Monday , August 21 2017
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We Are Adding Less to Housing Supply

Summary:
Housing prices particularly in places like Toronto and Vancouver are still a big issue and what is driving them is the subject of debate. There is Josh Gordon’s recent policy paper, which places the main emphasis on demand side factors and there is the recent story raising alarm on Toronto’s “housing bubble”. There are of course demand and supply side factors and the supply of new housing coming onto the market is a factor. So today’s post is going to do two things: first, add to the debate on housing supply as a driver of housing prices in Canada and second, celebrate Canada’s 150th by adding a long term time series on housing starts going all the way back to Confederation. I decided it would be useful to see what housing starts have been like in Canada over the longer term and have several sources of data.   I have three series from Historical Statistics of Canada, which provide total dwelling starts for 1949 to 1976 (Series S190-1), total dwelling starts for 1921 to 1950 (Series S198-2) and total dwelling starts (Series S203-2) for 1868 to 1920. There is overlap in these series and I imagine some differences in their coverage and construction but I use them to provide a series on total dwelling starts going from 1868 to 1954. By dwelling units, I mean not only single-detached homes but also semi-detached, row houses, apartments and multiple units.

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Housing prices particularly in places like Toronto and Vancouver are still a big issue and what is driving them is the subject of debate. There is Josh Gordon’s recent policy paper, which places the main emphasis on demand side factors and there is the recent story raising alarm on Toronto’s “housing bubble”. There are of course demand and supply side factors and the supply of new housing coming onto the market is a factor. So today’s post is going to do two things: first, add to the debate on housing supply as a driver of housing prices in Canada and second, celebrate Canada’s 150th by adding a long term time series on housing starts going all the way back to Confederation.

I decided it would be useful to see what housing starts have been like in Canada over the longer term and have several sources of data.   I have three series from Historical Statistics of Canada, which provide total dwelling starts for 1949 to 1976 (Series S190-1), total dwelling starts for 1921 to 1950 (Series S198-2) and total dwelling starts (Series S203-2) for 1868 to 1920. There is overlap in these series and I imagine some differences in their coverage and construction but I use them to provide a series on total dwelling starts going from 1868 to 1954. By dwelling units, I mean not only single-detached homes but also semi-detached, row houses, apartments and multiple units. I use S203-2 for 1868 to 1920, S198-2 for 1921 to 1950 and S190-1 for 1951 to 1954. For the period 1955 to 2016, I use the total dwelling units starts from Statistics Canada (the site was working the day I went to get the data) Series v730579.  I have provided a Table with the data at the end of the post.

Putting these series together generates Figure 1 and the results show periods of rise and decline. The wheat boom era from 1896 to 1913 certainly stands out showing an increase from 11,600 dwelling starts to peak at 76,300 in 1912 and then a drop. The peak of 1912 was not to be surpassed until 1948 when starts were 95,700. The period from the depths of the Great Depression until the mid 1970s was generally a period of increase and the largest annual number of dwelling starts was in 1976 at 273,203. The period since 1973 has generally been one of some decline with smaller peaks in 1987 (245,986 starts) and 2004 (233,431 starts).

Slide1

Of course, Canada’s population has grown substantially since 1868 and what is more interesting is adjusting these numbers for population. These dwelling starts were converted into per capita starts using Statistics Canada population series v7422019 for 1868 to 1970 and v52154496 for 1971 to 2016. The year 1868 was set equal to 100 and a per capita index of total dwelling starts constructed and presented in Figure 2.

Slide1

In per capita terms, the two great eras of growth in total dwelling  starts are the wheat boom era from 1894 to 1910 which see the index grow from 57.5 to peak at 297 in 1910 and the post Great Depression era which starts in 1932 at an index value of 39.4 and then rises to peak at 310.5 in 1973. The period since 1973 has seen a decline in the value of the per capita index for housing starts.

