Despite making progress on its goal of building 1.5 million new homes by 2031, the Ontario government must do more to improve housing stock and cut down on bureaucratic obstacles, the Ontario Real Estate Association (OREA) says.
Ontario’s current housing stock situation falls far short of what is currently needed to house the province’s growing population.
According to OREA CEO Tim Hudak, Ontario saw more housing starts in 2021 and 2022 than it had for the past 30 years. However, housing starts in 2023 fell 7%, according to the Canada Mortgage and Housing Corporation (CMHC), with a 25% reduction in starts for single-detached homes.
In an analysis of Ontario’s efforts to boost housing supply released by OREA today, the association notes that 76% of the 55 recommendations given by the Ontario government’s Housing Affordability Task Force in 2022 have already been implemented or are in progress. OREA claims Ontario housing starts in 2021 and 2022 were the highest in 30 years, but that more needs to be done.
Creative approaches needed to make housing more accessible
“The government’s bold goal needs to be continued bold action, and they have the tools to accommodate the province’s growth,” Hudak said at a Queen’s Park press conference on Thursday. “Solving the housing affordability crisis in Ontario cannot be addressed without addressing the need for more housing supply today.”
Going forward, the OREA is also looking to lower housing costs in the first place by lowering or eliminating what it describes as costs that hamper housing development.
One of them is the Land Transfer Tax, a fee the OREA says should be either banned entirely or significantly reduced. But OREA also wants to reform how municipalities collect and spend development charges, claiming that just under half of what was collected in 2021—around $4 billion—was spent that year.
“We really want to focus on getting more homes built, and more apartments,” Hudak says. “We don’t think that higher taxes, like we’ve seen some municipalities do, or thicker regulation, will do that.”
On top of cutting costs and reforming land zoning, OREA wants the Ontario government to make home ownership more affordable by creating an innovation fund in the Ministry of Municipal Affairs and Housing that would fund and support alternative pathways to owning a home, and help lower the cost of building homes for first-time homebuyers. Compared to jurisdictions like the United Kingdom, Hudak says, Ontario’s financial institutions aren’t looking into these models.
“Co-ownership would offer an opportunity for first-time homebuyers to get into the market,” Hudak says. “It could be co-owning a home with another person. It could be co-owning a home with an investor, or even with the government. And then, when you sell that home, you pay back that investment.”
OREA is looking for the Ontario government to prioritize loan guarantees and support for purpose-built rental, affordable rental, and affordable ownership progress. It wants the Ontario government to not use what it describes as “overly restrictive administrative burdens and agreements,” and instead wants contracts based on the private sector’s practices rather than the government’s typical terms and conditions.
Addressing existing challenges
OREA is also calling for the provincial government to reform the Ontario Land Tribunal to eliminate case backlogs, allow fines for unreasonable delays, and prevent what it describes as abuse of the system.
It also wants to end exclusionary zoning rules for single-family homes across the province, a change cities like Toronto, Hamilton and London have already made, and convert all land along transit corridors and residential apartments and offices in Toronto to mixed commercial and residential use.
Overall, the OREA report says, the provincial government has made notable progress on improving the overall housing supply, from setting a goal of building 1.5 million new homes to the simplification of policy documents and planning legislation related to housing construction.
But the report says about a quarter of the Housing Affordability Task Force’s recommendations have, thus far, gone unheeded.
These include requiring municipalities to pay property owners from the loss of property value as a result of heritage designations, allowing as-of-right zoning of 6 to 11 storeys with no minimum parking requirements anywhere in the province, and eliminating or reducing tax disincentives to housing growth.
High housing demand poses challenges
Meanwhile, Canada continues to see very high demand for housing that currently outstrips the existing housing stock. Many would-be homeowners are forced to remain renters, and even the rental market is becoming harder to enter.
According to a recent CMHC report, Canada’s apartment vacancy rate was just 1.5% in October, the tightest on record.
CMHC pointed out that the number of rental units in Toronto or Ottawa that are considered affordable for people with the lowest incomes is effectively zero.
OREA remains optimistic
Yet in spite of Ontario’s ongoing issues, Hudak says he remains optimistic that the Ontario government will be able to vastly grow the province’s housing supply.
In his view, Ontario’s government under Premier Doug Ford is heading in the right direction on policy, and he attributes the drop in 2023 housing starts to rapidly rising interest rates, and its corresponding effects on homebuyers.
But he believes the government cannot afford to tap the brakes.
“We need to put our foot on the gas,” Hudak says. “We can’t hesitate. No more studies. There’s a pathway here that has been laid out. Just get it done.”
Brennan Doherty