Housing supply

GTA needs better forecasts to solve housing supply problem

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In the early to mid-2000s, Ontario decided to actively manage growth and development in the Greater Toronto and Hamilton Area and surrounding municipalities for environmental, social and economic reasons. This decision came to life in the form of the Growth Plan for the Greater Golden Horseshoe, 2006, and subsequent Growth Plans, which determine the number of dwellings built, their location and their density. These plans are informed by population, migration, and housing completion forecasts that attempt to project exactly how much housing will be needed in the future. Since these forecasts are fundamental to determining future housing needs in our region, it is important to ask whether they are as accurate and reliable as possible.

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If population projections are too high, municipalities build too much or invest too soon in infrastructure to support growth that does not materialize or that occurs much later. This can put a strain on municipal finances, as they invest before the development charge revenues they will receive once the development is completed. This situation is not ideal but may be preferable to the alternative. When the population forecast is too low or the housing completion forecast is too high, there is not enough housing projected for population growth and we get a shortage of housing supply, resulting in the type price escalation and affordability issues we are currently experiencing in the GTA. .

In order to understand the factors that led to this forecast failure and a key reason for the housing supply and affordability crisis in our region, BILD asked the Institute for Smart Prosperity to examine population, migration and housing completion forecasts used to plan housing in the GTA.

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The Smart Prosperity report, funded by BILD and released on January 25, found that over the past seven years, forecasts have underestimated population growth and overestimated housing completions. This means that municipalities plan for growth using inaccurate assumptions and, predictably, end up with a shortage of necessary infrastructure and a lack of housing to support new residents. Combine that with our area’s lengthy building approval processes and significant government fees, taxes and charges on new homes, and it’s no wonder so many GTA residents struggle to find the options of housing they need at affordable prices.

As the report rightly notes: “Developing accurate long-term forecasts in an environment of rapid political change is a Herculean task. This illustrates the need for more regularly updated forecasts, as well as the uncertainty built into existing forecasts.

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So what are the solutions to make forecasts more accurate? Obviously, one needs to look at how and how often we forecast housing demand. Some solutions that could be implemented relatively easily are to have a common and agreed data set, to update this data regularly, and to revise forecasts in the event of major policy changes, particularly around immigration targets. . We should also build contingencies into planning models to account for variations over time.

The root causes of the GTA’s housing supply and affordability issues are complex. Understanding that inaccurate forecasts of population and housing completion are part of the problem, we must seek solutions that will allow us to better plan for the future of our region.

Dave Wilkes is President and CEO of the Building Industry and Land Development Association (BILD).

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