How Is Ontario Addressing Affordability?

How is Ontario Addressing Affordability

Ontario is one of the country's hottest provinces and houses the most populated cities. As such, the region expects to get a little more crowded, anticipating 2.27 million people by 2031. With these numbers, the province requires a lot of new infrastructures, including more transit, offices, and housing.

As a result of the province’s growing population, the price of homes across the region has reached unaffordable levels. Many homebuyers are left curious about what the government will do to help combat this issue.

In order to build enough homes and reach the rising demand, proactive solutions have been implemented by the Ford Government to produce 1.5 million homes over the next ten years. This solution came from Ontario’s Housing Affordability Task Force’s 55 recommendations in February 2022. Since then, a first-step response has been made to help tackle the affordability crisis.

The government introduced Bill 109, More Homes for Everyone Act, 2022, which was created in response to the Task Force's recommendations. This new Bill will allow targeted policies to construct fairer, immediate housing faster for Ontario homebuyers.

On June 22, 2022, PMA-CIBC held their Summit Series Conference on 'Tackling The Task Force - How Is Ontario Addressing Affordability?'. This webinar was led by Luca Bucci, Chief Executive Officer of the Ontario Home Builders Association, and the panel consisted of several other home building industry experts. The hour-long conference focused on Bill 109 and the necessary steps to achieve 1.5 million homes in the next decade. The conference also broke down the Ontario Housing Affordability Task Force report, analyzed the province's plan to stabilise the market, and explained the industry's future.

During the Summit Series Conference, Bucci stated, "We need to make an attempt to deal with the processing issues and delays builders have been experiencing with municipalities and the supply chain. The government is committed to using the Task Force recommendations as a blueprint in future legislation to tackle the issue of supply.’’

The online conversation analyzed Bill 109 and discussed what it will take to deliver 1.5 million homes. Four common themes emerged during the conference which highlights how the province should address the affordability and housing issue.

Let's take a closer look at these four themes and how they affect the province's future.

The Supply Chain & Today's Inflationary Climate and Pressure

Understanding the supply chain and the inflationary climate is vital to understanding today's market. We're currently amidst an inflation period as the country is experiencing interest rate hikes from the Bank of Canada. This increase is supposed to help bring down the price of homes. However, the cost of making homes is still high, resulting in a supply shortage. Not only is there a shortage of homes, but there is also a shortage of materials, resources, workers, developers and more. In order to help combat these issues, two things need to be done. 1) The province needs to find a way to help Ontarians overcome financial challenges. 2) The government needs to analyze the supply chain to find its weaknesses and allocate resources to increase the supply of homes.

The Talent Gap

There are not enough trained professionals or workers to build homes

Currently, Canada is facing a labour shortage. According to Statistics Canada, the unemployment-to-job vacancy rate is at a historic low, which means there are now more available jobs than workers to fill them. The home building industry is no exception as there are not enough trained professionals or workers to build homes at the rate required to hit the 1.5 million home target.

Part of analyzing the supply chain we mentioned above includes allocating the right resources to a) get sufficient employees and b) enough funds to increase wages to incentivize people to work. To address these issues, the government would need to work with professionals in the industry and use incentives to get students into the trades and fill these roles. Immigration is an excellent solution; however, employing Canadian citizens and sourcing from within would be ideal. Suppose the government, school institutions and industry experts were to work together, in that case, they could help fix the talent gap and get employees to work in necessary occupations - including development, consulting, and city hall staffing. Ultimately, this would support the industry and help get it on track.

Response To The Legislation at Municipal Levels

Bill 109 is a necessary and useful first step to help combat Ontario's affordability issue. This legislation, inclusionary zoning and increasing development charges are a few new measures introduced to help bring the cost of homes to attainable levels. However, Bill 109 has not been well received across all levels of the government as some municipalities have pushed back. This issue stems from a political standpoint in which the home building industry tends to get caught in the crossfire. When the federal government introduces legislation like this, municipal representatives tend to side with their local voters. Depoliticizing the construction of homes is crucial to building the adequate numbers needed. New legislations can't just come from the federal level; mayors and councillors need to create bylaws in favour of building new homes in their communities. Federal, Provincial and Municipal members must work together to build more homes and make denser communities for the projected growth.

Bill 109 As An Industry

This final theme ties in with the previous three, which lead to creating Bill 109 as an industry. As we mentioned, the supply chain needs rework, the talent gap needs to be filled and the industry needs to be depoliticized. There is enough money, time and resources that could go into Bill 109 to make it an industry with thousand’s of employees resulting in increased housing supply. More specifically, for Bill 109 to gain momentum more staff is required in government positions, more teachers and industry experts are needed in school institutions, and more students are needed in trades. To achieve this the industry would also need funding to incentivize people to want to work. Ultimately, if Bill 109 was pushed as a top priority and made into an industry, then the province could reach its desired targets: build more homes and fix the affordability issue.

The province’s affordability issue have weighed Ontarian’s heads over the last couple of years. The province has seen housing prices reach record levels, and as history has shown, the cost of homes will only continue to go up, which is natural. Ten years ago, the average cost of a home in Ontario was approximately $329,000. In 2021, the average house price across Ontario was $923,000. Over that period, average house prices have climbed 180% – this speed is unnatural. But with the help of Bill 109 and future legislations, the government is hopeful that Ontarians will be able to afford homes again.

At GTA-Homes, we pride ourselves on educating our clients with valuable and resourceful information. You can keep up to date with market trends and real estate news by signing up for our newsletters and our online condo investment seminar.