Housing bubble begone. Turns out we just might need all those new condos and houses
Are we really overbuilding, constructing too many condominiums and creating too much sprawl? A new report maintains we need that housing more than ever.
Benjamin Tal, deputy chief economist with Canadian Imperial Bank of Commerce, says we might be substantially underestimating household formation because we are not factoring in up to 100,000 immigrants.
“Ask any real estate developer in any of Canada’s major cities about the risk of overbuilding, and the first line of defence would be immigration and its critical role in supporting demand,” writes Mr. Tal, in a note he coauthored with Nick Exarhos. “It turns out that at least for now, this claim is more valid than widely believed.”
Mr. Tal points out that not only do new immigrants account for about 70% of our population growth about half of them are in the 25-44 age cohort, a key demographic that will lead to more household formation.
In 2013, the number of Canadians aged 20-44 grew by 1.1% which is the fastest pace in more than two decades and stronger than the average of countries in the Organisation for Economic Co-operation and Development.