Of course, I do not have any estimates for the total stock of housing but I would imagine the total stock has indeed grown fairly steadily. In terms of additions to Canada's housing stock however, the growth rate has slowed.  Housing starts were growing faster relative to population before 1973 and since then there has been a moderation.  To my mind, this could indeed be a factor in the long term rise in housing prices especially if the demand for housing is actually shifting right faster than supply.

DATA TABLE

YEAR Dwelling Starts Population Per Capita Per Capita Index (1868=100)
1868 13500 3511000 0.00384506 100.0
1869 13200 3565000 0.00370266 96.3
1870 17800 3625000 0.00491034 127.7
1871 22700 3689000 0.00615343 160.0
1872 15900 3754000 0.00423548 110.2
1873 18500 3826000 0.00483534 125.8
1874 24800 3895000 0.00636714 165.6
1875 20200 3954000 0.00510875 132.9
1876 18000 4009000 0.00448990 116.8
1877 16700 4064000 0.00410925 106.9
1878 15300 4120000 0.00371359 96.6
1879 16000 4185000 0.00382318 99.4
1880 19300 4255000 0.00453584 118.0
1881 14900 4325000 0.00344509 89.6
1882 11400 4375000 0.00260571 67.8
1883 8200 4430000 0.00185102 48.1
1884 11100 4487000 0.00247381 64.3
1885 12900 4537000 0.00284329 73.9
1886 15600 4580000 0.00340611 88.6
1887 18000 4626000 0.00389105 101.2
1888 21400 4678000 0.00457460 119.0
1889 22100 4729000 0.00467329 121.5
1890 20200 4779000 0.00422683 109.9
1891 22000 4833000 0.00455204 118.4
1892 21000 4883000 0.00430063 111.8
1893 15800 4931000 0.00320422 83.3
1894 11000 4979000 0.00220928 57.5
1895 10700 5026000 0.00212893 55.4
1896 11700 5074000 0.00230587 60.0
1897 15200 5122000 0.00296759 77.2
1898 18000 5175000 0.00347826 90.5
1899 19700 5235000 0.00376313 97.9
1900 16400 5301000 0.00309376 80.5
1901 19400 5371000 0.00361199 93.9
1902 25100 5494000 0.00456862 118.8
1903 33000 5651000 0.00583967 151.9
1904 40900 5827000 0.00701905 182.5
1905 52200 6002000 0.00869710 226.2
1906 51700 6097000 0.00847958 220.5
1907 51300 6411000 0.00800187 208.1
1908 42900 6625000 0.00647547 168.4
1909 61000 6800000 0.00897059 233.3
1910 79800 6988000 0.01141958 297.0
1911 71500 7207000 0.00992091 258.0
1912 76300 7389000 0.01032616 268.6
1913 63700 7632000 0.00834644 217.1
1914 44000 7879000 0.00558447 145.2
1915 21300 7981000 0.00266884 69.4
1916 22800 8001000 0.00284964 74.1
1917 23500 8060000 0.00291563 75.8
1918 23600 8148000 0.00289642 75.3
1919 30600 8311000 0.00368187 95.8
1920 31100 8556000 0.00363488 94.5
1921 33900 8788000 0.00385753 100.3
1922 43500 8919000 0.00487723 126.8
1923 40800 9010000 0.00452830 117.8
1924 42300 9143000 0.00462649 120.3
1925 43400 9294000 0.00466968 121.4
1926 49400 9451000 0.00522696 135.9
1927 55600 9637000 0.00576943 150.0
1928 54200 9835000 0.00551093 143.3
1929 51400 10029000 0.00512514 133.3
1930 41300 10208000 0.00404585 105.2
1931 38000 10377000 0.00366194 95.2
1932 16800 10510000 0.00159848 41.6
1933 16100 10633000 0.00151415 39.4
1934 19400 10741000 0.00180616 47.0
1935 22200 10845000 0.00204703 53.2
1936 25700 10950000 0.00234703 61.0
