Everything you need to know about housing, explained.

Ontario's housing market is facing significant challenges, with a critical shortage of supply leading to increased prices and reduced accessibility. Addressing this issue requires a comprehensive understanding of the factors contributing to the crisis.

The Issue

Policymakers have implemented various measures such as rent control, inclusionary zoning, and housing subsidies to tackle housing affordability. However, these approaches often redistribute existing housing stock rather than encouraging the development of new units. Economists widely agree that increasing housing supply and removing barriers to development are essential for stabilizing rental prices. Without sufficient supply, the housing market resembles a game of musical chairs—those unable to secure housing are often left without options.

Ontario's Supply Shortage

The core of Ontario's housing challenge is a persistent supply shortage. Projections indicate that without significant changes, the development of new rental housing will fall short by more than 30,000 units annually over the next decade. This shortfall will likely lead to continued rent increases, especially in major urban centers like Toronto.

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Defining Affordable Housing

Affordable housing is commonly defined as housing costs that consume no more than 30% of a household's income. However, this definition can vary significantly between cities and may not account for additional expenses such as transportation, especially for those living farther from urban centers. Median income metrics can also distort affordability assessments in high-income areas, as they may not reflect the financial realities of lower-income residents.

Barriers to Building More Homes

Understanding the obstacles to increasing housing supply is complex. Key factors include:

Zoning and Land Use Regulations: These determine the quantity, type, and size of new developments. In Ontario, a complex blend of provincial and municipal policies often limits higher-density housing, particularly in neighborhoods where new construction must align with existing "physical character."

Government Fees and Delays: According to a 2024 report by the Building Industry and Land Development Association (BILD), government fees and taxes can add up to 25% to the cost of new homes in the Greater Toronto Area (GTA). Bild GTA Development and planning fees alone add significant costs, which are ultimately passed on to consumers.

Landlord and Tenant Board (LTB) Delays: Persistent delays at the LTB hinder the timely resolution of disputes between landlords and tenants. These delays create uncertainty and can discourage investment in rental housing, further constraining supply.

Housing Start Rates

Recent data indicates a decline in housing starts in Ontario. In the first half of 2024, housing starts fell by 21% in the Ontario portion of the Ottawa-Gatineau census metropolitan area, reaching the lowest level in nearly a decade.

This trend underscores the urgent need for policies that encourage new construction to meet the province's growing housing demands.

Addressing Ontario's housing crisis requires a multifaceted approach that includes increasing supply, streamlining regulatory processes, and ensuring that policies promote, rather than hinder, the development of diverse housing options.

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