This is why we can’t have nice things.

Who will build the homes we need?

Ogmundson packed a tonne of value and granular details in his presentation, but one thing that stood out to me was the upcoming mass exodus of skilled tradesmen and the impact on productivity in the new housing construction sector.

As BC faces an ongoing housing crisis, all eyes are on the province’s ambitious housing construction targets. With a growing population and a pressing need for affordable housing, the targets set for 2024 and beyond are critical. But there's a big challenge looming: a severe labour shortage in the construction industry that could drastically slow down progress. In the Greater Vancouver area, where housing demand is already sky-high, this shortage could spell serious trouble for the region’s housing goals.

The construction industry in BC is struggling to find enough skilled workers to meet the demand for new housing projects. According to the BC Construction Association (BCCA), over 11,000 new workers are needed each year to keep pace with current demands. However, retirements, competition from other sectors and a slow pipeline of new tradespeople entering the workforce are leaving a massive gap.

Another big issue facing the construction industry isn’t just the sheer number of workers needed but also the productivity levels of new tradespeople. As more experienced workers retire, the industry is relying on apprentices and less experienced tradespeople to fill the gap. While these workers are essential to the future of the industry, their lower productivity during training periods can significantly slow down project timelines.

For example, in large-scale housing developments, delays from under-skilled labour can push projects back by months or even years. This compounds the housing shortage problem, as delayed projects mean fewer housing completions in the short term. Given that new workers take several years to reach their full potential, the productivity gap will continue to impact housing targets well into the future.

High costs and red tape are making it worse.

Economic and other factors are putting additional strain on the housing sector as well:

1. High construction costs: Vancouver already grapples with some of the highest construction costs in the country, and fees are a big part of that. According to CMHC data from last year, development cost charges made up 2.1% to 6.8% of building costs, depending on the housing type. When you include additional costs like permit fees, density payments and municipal charges, the total jumps to 8.1% to 20.4%. For single-detached homes, the number sits at 3.7%. All of these charges add significant weight to housing affordability challenges in the city.
   
2. Interest rates: Even with the Bank of Canada reducing interest rates in 2024 to curb inflation, borrowing costs for developers remain high. This has led to delays in new project launches, as developers are cautious about starting new builds with higher financing costs. For consumers, interest rates continue to make mortgages more expensive, reducing the pool of qualified buyers, which in turn slows down demand for new builds, making it even harder for projects to get funded.
   
3. Immigration and population growth: Greater Vancouver continues to experience rapid population growth, driven by immigration and interprovincial migration. As more people move to the region, the demand for housing intensifies. But with labour shortages slowing construction, the gap between supply and demand is widening, which further drives up housing prices.
   

Regulatory delays are also playing a major role in slowing down housing projects. The current target for processing development permits for mid-rise projects (three to twelve stories) is three months – provided no rezoning is needed. Yet, in 2024, the actual average time for these small mid-rise permits has stretched to 19 months, significantly missing the mark. For larger high-rises and major developments, the wait time can extend anywhere from 1.3 years to three years.

Just how bad is it?

So, what does this all mean for BC’s housing targets in 2024 and beyond? The BC Government has set aggressive housing targets to combat affordability issues, with plans for 50,000 new housing units in 2024 alone.

However, the trend over the last five years shows consistent shortfalls in hitting housing targets, and the labour shortage is making things worse. It’s clear that without an intervention to address the labour shortage, BC will continue to fall short of its construction goals. In fact, even if more workers are brought into the industry, the productivity gap will persist for years, delaying housing completions.

As we look beyond 2024, these same challenges are likely to persist, making it difficult for the province to achieve its ambitious housing goals.

What we can do about it.

To combat these challenges, the industry and government need to consider several solutions:

• Boosting apprenticeship programs: Expanding training and offering incentives for younger workers to enter the trades could help fill the gap. However, these efforts will take time to bear fruit, as new workers need years to reach full productivity.
  
• Attracting foreign workers: Counterintuitively, easing immigration rules to allow for more skilled construction workers to enter BC could actually provide immediate relief, helping to meet short-term housing goals.
  
• Exploring technological solutions: The use of automation and prefabrication could reduce the reliance on manual labour in certain aspects of construction, helping to speed up timelines and reduce costs. Other municipalities, such as Edmonton, Alberta have recently approved a new digital tool that allows people to apply for a development permit and the build to begin on the same day, provided the application meets requirements.

BC’s labour shortage is poised to significantly impact new housing construction targets in 2024 and beyond. With fewer workers entering the industry and a growing productivity gap, the province faces the risk of falling further behind on its ambitious housing goals. Add rising costs and regulatory delays to the mix, and it’s clear that solving the housing crisis will require innovative solutions. If the housing demand in the Greater Vancouver area and across BC is to be met, addressing the labour shortage must be the province’s priority.