Ontario is Now Addressing Affordability

Ontario is one of the hottest provinces in the country, with the most populated cities. As a result, the region expects to become slightly more crowded, with 2.27 million people expected by 2031. With these figures, the province requires a significant amount of new infrastructures, such as more transit, offices, and housing.

The cost of properties in the area has risen to unaffordable levels due to the province’s expanding population. Many prospective homeowners are interested in learning what the government will do to help address this problem.

To address the increasing demand for housing, the Ford administration has implemented proactive solutions to build 1.5 million homes over the next ten years. This solution stemmed from the 55 recommendations made by Ontario’s Housing Affordability Task Force in February 2022. Since then, a first-step response to the affordability crisis has been implemented.

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 home buyers.

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 stabilize the market, and explained the industry’s future.

During the Summit Series Conference, Bucci said, “The government is committed to using the Task Force recommendations as a blueprint in future legislation to tackle the issue of supply. 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 online discussion focused on Bill 109 and what it will take to deliver 1.5 million homes. During the conference, four common themes emerged that highlight how the province should address the affordability and housing issues.

The Supply Chain & Today’s Inflationary Climate and Pressure

Understanding the supply chain and the inflationary environment is critical for comprehending today’s market. We are experiencing inflation due to the Bank of Canada raising interest rates.

This increase is intended to help lower home prices. However, the cost of building houses remains high, resulting in a supply shortage. Not only is there a scarcity of homes, but also of materials, resources, workers, developers, and other resources.

Two things must be done to assist in combating these issues.

1) The province must find a way to assist Ontarians in overcoming financial difficulties.

2) The government must examine the supply chain for flaws and allocate resources to increase the supply of homes.

The Talent Gap

Canada is currently facing a labor shortage. According to Statistics Canada, the unemployment-to-job vacancy rate is at an all-time low, implying that 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 meet the 1.5 million home target.

Allocating the right resources to a) get enough employees and b) enough funds to raise wages to incentivize people to work is part of analyzing the supply chain we mentioned above. To address these issues, the government would need to collaborate with industry professionals and use incentives to encourage students to enter the trades and fill these roles.

Although immigration is a viable option, hiring Canadian citizens and sourcing from within would be preferable. If the government, educational institutions, and industry experts collaborated, they could help close the talent gap and place employees in necessary occupations such as development, consulting, and city hall staffing. Finally, this would benefit the industry and help it get back on track.

Response To The Legislation at Municipal Levels

Bill 109 is a necessary and beneficial first step toward addressing Ontario’s affordability crisis. This legislation, inclusionary zoning, and increased development charges are just a few of the new measures put in place to help bring home prices down to more affordable levels. However, Bill 109 has not been well received at all levels of government, with some municipalities opposing it. This problem stems from a political standpoint, and the home-building industry is frequently caught in the crossfire.

Municipal officials usually side with constituents when the federal government introduces legislation like this. Depoliticizing home construction is critical to constructing the necessary numbers. New legislation cannot be enacted solely at the federal level; mayors and councilors must pass bylaws encouraging the construction of new homes in their communities. For the projected growth, federal, provincial, and municipal members must collaborate to build more homes and denser communities.

Bill 109 As An Industry

This final theme connects to the previous three, which led to the establishment of Bill 109 as an industry. As previously stated, the supply chain must be reworked, the talent gap must be filled, and the industry must be depoliticized. Bill 109 has enough money, time, and resources to turn it into an industry with thousands of employees, resulting in an increased housing supply.

More specifically, for Bill 109 to gain traction, more personnel in government positions are required, as are more teachers and industry experts in educational institutions and more students in trades. To accomplish this, the industry would also require funding to incentivize people to work. Finally, if Bill 109 is prioritized and turned into an industry, the province will be able to meet its goals of building more homes and addressing the affordability crisis.

Over the last few years, Ontarians have been concerned about the province’s affordability. Housing prices in the province have reached record highs, and as history has shown, the cost of homes will only rise further, as is natural. The average cost of a home in Ontario ten years ago was around $329,000.

The average house price in Ontario in 2021 will be $923,000. Over that time, average house prices increased by 180% – an unnatural rate. However, the government is hopeful that with the help of Bill 109 and future legislation, Ontarians will be able to afford homes again.