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Canada is in the midst of a record housing construction boom, but Toronto is notably absent from this surge, according to the Royal Bank of Canada.

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Canada has long wrestled with a housing supply shortage problem, but over the past year, it’s not for a lack of building. A report by the Royal Bank of Canada found that housing starts over the past 12 months were at their strongest since 1977 and the number of new housing units currently under construction is at an all-time high.

In the past year, as many as 260,500 housing units began construction with their foundations poured, defining the housing start. The report added that this is a building boost of about 26 per cent compared to the average pace set in 2015 to 2019. The last time construction activity was buzzing this much was in the mid 1970s —  a decade that began with the country being heavily plagued by stagflation.

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There have also never been so many housing units under construction, with nearly 320,000 in progress. Robert Hogue, senior economist at RBC and author of the report, expects that housing completions should accelerate over the next year.

“This is by far the highest number, and a 12 per cent (or more than 30,000-unit) increase from the end of 2019. About three-quarters of the total are apartments (mostly condos but also rental),” Hogue noted.

While any number of scenarios could blunt the escalation of home completions, analysts at RBC believe as many as 240,000 units could be completed nationwide in 2022.

Smaller markets, such as rural and smaller urban areas, are the first to see the pick-up in pace. This is largely due to the types of homes being constructed in these areas, which were ground-oriented, single-detached homes that have a quicker turnaround time than the larger multi-unit towers that are more common in large metropolitan areas. The housing frenzy throughout the pandemic underscored the widening gap between supply and demand.

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Toronto, the country’s most populous city, did not contribute to the supply construction surge, seeing its housing starts rise by only 1.4 per cent (or 500 units) compared to the 2015 to 2019 average. The report points the finger at Ontario’s Fair Housing Plan in 2017 which preceded a steep drop in pre-construction condo sales between 2018 and 2019. The boost in issued building permits may have the market turning the corner on this slump, but without a meaningful growth in unit development, there will be fewer housing options for renters and buyers.

While the ramp-up in construction was more elevated in places like Vancouver (10.3 per cent), Calgary (7.2 per cent), and Edmonton (4.1 per cent) in the same timeframe, their rates still fall below the national average of 26 per cent.

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Despite the home construction boom, there are still many challenges to building a move-in ready home, particularly in this climate. Rising construction costs for materials like lumber are only climbing further, making these projects expensive and leaving the completed product less affordable for Canadians. The projects are also taking longer to finish, with the average timeline for housing completions more than doubling during the past two decades from nine to 21 months.

Finally, the choppy supply chain is making it more difficult to reliably access the materials needed for these projects, lengthening and elevating the prices for an already time-consuming and expensive process. The supply chain dynamic could serve as an impediment to housing completions in the next year, Hogue pointed out.

Strong immigration with growing targets every year and an increasing need for more housing options for younger Canadians means that the stakes are high to build more units and build the right type of housing. The report suggested that given the high costs of home construction that will demand higher prices once they hit the market, it is unlikely that the types of homes built will fill the gap for Canadians with a modest income.

• Email: shughes@postmedia.com | Twitter: StephHughes95