Ontario’s goal of building 1.5 million homes is clear. The plan to build them isn’t.
A new report from the PLACE Centre, created in collaboration with Ontario’s Big City Mayors, is calling on governments, industry leaders, and the labour sector to come together and create a feasible plan to build 1.5 million homes by 2031.
The task at hand is daunting; in the last 10 years, Ontario has built fewer than 700,000 homes. It has not built 750,000 homes — one half of its target — in any ten-year period since 1973-1982. The province has never built more than 850,000 homes in any ten-year period, ever.
“In short, Ontario must do something it has not done in over forty years, then double it,” the report states.
Dr. Mike Moffatt, Founding Director of the PLACE Centre and an Assistant Professor at Ivey Business School, told STOREYS Ontario is currently on pace to achieve 58% of its 1.5-million target come 2031. While he believes the province can still achieve its housing goal, it will take a “monumental, wartime-like effort.”
“I don’t think we should underestimate the extent of the challenge. But we’ve got to get there,” Moffatt told STOREYS. “We need substantial reform, and we need it now. This is going to require a level of coordination and political courage that we haven’t seen in decades.”
Although the province has allocated individual homebuilding targets to 29 large and fast-growing municipalities — which range from 8,000 in Kingston to 285,000 in Toronto — this is a “challenge,” the report notes, as the majority of homes are built by the private sector. Where municipal governments play a role is in the approvals process, as well as policy and zoning.
Meanwhile, the need for more housing stems from Ontario’s rapidly rising population, which is due to the federal government’s increased immigration targets and enrolment decisions made by the higher education sector. The boom has already created a housing shortage, which in turn has resulted in an affordability crisis in both the ownership and rental markets.
“Cooperation is absolutely vital if 1.5 million homes are to be built in Ontario in the next 10 years,” the report reads.
“The inherent coordination challenges of a complex system like housing creates a need for government, industry, and labour to come together and develop a plan outlining roles and responsibilities, along with a shared accountability framework, with regular meetings and updated plans to track the progress of each actor in the housing system.”
While the report stops short of recommending any specific policy changes, it outlines six core challenges that stand in the way of homebuilding in the province, as well as the role of key players in solving them.
The most glaring issue “by far,” Moffat said, is coordination. With the responsibility to build spread across all three levels of government as well as the public and private sectors, significant gaps exist in communication and planning.
“The biggest barrier right now is that we’re not tying in our population growth policies to our housing policies,” Moffat said. “All these key players have got to be working together. They’ve all got to do some long-term planning. That’s the only way we’re going to get out of this crisis.”
Another large bottleneck is the significant shortage of skilled labour across the province. According to an October 2022 report from the Canada Mortgage and Housing Corporation (CMHC), Ontario needs to double the number housing starts it produces over the next seven years in order to meet the CMHC’s affordability supply target for 2030. However, labour limitations will only allow the province to increase starts by 36%.
Alongside the lack of labour, supply chain disruptions over the course of the pandemic have led to a shortage of building materials and equipment. High interest rates have also hampered developers’ ability to access financing. A shortage of available land can drive up its price, dissuading builders.
Said private sector developers will only proceed with a project if it is financially viable, a challenge that governments can remedy by reducing a project’s cost, including by lowering development charges and doing away with HST on purpose-built rental construction, by speeding up the approvals process, and by reducing or deferring income tax on new developments.
The aforementioned labour limitations “make it clear” that Ontario will not be able to meet its housing targets by continuing to build in the same way. Instead, builders and developers must boost productivity, in part by building different types of homes — a duplex typically requires less land, labour, and materials than two single-detached homes — and adopting new methods of construction, like modular and mass timber construction.
While vital, the various rules, regulations, and requirements that govern what can and can’t be built can be tweaked to allow for increased homebuilding. Examples detailed in the report include reforming zoning rules, reducing the time it takes to get a project approved, and keeping regulations, like the building code, up to date.
Another challenge facing Ontario is a lack of non-market housing, including community housing, transitional housing, and on-campus student rentals. While all orders of government play a role in the construction of non-market housing, provincial and federal governments have access to more revenue tools, putting them in a better position to finance such projects.
“The housing system is an overlapping web of roles and responsibilities,” the report reads. “This complexity makes coordination vital, as decisions by different actors often need to be made and implemented in tandem for the system to function.”
These actors — federal, provincial, and municipal governments, builders and developers, the labour sector, and the higher education sector — all shoulder the responsibility of solving these six challenges, and, ultimately, of building 1.5 million homes.
For example, the federal government can align immigration targets with municipal housing targets and increase the number of skilled tradespeople through immigration, while the provincial government can implement the recommendations made by the Ontario Housing Affordability Task Force. As the report notes, “it cannot be understated how vital the province is in determining what can and cannot get built.”
Although they are “creatures of the province,” municipal governments control everything from zoning policies to parking minimums, meaning they can substantially reform the approvals system to get more housing built faster.
Builders and developers can adopt more resource-efficient forms of construction, like reusing and repurposing materials, to reduce costs, and utilize new technologies and building methods to increase productivity.
The organized labour and higher education sectors can ensure Ontario has an adequate supply of properly trained workers. The latter should share their enrolment forecasts with municipalities, developers, and builders so they can plan for growth.
While building 1.5 million homes by 2030 will require a “monumental effort,” it is necessary to accommodate the rapidly growing population. Moffatt points to San Francisco, with its high home prices, high rates of homelessness, and dwindling middle class, as being a foreshadowing of Ontario’s future if change is not swift.
“I think a betting person would say we’re probably going to miss the target. But, my counter to that is that we have to hit it,” Moffatt said.
“Or else what we’re already seeing in food banks, in these tent encampments all across the province, that is only going to get worse. So will we get there? I don’t know. But I think we really have to try our best to. There’s no other option.”