Ontario’s double-squeeze on new homes

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Appeared in the Toronto Sun, May 12, 2017

As public concern over skyrocketing home prices in Toronto reaches a fever pitch, governments are quick to point to external factors—foreign buyers, real estate speculators, supposed greedy landlords—but rarely stop to think about how their own actions contribute to the situation.

Housing in the Greater Toronto Area (GTA) must either grow upward or outward (or both) to accommodate rapid growth. However, government policies are restricting both options. This double-squeeze is a key contributor to declining affordability in Toronto.

The GTA is growing fast. Between 2011 and 2016, it added almost 350,000 new residents—roughly the population of Markham. This attests to the region’s status as a hub for jobs, culture and lifestyle, and should be celebrated. New residents need new homes of all kinds. One way cities can respond is by growing outward. More housing on the urban fringe, feeding people downtown to work. This was the main approach for much of the 20th century and, to a lesser extent, today.

However, provincial policies, including the Greenbelt and the 2006 Growth Plan for the Greater Golden Horseshoe, hem this growth in, preventing new subdivisions from emerging near Toronto and pushing them farther out along a 400-series highway toward Barrie or Guelph. This means fewer new homes and longer commutes for those that get built.

The other way cities can grow is upward. Townhomes and apartment towers can replace post-war bungalows and parking lots, bringing people closer to jobs and amenities such as museums, schools and cafés. But restrictive zoning, costly fees at city hall, long and convoluted building permit approval processes, local opposition to new homes—all these forces can stunt upward growth and make it more difficult for the housing market to respond to growing demand.

So what can be done?

A good first step in addressing the squeeze is to loosen constraints on new housing. Shorter, more predictable building permit approval timelines, reasonable costs and fees on homebuilders, and far more flexible zoning would go a long way towards a more housing-friendly environment in the GTA.

For examples of success, cities such as Toronto need only look at what their neighbours are doing. Recent research shows strong variations between municipalities on timelines, costs and local attitudes towards new housing. For example, it takes 3.4 months longer, on average, to obtain a building permit in Oakville than in neighbouring Burlington. Compliance costs and fees at Toronto City Hall are typically more than twice what they are in Hamilton. By sharing best practices, municipalities can help boost the housing supply, without any additional action from Queen’s Park.

Clearly, the double-squeeze on new homes is contributing to price growth in the GTA. Queen’s Park hampers outward growth by taking land off the table for homebuilding, and city halls slow upward growth through onerous land-use regulations. If governments want to address the housing shortage and skyrocketing prices, they can start by sharing best practices to reduce barriers to homebuilding.

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