To make inroads into the housing supply and affordability crisis plaguing our cities, we must address and focus squarely on systemic issues, particularly at the municipal level.
Lengthy wait times for residential development applications are stymieing the building of new homes and condos. It has become increasingly difficult for developers to put shovels in the ground on projects.
Building departments are behind the times. Our permitting system must be digitized, standardized and streamlined across the province. Presently, up to 45 different government bodies and agencies can be involved in the decision-making process on a new project. Far too many. It only gums up the wheels of progress and leads to lengthy and unnecessary delays on projects.
Our country ranks 34th out of 35 Organization for Economic Co-operation and Development (OECD) countries in the average time it takes to obtain regulatory approval for a construction project.
Obtaining a building permit in Canada is often a protracted process. We are demonstrably behind the times. One could grow old waiting for the bureaucracy to approve a building permit in this country.
At the City of Toronto, decision timelines on minor variances are getting longer. They take around 95 days – 65 days longer than the standard required by the Planning Act and 32 longer than the standard set by the city. Such delays are costly, adding 8% to 14% to construction costs annually.
To reach affordability, CMHC reckons that, if current immigration trends continue, we will need an additional four million housing units to be built beyond the business-as-usual scenario by 2030 to restore affordability – up from the earlier projection of 3.5 million – due to the growing population.
The disturbing reality, though, is that housing starts are trending in the wrong direction. CMHC reported that the annual pace of housing starts in Canada edged down 1% in August compared with July.
Mike Moffatt, an economist and Senior Director of Policy and Innovation at the Smart Prosperity Institute, spoke at a housing summit hosted by RESCON recently and indicated that Ontario needs to build 170,000 homes a year over the next decade, but without substantial reforms, the province will likely see 100,000 or less built a year. He said we won’t get where we need to be with minor tweaks.
Couldn’t agree more.
Approval times take far too long. The average approval timeline for a project in Toronto in 2022, for example, was 32 months, up from 21 in 2020. Meanwhile, municipalities in the GTA are among the lowest-ranked regions in Canada when it comes to the approvals process, time it takes to get a project approved, and government charges per square foot on new low- and high-rise housing.
It is unlikely to improve during the short term, as the vacancy rate within the City’s planning department is around 17%, up from 13% a year earlier. The need for more planners is critical.
At RESCON’s recent housing summit, Jason Mercer, Chief Market Analyst at the Toronto Regional Real Estate Board, explained that there is a lull in the marketplace just now, but it will likely be a short-term trend as the population continues to grow as a result of immigration, putting more pressure on the housing market.
We need immigration to sustain us economically, but we must find a way to house the newcomers or people will leave the GTA, our province, and country to find other areas of the world in which to live.
Marlon Bray, Senior Director of Cost Consulting at Altus Group, told the housing summit that there is no use nibbling at the edges as we are in immediate need of big plans and reforms. He stressed the need for quick action as 65% of new housing construction is high-rise, which takes years to build.
Several speakers at the housing summit pointed out that in order to increase density in cities and support more growth, municipalities need more help from senior levels of government with funds for infrastructure.
Paul Smetanin, President and CEO at the Canadian Centre for Economic Analysis, told the audience that public infrastructure investment funding required to support growth trends is 30% below what it should be – and the situation is likely to get worse over the next 10 to 15 years.
The federal investment in public infrastructure in Ontario is imbalanced relative to the funds it receives from taxes on new housing – which leaves the province and municipalities in a true bind.
Recent reports have indicated that many of our talented young people are leaving our cities and our province because they simply can’t find an affordable place to call home. We must turn this tide.
Our responsibility must be focused on solutions. All levels of government, private-sector partners and housing stakeholders have a role to play. The good news is that everyone agrees we need to quickly build more homes.
We are at the crossroads of a generational crisis in housing, one that is unprecedented. When you get to the point that the middle class can’t afford housing, you know that you have a serious problem.
Fixes must be found.