Ontario Needs One Million New Homes Within the Next 10 Years, Says Report

Written by Posted On Tuesday, 12 October 2021 00:00

Canadian home prices continue to rise, while the inventory of properties for sale remains low. That’s created an affordability issue that was one of the top issues in the recent federal election.

Governments at all levels are being asked to produce policies to increase housing supply and ease the upward pressure on prices.

A new report projects that if current housing policies remain in place, Ontario will require one million new homes to be built within the next 10 years to house the one million households that are expected to be formed. The report was written by Mike Moffatt for the Smart Prosperity Institute. Funding was provided by the Ontario Home Builders’ Association.

“The pandemic has radically altered both housing prices and family migration patterns (both domestic and international). With the hope that a return to normalcy will soon be here, and as communities across Ontario seek to ‘build back better’ it is natural to wonder how fast the population will grow, and what this will mean for the future demand for housing,” writes Moffatt in the report, Baby Needs a New Home.

He used population projections from the Ontario Ministry of Finance that say between now and 2031, Ontario will grow by 2.27 million people. That works out to about 910,000 households. But Moffatt notes that during the last five years, while 413,753 households were formed, only 349,039 homes were built.

“This mismatch between the projected growth in households and the number of homes built creates a supply gap, which helps explain the rise in home prices (of all forms), the bidding wars for houses and the high number of ‘drive until you qualify’ families (who move further out of the cities to find cheaper housing) we saw before the start of the pandemic.”

He says “generational turnover” of existing homes can supply enough housing for the next generation in some communities, but “in other communities it only scratches the surface.” In high-rise apartment units, only 30,000 units will become available for the 225,000 new young households seeking accommodation. Overall, generational turnover “will house about 45 per cent of the new young families that will live in forms of housing other that high-rise apartments. The rest will come from new home construction,” Moffatt says.

Excluding the existing supply gap, during the next 10 years an additional 200,000 high-rise units and 715,000 low and medium-density units will be required, says the report.

“Whether or not these projections prove accurate as forecasts will be highly dependent on policy choices made by all three levels of government over the next decade, along with a host of other factors,” says Moffatt. These include policies on housing, immigration, international students and labour. “These projections should be used as inputs into the policy-making process, rather than forecasts where we collectively have very little control of the outcome.”

The Ontario Real Estate Association (OREA) is calling for the Ontario government to end exclusionary single-family zoning in high-demand urban areas.

“In too many Ontario cities it defies common sense that you can take a bungalow and turn it into a monster four-storey home for one wealthy family, but you cannot build affordable townhouses for multiple families without red tape, runaround and exorbitant costs,” says OREA CEO Tim Hudak. “Exclusionary zoning policies are at the heart of Ontario’s housing affordability crisis in high-growth areas and it’s time the province steps in to modernize these archaic laws.”

OREA says the current policies that require zoning bylaw changes cause delays for projects and “encourage NIMBY forces to drive up costs of homes or drive away affordable homes in a neighbourhood entirely.”

Ontario’s population growth during the last five years was partly due to increases in immigration, but mostly due to an increase in the number of non-permanent residents – primarily international students, says the Smart Prosperity Institute report. 

Statistics Canada offers an interesting look at the population status of the country with its population clock.

Population growth is modelled in real time, showing the population of the country, provinces and territories. The population change modelled since midnight is also provided.

“Each of the uniquely coloured, vertical bars represents a component of population growth (births, deaths, immigrants, emigrants, non-permanent residents and interprovincial migrants). When these bars fill or empty, there is an impact on the population,” says Statistics Canada.

When there’s a birth or death reported, the provinces and territories where the events occur are highlighted on the map and in the data table below. When someone moves from one province to another, an arrow is shown between the provinces or territories of origin and of destination.

The agency notes that population estimates and the official Census are the tools used to measure the population for the purposes of government programs.

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Jim Adair

Jim Adair is editor of REM: Canada's Real Estate Magazine, a business publication for real estate agents and brokers. He has been writing about Canadian real estate, home building and renovation issues for more than 30 years. You can contact Jim at jim@remonline.com.

www.remonline.com/

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