With a provincial election looming and a federal one on the horizon, we are heading into interesting times. But this period could also be one of opportunity. I’m hopeful the elections will be a catalyst for candidates of all political stripes to put forward solutions to tackle our dire housing supply crisis.
While there are a mix of factors impacting construction of housing, the exorbitant tax burden on new housing, including hefty development charges, as well as excessive red tape and bureaucracy and the unreasonably slow approvals process need to be front and centre with representatives of all parties.
People simply can’t afford to buy new homes. In the GTA, municipal fees for singles have jumped from $42,000 in 2022 to an average of $164,920. Apartment fees have climbed from $32,000 to $122,387.
Taxes, fees and levies now account for 36 per cent of the cost of a new home – up from 31 per cent three years ago. On a $1-million home, consumers are now paying nearly $360,000 in taxes and fees.
RESCON has joined a coalition of industry stakeholders and associations calling for a 75-per-cent decrease in development charges, which would reduce them to the more reasonable level they were at in 2015. This type of action is paramount if we are to restore affordability and sensibility to the market.
Development charges, in particular, are out of control. If the price of consumer items increased at the same rate as development charges, a single litre of gas would cost $33, a small Tim Horton’s coffee would be about $57, a Big Mac would be about $145, and a four-litre bag of milk would be $328.
Moribund approvals and time wasted also continue to block projects from proceeding. In Toronto, where projects are supposed to be cleared in 90 days, approvals processes are taking at least 600 days to advance. First-time buyers are unfairly footing massive bills from unnecessary bureaucratic delays.
Some Ideas Put Forward
Some steps to right the housing market have already been proposed.
For example, at the federal level, the Conservatives have promised to cut the sales tax on new housing under $1 million if they form the next government. This would reduce the cost of an $800,000 home by $40,000. None of the other federal political parties have weighed in on plans to address the issue.
On the provincial front, the Liberals have promised that, if elected, they will scrap development charges on new housing, which would cut costs by up to $170,000 on family-sized homes of 3,000 square feet or less.
The present provincial government has taken action but new housing construction is nowhere near where it needs to be.
At RESCON’s recent annual general meeting, Premier Doug Ford outlined some of those steps, which included investing over $970 million via the Housing-Enabling Water Systems Fund to help build more than 500,000 homes across 60 municipalities, contributing funds from the $1-billion Municipal Housing Infrastructure Program to help municipalities repair roads and bridges, and handing out funds from the $1.2 billion Building Faster Fund to reward municipalities that are getting it done.
The government also removed the HST off purpose-built rentals and Ford recently noted in an op-ed in The National Post that cutting red tape and streamlining approvals are key to getting projects built faster.
However, he noted there is still work to be done and pledged to help homebuilders make homes more affordable for consumers.
RESCON is supporting Ford’s decision to seek a new mandate from voters. We believe that the leader of our province must have a strong mandate to deal with both the housing supply crisis and the aggressive U.S. administration.
Situation Is Dire
Our housing situation is getting worse, not better. CMHC reports that 74,573 housing units were started in Ontario in 2024, down nearly 15,000 from 2023. There were significant drops in all types of housing. In 2024, we saw the weakest sales in new homes and condominiums since the mid-1990s.
In the GTA, new home sales in the month of December were down 46 per cent from the same month in 2023 and 80 per cent below the 10-year average.
Over the last four years, 100,000 more Ontarians have left for other provinces than have moved into the province due to the lack of housing. Many of these people are the economic future of Ontario.
To spur the new housing market, we need conditions that allow builders to build houses that people can afford. The time for action is now. Tomorrow may be too late.