing, and other trades associated with housing construction. As the most populated province in Canada, Ontario has an especially high demand and accounts for 40 per cent of construction employment overall.

In Ontario, the provincial government has set housing and job targets to help meet the demand for housing, with specific housing goals in the top 50 most populated municipalities. By 2031, the goal is to build at least 1.5 million homes, which is backed by a $1.2 billion “Building Faster Fund” to help municipalities meet their individual goals. While the goal was set as recently as 2022, there has been strong progress. In 2023, the second year of this initiative, there were nearly 90,000 housing starts, with nearly 110,000 new homes created. If this trend continues, Ontario is hopeful about meeting the housing targets they’ve set for 2031.

With the anticipation of the Baby Boomer generation’s retirement, Ontario has put forward initiatives to train younger people to be able to fill their jobs. Programs like the Skills Development Fund offer free skilled trades training to various individuals.

Shifts in Types of Residential Projects

Since the pandemic in 2020 brought about an increase in working from home and remote work, there’s been a fluctuating need for residential construction. This has inspired some developers to take on office-to-residential conversions. Through an approach known as adaptive reuse, vacant office buildings are converted to bring units to market faster and in a more sustainable way—all without major changes to existing city skylines. This has also increased construction productivity, as many infrastructure elements are already in place, focusing on renovated units to fit residential building codes without constructing entirely new buildings.

Sustainability

Converting existing buildings creates more accessible and sustainable housing in target areas, often with access to mass public transit thanks to their urban locations. Developers’ focus on various sustainable construction methods also affects how contractors work and their approaches when undertaking these conversions.

While specific requirements for sustainability and emissions targets will vary from project to project and between development groups, the shift towards sustainability means contractors will more often try to source sustainable materials and recycle and reuse materials where possible.

This is one of the reasons why office-to-residential conversions are gaining popularity — despite the changes needed to the interior to make it a liveable space, developers are reusing the existing building structure. This offers a significant reduction in greenhouse gas emissions to a similar development built from the ground up. Developers also have the opportunity to reuse and donate the materials that previously made up the building’s interior.

While housing needs across Canada vary, it is no secret that more housing is desperately needed. This evidently means that more skilled labourers are needed and will continue to be needed. Projects like the Skills Development Fund can help train new people into the industry, diversifying and expanding the workforce and offsetting a rapid rate of retirement.

The increasing need requires creative solutions, and different types of projects are emerging to fill the gap. Office-to-residential conversions, in particular, can help to meet these demands and support the province and individual municipalities to meet their housing targets. Government supports, like the Building Faster Fund and Rapid Housing Initiative, will be instrumental in propelling these endeavours if the province truly plans to continue to meet the goals set for housing by 2031.

The conversion of unused office spaces to residential units and the emphasis on sustainable construction practices stand out as key strategies for meeting housing goals and creating a more resilient housing market, and both approaches will impact the scope and scale of projects that contractors can expect to see in the coming years.


Roch Chevrier is Regional VP of Construction at CLV Group Developments Inc., an industry-leading apartment developer that is dedicated to creating communities and place-making.

You might also like