Ontario is in the midst of a housing crisis as prices continue to soar.
People should have the choice to live close to work and family, just like the generations before them. But for too many of them, the housing crisis has already made that choice for them. Tragically, as these problems ripple through the housing market, rents have skyrocketed, pushing people living in precarious housing into homelessness.
So how do you resolve this situation? How do you curb an uncontrollable and artificially inflated real estate market without creating winners and losers?
Before solving the problem, we must first understand it. Economist Mike Moffatt’s research points to several factors that have led to a mismatch between housing supply and demand in the province.
Ontario has experienced accelerated population growth, with our population growing by one million people in the past five years, compared to 600,000 in the previous five years. Moffatt estimates this created a demand for 430,000 homes during this period, but only 330,000 homes were completed. We are 100,000 houses short. Indeed, analysis of major Canadian banks indicates a national housing shortage over the past five years.
Added to this challenge is the impact of investment purchases and the availability of cheap credit, which means that those with the financial resources are able to drive up the prices of purchases. Layer on the impact of COVID driving demand out of the Greater Toronto Area. Finally, material supply and labor shortages are causing construction costs to rise rapidly.
This created a perfect real estate storm. And while it might be tempting to blame municipalities for adding to the pain with approval processes or fees, there’s a lot more going on.
A survey of Ontario’s largest municipalities suggests there are at least 250,000 new homes and apartments that were approved in 2019 or earlier but have yet to be built. Although approval processes are only a small part of the overall cost of housing, auditing municipal and provincial processes can yield positive results, but we also need to look at why approved units are not being built.
We need more pragmatic and impactful solutions, based on a healthy economy. This means we need to focus on the economic levers; measures that reduce housing costs by a few thousand dollars will have no impact in the face of current price increases.
Municipalities, the province and the federal government must change the economics of development to encourage affordable built forms – particularly the “missing middle” which could include apartments on arterial streets, mid-density and high-density rental housing in urban, and soft density in the neighborhoods.
What will that do? We will need a unified intergovernmental approach in 2022. There are too many working groups, summits and programs going on right now between the three levels of government. Instead, we all need to be at the same table – federal, provincial, municipal, the homebuilding industry and those who control capital.
All three levels of government must work together to plan solutions such as immigration through a housing strategy for new Canadians, which becomes part of the immigration system. The offer must be adapted to population growth.
And for those for whom housing costs are completely prohibitive, we will need continued provincial and federal investment in subsidized and social housing.
Finally, we need local implementation of housing solutions. Every community in Ontario is unique and the solutions will be different in Thunder Bay, Tillsonburg and Toronto. Elected city councils must have the political will to implement change because they are closest to their communities and have a better understanding of what will work.
Respecting local decision-making will increase the chances of success as we increase the supply of housing in Ontario.
We know how our population is growing, we know how our workforce is changing. Let’s take these numbers and prepare our communities to be able to house more people, in a coordinated and thoughtful way.