Ontario Housing: Failure to Thrive

 In Feature Articles

Everyone knows that Ontario’s population is rapidly growing, and likewise, everyone knows that there is a major shortage of housing, whether considered “affordable” or not. As a result, 1-million new homes will be needed over approximately the next 10-years for both potential buyers and renters, according to a national research network and policy think tank based at the University of Ottawa aptly named the Smart Prosperity Institute. They worked closely with the Ontario Home Builders Association (OHBA) to arrive at the intimidating number of 1-million homes. Indeed, that number in their report is big enough for everyone to notice and realize that swift and effective action needs to be taken now to deal with Ontario’s population growth and properly address the ever-widening supply gap.

The in-depth research was into not only how many homes would be required, but also what types of homes would be required to house the estimated 2.27 million being added to Ontario (1.2 million of those being in the GTA) over a 10-year period, based on predictions from the Ontario Ministry of Finance. According to the Toronto Regional Real Estate (TRREB), the scarcity of housing supply in the GTA area alone has pushed an insane 18.3% year-over-year upsurge in the average selling price of a home to $1,136,280 this past September. Consequently, the TRREB board has called on all levels of the government to urgently work on improving the housing supply issue, which they say has reached a ‘critical juncture.’

 That said, about a month ago, a report from RBC senior economist highlighted the overall strength of the construction industry, as it relates to residential housing, which has seen housing starts over the past year reach the most sizeable level since around the mid-1970s and that the total amount of homes under construction is at an all-time high. But even with housing starts at an all-time high, move-in ready supply is staying very low due to the typical timeline to finish a new build taking more than double the time over the past two decades, from 9 to 21 months, depending on the housing type. Furthermore, the above-noted surges in housing starts are conspicuously absent in places like Toronto, where the housing starts rose by a meager 1.4% (500 units) when you compare it to the 2015 to 2019 average of housing starts. This definitively falls short of the national housing building growth of 26 % when compared to the rate established between 2015 and 2019.

A lot of this comes from the glacially slow-building permits approval process that further slows housing from being built rapidly, amongst other roadblocks like rigid zoning laws add to the issue. Ontario has already experienced speedy growth within just the past five years, with the population rising by almost 1-million people between July 2016 and July 2021. To draw a clear comparison, Ontario grew by only 600,000 in the five years before that. “The goal of building one million new homes in the next ten years presents a challenge for a province whose housing construction rates have led to a supply gap of over 60,000 housing units from 2016 to 2021,” said Mike Moffatt, senior director of policy and innovation at Smart Prosperity Institute, and author of the report.

 The reports final number was broken down over the next 10-years, like this:

 910,000: For new families (mainly for couples planning on having children)
65,000: To tackle current supply gaps in the market
25,000: To provide a cushion for any other unexpected additional population growth during this time period

 The report predicts that approximately 195,000 will reside in high-rise apartment buildings and that the remaining 715,000 will end up living in all other forms of housing.

 The report stated, “If Ontario manages, through the complex planning system that ultimately requires municipal governments to implement Official Plans, to ensure housing supply matches with projected housing demand, the provincial economy and residents of the province will benefit enormously as the quality of life improves, and housing becomes more available, attainable, and sustainable. “How many housing units are ultimately built in the province will be the result of the choices all levels of government make in the coming years,” reads the end of the report.

 “Ontario’s housing market is a bit like a cruel game of musical chairs where more and more people, and in particular young families looking for room to grow, are leaving more expensive cities and scattering across the province in search of housing,” said Mike Collins-Williams, chief executive officer of the West End Home Builders’ Association. “We need more housing supply and choice in communities across Ontario. The one million new homes that are needed over the next decade to respond and support young families can only happen if municipal councils approve the necessary mix of housing options in their communities.”

 In closing, failure to address these ongoing housing issues in Ontario will continue to push people out of many of Ontario’s largest cities and communities until they find affordable places to live in. The bottom line? The more housing that exists, the more affordable it will be, making for more successful people, cities, and local economies.

Alex Szot is a Pre-Construction Engineer at GeoSolv. He holds a Bachelor of Applied Science degree in Civil Engineering from the University of Toronto and is a practicing member of the Association of Professional Engineers of Ontario. He has over seven years of experience in a wide range of geotechnical areas, having worked as a geotechnical consultant before joining GeoSolv. If you have any questions for Alex, he can be reached anytime at alex@geosolv.ca

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