Fort McMurray residents to face housing shortage as large-scale rebuilding takes over town

Large-scale rebuilding in Fort McMurray won’t start until next year, a report published Thursday by the Canada Mortgage and Housing Corporation predicts.

And by 2017, the community will see significant housing shortages, as construction workers and displaced residents try to cram themselves in, the report warns.

WATCH: Fort McMurray’s recovery committee now says the rebuild of the community could take three to five years. They caution it’s an early estimate, and it could be longer or shorter depending on progress. Reid Fiest has more on the start of the long process of rebuilding.

2:32 Fort McMurray wildfire rebuild could take years

Reconstruction in Fort McMurray is being delayed by cleanup and the nightmarish work of processing insurance claims for thousands of destroyed homes.

In May of 2016, an enormous wildfire forced the entire population of Fort McMurray, about 80,000, to flee on short notice. Oil sands production was shut down. One neighbourhood had 90 per cent of its structures destroyed. Some 1,928 structures were destroyed in total, some of them multi-unit buildings.

WATCH: It’s been exactly three months since residents fled Fort McMurray as flames chased them from their homes. Some homeowners returned to rubble and were forced to start over from scratch. As Sarah Kraus reports, some residents are concerned a clause in their insurance policies will prevent them from accessing the money they need to rebuild.

4:11 Fort McMurray homeowners express concerns over insurance policies

Many homes were sealed with a heavy foam to trap toxic substances, which now has to be removed before rebuilding can start. (Rebuilding was delayed in a similar way after the Slave Lake wildfire in 2011.)

If every home destroyed by the fire is rebuilt, Fort McMurray will see about 2,500 housing starts next year, the highest number the community has ever seen. Builders will also be busy working on homes that were left damaged but repairable.

2017 should see “the highest new home construction activity Fort McMurray has seen in twenty years.”

But that doesn’t solve the problem of where returned residents and construction workers go in the meantime. Fort McMurray had a high rental vacancy rate and falling rents before the fire, but that won’t be the case for the foreseeable future, the report says.

WATCH: The Fort McMurray wildfires have sparked new research related to PTSD. A Canadian research team is studying the mental health effects of the fires. Su-Ling Goh has the details.

2:38 Canadian researchers begin to study mental health impacts of Fort McMurray wildfire

Work camps opened accommodation for residents during the fire, but their quarters aren’t designed for families and are too far from Fort McMurray to commute.

However, it’s an open question whether the most devastated areas, where the fire destroyed basic infrastructure like roads and water pipes, will be repaired next year – or at all.

Some displaced residents might cash the insurance cheque and leave, especially given the depressed state of the oilpatch economy, but over half of those who fled the wildfire this summer have returned, the report says. People whose homes were spared by the fire may leave for economic reasons, freeing up houses for those whose houses were destroyed to buy.

The federal government will distribute $300 million in disaster relief funds, some of which can be used to repair damage to homes that isn’t covered by insurance.

WATCH: Fort McMurray wildfire: Abasand, Beacon Hill residents can now begin to rebuild

1:46 Fort McMurray wildfire: Abasand, Beacon Hill residents can now begin to rebuild