On this week’s episode of Free Lunch by The Peak, we sat down with Russell Hixson, who writes about the construction sector, to talk about what’s driving growth in housing costs.
How much does it cost to build something in a city like Toronto?
“Since 2017, the cost of construction has gone up, I believe for the 11 biggest cities in Canada, by 73%. So Calgary, like 79%. Edmonton, 65%. Even the cities that you might think are more affordable and doing better, they've still had massive price increases.”
What are the persistent areas where builders are seeing cost increases?
“Not having access to labour is burning a hole in the pocket of builders. You have a lot of people who are highly skilled workers: electricians, project managers, carpenters. They're getting to retirement age, and they're retiring. We're going off a demographic cliff here.”
What are the ripple effects of the labour shortage in construction?
“If there are not enough people to build the homes and companies have to say no to the work because they're already at capacity in terms of the number of projects they can take on, fewer homes will get built, and then we aren't addressing our affordable housing crisis.”
What are some of the strategies that have the potential to bring costs down?
“Modular home building has a lot of potential. That’s when parts of the home are pre-built indoors. Weather isn’t a problem, and you can potentially save a ton of money and end up with buildings that are built to better tolerances. It takes fewer people to build them as well.”
This interview has been edited for clarity and length. Listen to the full conversation here.