It’s time to start looking at bold solutions to address Ontario’s housing affordability crisis
Housing affordability is likely the most critical issue Ontarians face today. In February 2022, the average price of a home in Ontario hit $998,629, representing an annual increase of 26%. Meanwhile, the average household income in Ontario is around $80,322 after tax. Ontario housing prices have increased dramatically in recent years, vastly outpacing income growth, creating near-impossible barriers to home ownership for many.
With Canada welcoming a record 401,000 new permanent residents in 2021 and even greater targets set for the next three years, bold solutions for increasing housing supply are essential to tame the affordability crisis.
The main factor contributing to Ontario’s rocketing housing prices is lack of supply. Canada has the lowest number of housing units per capita of any G7 country and Ontario’s housing shortage is the worst in the country. The province needs to add more than 650,000 additional housing units just to reach the same housing-per-capita average as the rest of the country. To address Ontario’s housing affordability crisis, the Ford administration’s Ontario Housing Affordability Task Force (OHATF) recently released a report that includes 55 recommendations aimed directly at improving affordability.
The report offers several excellent ideas that, if implemented correctly, would be game-changers for increasing housing affordability. However, some of the recommendations put forward would have a significant, deleterious impact on current homeowners. While many developers and housing advocates groups have welcomed the report’s findings, the general public may not be aware of the very material ways these recommendations would affect their communities if implemented.
Increasing supply is essential to improving housing affordability
The OHATF report acknowledges that Ontario is in a supply crisis. Pricing is not being driven by a “bubble” that is going to pop; the evidence is clear that there is simply insufficient supply to meet current demand and future needs. Instead of proposing measures to cool demand, such as taxing house flippers, we must look at ways to speed up the development and construction processes. The OHATF urges the province to set a bold target of adding 1.5 million homes over the next 10 years and updating planning regulations to make this a priority.
150,000 homes per year is a vast number. Despite Toronto’s skyline hosting more high-rise construction cranes than any other city in North America, only 81,325 new homes of any type were completed in 2021 in the entire province. While it feels like there is an abundance of development in Ontario, the reality is that every year supply falls significantly behind demand. The OHATF’s report seeks to address ways to accelerate development.
Create greater density by altering how lands are being used
One of the primary causes of delays in housing development is the immense difficulty developers face in converting land use permissions. A welcome aspect of the OHATF report is the recommendation to automatically convert underused commercial and industrial properties to allow for “mixed-use” development that permits both commercial and residential construction.
Underutilized “employment lands” present an excellent source of land for more housing supply as they are currently reserved for uses that no longer fit urban needs. While Toronto was once a locus of manufacturing, the city’s lands reserved for heavy industry are generally no longer needed and these spaces can be intensified with mixed-uses. The shift to remote work is fundamentally shifting how and where we work, rendering segregated areas reserved for work generally obsolete in urbanized areas. Housing can be added to employment lands while still protecting space for future economic activity through vertical intensification. Mixed-use buildings are already common, in which residential and commercial (office and retail) uses are creatively integrated into functional architecture. This type of thoughtful densification preserves space for employment while allowing valuable land to also be used for residential purposes.
Another recommendation set forth by the OHATF report that can help increase density is permitting “as of right” secondary suites, garden suites, and laneway houses province-wide. Advancing “as of right” permissions means that property owners are able to build additional residential space on their property without having to go through complex, costly, and stressful rezoning and “minor variance” processes. We are already seeing this happen in Toronto, which recently announced that homeowners will now be permitted to build garden suites on residential properties in the city, in addition to laneway houses, which were made legal in 2018.
The OHATF report also attacks Ontario’s stringent heritage designations as an at-times unacceptable barrier to increasing housing supply. While the built history and heritage of the province must be protected, the Task Force recognized that abuse of heritage designation regulations has been slowing supply and making development significantly more expensive. The recommendations in the report will help to ensure heritage designations are not taken advantage of as a means to stall development, while still protecting valuable heritage-listed properties.
Allowing “as of right” permissions will have a significant impact on residents
While allowing “as of right” permissions will undoubtedly grease development approval processes, it is also true that some of the Task Force recommendations will be highly controversial as their disruptive effects become apparent to existing homeowners and community associations. For example, the recommendation to allow four-storey, four-unit multi-family residential buildings on all residential lots in the province “as of right” could destabilize single-family communities with construction chaos, significant street parking shortages, over-populated school districts, and extreme cost increases for home renovation projects. Savvy developers are already “tying up” residential lots in case this recommendation makes its way into legislation. While these types of “as of right” changes will undoubtedly lead to increased supply of much needed housing units for those in need, the negative impacts on existing homeowners will be significant.
The OHATF report also recommends allowing more permissive land use by creating universal provincial standards for urban design and removing policies that prioritize preserving the character of neighbourhoods. While preserving the character of neighbourhoods is assuredly important, too often, housing projects are delayed or rejected as a result of archaic preferences of local property owner associations activists who continue to profit from rising property values at the cost of housing supply. As a result, the OHATF report also recommends significantly increasing the fees that must be paid by third parties seeking to obstruct approvals of new developments.
It’s time to shift how we view development
Tough conversations need to be had about which of the OHATF’s recommendations should be legislated. Housing unaffordability has reached critical levels in Ontario, and throughout the province community pushback and resistance, along with government red tape, has created barriers to increasing supply by slowing municipal approval processes and discouraging new housing.
The OHATF report makes clear that we need a fundamental shift in the way we think about city-building. If we genuinely hope to increase the available housing stock and improve affordability, we need to collectively look at the bigger picture and start seeing new development as the solution.
As we head towards a provincial election on June 2nd, expect housing affordability to become a decisive—and possibly divisive—issue. The OHATF report will almost certainly inform legislation put forward by the current government. It will be interesting to see how the opposition parties respond; they are not used to seeing a mandated government subsume homeowner rights to the forces of social good pushing a pro-housing agenda. This crisis goes beyond party affiliation. The fundamental fact is that people need places to live, and those are in short supply. It is time to start considering the needs of future residents in addition to the rights of current homeowners to create a better and more equitable future for the residents of Ontario.
Randy Gladman is Senior Vice-President of Development Advisory at Colliers in Toronto
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