Fraser Forum

Ontario set to fall far short of homebuilding goal

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Ontario set to fall far short of homebuilding goal

Just over a year ago, the Ford government’s Housing Affordability Task Force published a report with its findings and recommendations including the goal—since adopted by the government—of doubling homebuilding, with an eye on building 1.5 million homes by 2032. This was clearly a tall order at the time. But it appears that only now is the sheer magnitude of the challenge beginning to sink in.

In its latest budget, the Ford government published a series of economic forecast assumptions including housing starts between 2022 and 2025. This metric, indicating the number of homes for which construction would begin, is estimated to average roughly 85,000 housing units annually over this period. For context, Ontario averaged just under 77,000 housing starts between 2012 and 2022.

Why is this important? Because, by its own admission, the government believes it’s unlikely to reach its homebuilding goal of (at least) 150,000 new homes per year, which it deems necessary to end Ontario’s chronic housing shortage.

Falling short of the government’s homebuilding targets might not be a big problem if the housing market was starting with a healthy housing stock. However, as a recent Scotiabank report noted, Canada has the lowest number of housing units per 1,000 residents in the G7. And among Canada’s largest metropolitan areas, the three with the fewest housing units per 1,000 were in Ontario, led by the Greater Toronto Area (GTA). In other words, the GTA is the worst performing region in the worst performing country. So falling short of the task force’s targets is a big problem.

To be sure, many of the reforms contained in the new Bill 23—the More Homes Built Faster Act—could help grow the housing supply. Amending local zoning to allow homeowners to add up to two more units to their properties and exempting developments of up to 10 units from site plan control (a step in the planning approval process) will help free up land and accelerate development approvals.

However, when faced with the goal of doubling housing supply, these reforms amount to tinkering at the margin. The latest land-use reforms fall well short of the task force’s recommendation of allowing six to 11 storeys “as of right” (without rezoning) and eliminating minimum parking requirements on all streets utilized by public transit. They also don’t shorten or remove the many intermittent stages where provincial growth policy must pass before becoming reality. For example, local official plans (which guide citywide growth) take years and substantial public consultation to update, only for local zoning to remain unchanged. This leads to further friction, further costs and further uncertainty, all of which frustrate homebuilding.

Ontario needs more houses, and fast. By the government’s own admission, we’re likely to fall short. The longer it takes to get more housing built, the longer Ontario’s housing crunch will persist. That’s bad news for Ontarians. Many more reforms are needed if Ontario is to double homebuilding this decade. In the meantime, however, the Ford government appears resigned to fall well short of its own targets.

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