Fraser Forum

Housing takes centre stage in Toronto election

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Though Toronto’s mayoral election is still months away, this has not stopped candidates from trading barbs on hot button issues. In particular, it appears housing has taken centre stage, with frontrunner candidates (current Mayor John Tory and former Chief Planner Jennifer Keesmaat) both promising to boost the stock of rental housing in Canada’s largest city.

With GTA rental vacancy rates among Canada’s lowest (around one per cent), it’s about time this issue receives the attention it deserves. A tight housing market hurts Torontonian families through the higher costs it imposes on household budgets, and the difficulty in finding adequate units to match specific needs (e.g. more bedrooms for a growing family).

This issue also hurts businesses, some of which are finding it increasingly difficult to attract and/or retain workers of all skillsets, despite Toronto’s relatively higher wages. In short, housing is a big deal.

While boosting the stock of rental housing is crucial to reducing vacancy, the specific policy approach can mean the difference between success and failure. So far, both major candidates have been short on details.

Mayor Tory (pictured above) promises to expand the city’s Open Door program of subsidized rental and ownership units by 40,000 over 12 years, while Keesmaat announced that, under her leadership, the city would build 100,000 “truly affordable” rental units on city-owned land over a decade. Beyond these pledges, neither candidate has provided details on how they would achieve their targets.

Though it seems that one or both candidates plan to push for more social housing (to varying degrees), alleviating the city’s vacancy problems will primarily fall to the private sector. After all, it makes little sense to provide public funding for the vast majority of people who could otherwise afford market rate housing—so long as it’s available.

To ensure an adequate supply of market-rate housing, candidates can look to cities in the United States. In Seattle—home to corporate giants Amazon, Boeing and Microsoft—rents dropped significantly this year after a decade of growth. The same recently happened in Manhattan, America’s financial hub, where median rents plunged 3.2 per cent year-over-year. Why? Because these cities build enough new units to meet strong demand.

Thanks to thousands of new units entering the market, Seattle’s rental vacancy rate jumped to 5.4 per cent in December—five times that of the GTA—indicating a far healthier balance between supply and demand. To unlock the housing supply in a similar fashion, Toronto City Hall can reduce the timelines homebuilders face to obtain building permits. According to periodic surveys of homebuilders between 2014 and 2016, it takes just shy of 18 months, on average, to obtain permits in Toronto. These timelines are prolonged by the need to rezone, and the uncertainty caused by unclear application processes, including opaque negotiations the city often requires to allow more density.

Shorter timelines and clearer rules would go a long way in making Toronto more housing-friendly. And, ideally, the mayoral candidates’ currently undefined housing strategies will include ambitious plans to remove barriers to building the many market-rate housing units the city needs.

As vague as their housing promises may be, the very fact that Mayor Tory and Keesmaat are considering vast increases to the housing supply is a positive development. It’s only by allowing new homebuilding to respond to strong demand that the cost of renting and buying will become more affordable to current and prospective Torontonians.

 

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