A groundbreaking new study from Concordia University’s John Molson School of Business and private equity firm Equiton has issued a stark warning: without a significant increase in housing supply, Canada’s major cities are on a trajectory for dramatic home price increases by 2032.

As your trusted real estate advisors, we believe it's crucial to understand the long-term forces shaping our market. This new research, titled “Breaking Ground: AI-Driven Analysis of How Policy Reform Can Unleash Canadian Housing Supply,” uses artificial intelligence to provide one of the clearest pictures yet of the challenges and opportunities ahead. Let's break down the key findings.

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The Stark Projections: A Look at 2032

The study leveraged a sophisticated neural network AI to analyze data from CMHC and Statistics Canada, simulating how home prices would react under different supply scenarios. The results are eye-opening.

If current housing completion trends continue without major intervention, the AI-driven model projects that median home prices could soar to:

• $2.8 million in Vancouver
• $1.8 million in Toronto
• $800,000 in Montreal

These figures underscore the urgent need for action, confirming CMHC's earlier estimate that Canada needs an additional 3.5 million homes by 2030 to restore affordability.

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The Power of Supply and Policy

The report doesn't just identify the problem; it quantifies the solutions. The AI model tested how specific changes could impact the market, revealing a direct link between policy, construction, and prices.

• Boosting Supply: The most powerful lever is increasing the rate of new home construction. The study found that doubling the current number of housing completions in Toronto and Vancouver could lower the projected 2032 median prices to $1.6 million and $2.5 million, respectively. While still high, this represents a significant reduction from the status-quo scenario.
• Cutting Red Tape: Regulatory efficiency plays a massive role. A 10% reduction in building restrictions could increase housing completions by nearly 10%. Similarly, a 10% decrease in project approval delays could boost completions by another 3%.
• Controlling Costs: Conversely, rising input costs, including materials, labour, taxes, and fees, pose a major threat. The research found that a 10% increase in these costs could slash housing completions by a staggering 25% to 35%, with apartment projects being the most vulnerable.

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City-Specific Dynamics

The study also highlighted that there is no one-size-fits-all solution, as local market dynamics differ. In Calgary, for example, home prices were found to be more sensitive to population growth than to supply levels. Meanwhile, in Montreal, strong and persistent demand means that prices are projected to continue growing regardless of the supply scenario.

This research provides an invaluable, data-driven look into the future of Canadian real estate. It makes clear that a multi-level, collaborative approach involving regulatory reform and cost stabilization is essential to prevent the dramatic price increases forecasted by the model.

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What This Means for You

For current and prospective homeowners, this study reinforces a key market fundamental: housing supply is the most critical factor influencing long-term value and affordability. The path to a balanced market is complex and requires more than just building homes; it demands a smarter, more efficient approach from all levels of government and industry.

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Whether you're planning to buy, sell, or invest, understanding these long-term dynamics is key. Contact Coldwell Banker Horizon Realty today to discuss how these future trends can inform your real estate strategy now.

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Source: Concordia University