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By: Guillermo Salazar • 31 January 2024

Homebuilders, Homebuyers: the squeeze is on.

Canada's housing market confronts a daunting challenge: the need for 3.5 million additional housing units in the next seven years. This issue is not just about quantity but encompasses affordability, accessibility, and sustainability.Fun Fact: We build around 200K homes per year, and we peaked in....1974 with 260K homes built that year. When Canada had 23MM people. Save you the calculator: 3.5M / 7 years = 500K homes per year. 2.5X the current output. Understanding the Demand: The Canadian Mortgage and Housing Corporation (CMHC) has put forth a staggering figure — 2 million homes needed (!). This number underscores the urgent requirement to address the housing shortfall in a holistic manner. Spoiler alert: 80% of the shortfall is in Ontario, BC & Alberta. Insights from the CHBA Housing Market Index: The Q4 CHBA Housing Market Index indicates a long-term problem, rooted in systemic issues like affordability constraints, high material costs, and regulatory processes. These problems hint at more than just a supply issue; they reflect deeper economic and policy-related challenges.Government Policy's Role: Government policies have a profound influence on home construction and affordability. There's a complex interplay between policies that squeeze home construction and the resultant impact on home ownership and affordability. Technological Innovations as a Solution: Historically, when faced with a rock and a hard place scenario that is so structurally broken, innovation and disruption breaks the log jam, there is room to bust the dam, by all the stakeholders. but we need to find the motivation for change. Innovative construction technologies, including modular building and 3D printing, hold the potential to revolutionize the industry. These advancements could significantly reduce costs and expedite construction timelines. We already see that with prebuilt trusses, precast concrete etc, you can have a bar shipped from Ireland & assembled in your town--we'll see more of this. Navigating Municipal Processes: AI and digital platforms can streamline lengthy municipal processes, a major bottleneck in housing development. These technologies promise faster permit processing and improved regulatory compliance. (i will not plug IrisCX virtual inspections here...oh wait).Incorporating AI and Innovation in Construction Processes:AI and innovation in construction processes are pivotal in addressing current housing market challenges. AI can optimize project planning, resource allocation, and even predict potential project risks, leading to more efficient and cost-effective construction processes. Innovative construction techniques, like AI-driven automation and machine learning algorithms, can enhance precision and speed in construction, reducing the overall time and cost involved in building new homes. This integration of AI and innovation is essential in transforming the construction industry, making it more efficient and capable of meeting the growing housing demands.Addressing Labor Shortages and Land Access: Labor shortages in construction can be mitigated by automation and robotics, while GIS and data analytics can optimize land use planning and identification of viable construction sites, addressing the issue of land access. (I will not plug IrisCX virtualbots for warranty automation...oh darn).Impact on Stakeholders: For home buyers, these advancements could mean more affordable and accessible housing options. Builders might see reduced costs and fewer regulatory hurdles. Homeowners could benefit from stable property values and lower maintenance costs.The road to resolving Canada's housing crisis lies in embracing technology and innovation. Collaboration among government, builders, buyers, and technologists is crucial to navigate this complex landscape and build a more efficient and sustainable housing market.FB Post, good summaryCHMC Post, great data on the housing side of thingsCBHA Report, great data on the builder side of thingsCostar report, great mashup of the demand and supply side of things.

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