1937 34600 11045000 0.00313264 81.5
1938 36600 11152000 0.00328192 85.4
1939 42200 11267000 0.00374545 97.4
1940 39900 11381000 0.00350584 91.2
1941 58800 11507000 0.00510993 132.9
1942 54600 11654000 0.00468509 121.8
1943 45900 11795000 0.00389148 101.2
1944 49800 11946000 0.00416876 108.4
1945 71500 12072000 0.00592280 154.0
1946 66900 12292000 0.00544256 141.5
1947 67700 12551000 0.00539399 140.3
1948 95700 12823000 0.00746315 194.1
1949 98600 13447000 0.00733249 190.7
1950 106800 13712000 0.00778880 202.6
1951 68527 14009000 0.00489164 127.2
1952 83246 14459000 0.00575738 149.7
1953 102409 14845000 0.00689855 179.4
1954 113527 15287000 0.00742638 193.1
1955 138276 15698000 0.00880851 229.1
1956 127311 16081000 0.00791686 205.9
1957 122340 16610000 0.00736544 191.6
1958 164632 17080000 0.00963888 250.7
1959 141345 17483000 0.00808471 210.3
1960 108858 17870000 0.00609166 158.4
1961 125577 18238000 0.00688546 179.1
1962 130095 18583000 0.00700075 182.1
1963 148624 18931000 0.00785083 204.2
1964 165658 19291000 0.00858732 223.3
1965 166565 19644000 0.00847918 220.5
1966 134474 20015000 0.00671866 174.7
1967 164123 20378000 0.00805393 209.5
1968 196878 20701000 0.00951056 247.3
1969 210415 21001000 0.01001928 260.6
1970 190528 21297000 0.00894624 232.7
1971 233653 21962032 0.01063895 276.7
1972 249914 22218463 0.01124803 292.5
1973 268529 22491777 0.01193899 310.5
1974 222123 22807969 0.00973883 253.3
1975 231456 23143275 0.01000100 260.1
1976 273203 23449808 0.01165054 303.0
1977 245724 23725843 0.01035681 269.4
1978 227667 23963203 0.00950069 247.1
1979 197049 24201544 0.00814200 211.8
1980 158601 24515667 0.00646937 168.3
1981 177973 24819915 0.00717057 186.5
1982 125860 25116942 0.00501096 130.3
1983 162645 25366451 0.00641182 166.8
1984 134900 25607053 0.00526808 137.0
1985 165826 25842116 0.00641689 166.9
1986 199785 26100278 0.00765452 199.1
1987 245986 26446601 0.00930123 241.9
1988 222562 26791747 0.00830711 216.0
1989 215382 27276781 0.00789617 205.4
1990 181630 27691138 0.00655914 170.6
1991 156197 28037420 0.00557102 144.9
1992 168271 28371264 0.00593104 154.3
1993 155443 28684764 0.00541901 140.9
1994 154057 29000663 0.00531219 138.2
1995 110933 29302311 0.00378581 98.5
1996 124713 29610218 0.00421182 109.5
1997 147040 29905948 0.00491675 127.9
1998 137439 30155173 0.00455773 118.5
1999 149968 30401286 0.00493295 128.3
2000 151653 30685730 0.00494213 128.5
2001 162733 31020596 0.00524597 136.4
2002 205034 31358418 0.00653840 170.0
2003 218426 31641630 0.00690312 179.5
2004 233431 31938004 0.00730888 190.1
2005 225481 32242364 0.00699331 181.9
2006 227395 32570505 0.00698162 181.6
2007 228343 32887928 0.00694306 180.6
2008 211056 33245773 0.00634836 165.1
2009 149081 33628571 0.00443316 115.3
2010 189930 34005274 0.00558531 145.3
2011 193950 34342780 0.00564748 146.9
2012 214827 34750545 0.00618197 160.8
2013 187923 35155451 0.00534549 139.0
2014 189329 35544564 0.00532652 138.5
2015 195535 35848610 0.00545447 141.9
2016 197916 36286425 0.00545427 141.9

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