Ontario Real Estate: Difficult Decisions Need to be Made

Enough promises. It’s time for action. That’s the message from RE/MAX Canada President Christopher Alexander in response to the housing supply crisis and resulting affordability challenges plaguing the Ontario real estate market.

The housing supply shortage has been making national and Ontario real estate news headlines, driven by the 2021 federal election and more recently, the Ontario election. But this topic has been a long time coming, Alexander told Storeys in a recent interview. “There was an almost two-decade long pause in new housing starts in the early ’90s, and we’re starting to experience the effects of that.”

Residential Starts Falling Short in Ontario Real Estate Market

Ontario housing starts have seen some dramatic ups and downs over the last 20 years. Between 2001 and 2021, according to data from Statistics Canada and Statista/Canada Mortgage and Housing Corp. (CMHC), about 1.5 million new homes were added to the Ontario housing market.

Meeting Demand in the Ontario Real Estate Market

The Progressive Conservative Party of Ontario took a step to address the critical supply shortage in the province, by establishing the Ontario Housing Affordability Task Force in December, 2021. The nine-member Task Force consulted with municipal leaders, planners, unions, builders, developers, the financial industry, academics, think tanks and housing advocates, and released their list of what were dubbed “radical” recommendations to cool the overheating Ontario real estate market by increasing supply levels. They also noted that the policy-based measures of the past have been unsuccessful.

“From our perspective, the challenge has been supply and demand,” Alexander told the media outlet. “That’s well-documented now, but that’s our issue. And we are really far behind in development and housing starts.”

The Task Force proposed a goal of 1.5 million homes in 10 years. To put that number into perspective, historical housing starts data show 1.5 million homes were built in Ontario in the last 20 year – half of what is proposed for the foreseeable future. Ontario housing starts in 2021 hit a high of almost 100,000 new units. In order to meet that 1.5-million milestone, we’d need to achieve 150,000 starts each year, every year for the next decade.

To Build Up or Build Out?

The amount of developable land in Ontario is dwindling, which means some tough choices and concessions, with two viable options: build up or build out.

Indeed, densification was a theme in many of the Task Force’s recommendations, which focussed on ways to:

• Increase housing density
• End exclusionary zoning that blocks or delays new or high-density housing
• Depoliticize the residential development approvals process
• Prevent abuse of the housing appeals system
• Provide financial support to municipalities that build more housing

“It’s high time the province explores options such as increasing building height and density in certain neighbourhoods, making it easier for property owners to add secondary suites, converting vacant commercial units for residential use, and waiving infill development charges,’ Alexander said.

However, there has been opposition to increasing density in certain areas. The other option would be to build out.

“We can’t suck and blow as a society and we have a problem,’ Alexander told Storeys. “Our inherent issue is we’ve got the lake to the south of the GTA, and the Greenbelt to the north so we’re in a very difficult position. And I ask people, ‘Okay, fine. You don’t want inclusionary zoning? Well, do you want to rip up the greenbelt a little bit?’ ‘No, I don’t want to do that, that’s bad for the environment.’ Well, then, what is it? You can’t have it all. I think as a province and particularly in southern Ontario, some very difficult decisions need to be made.”