Housing affordability has reached a "crisis point" in Canada's most populous province, says the Ontario Chamber of Commerce (OCC) in a new report.
Affordability issues in and around the Greater Toronto Area have been known for quite some time, but the OCC says this is no longer just an urban issue, it's "now impacting communities of all sizes across the province."
"While distinct, housing supply and affordability challenges are mutually reinforcing: as mid-high income earners are priced out of the real estate market, they are increasingly occupying market rental housing for longer, contributing to low vacancy rates and rising rental rates," the report reads. "This puts additional downward pressure on the limited supply of more affordable, non-market housing options, where waitlists can reach up to 12 years across the province, further compounding the homelessness crisis."
As workers struggle to afford housing, businesses are having difficulties attracting and retaining talent -- a phenomenon that's exacerbated by the ongoing labour shortage and an aging workforce. The construction sector, in particular, has seen a rise in job vacancies, the OCC notes. Although Ontario is experiencing record losses due to interprovincial migration, immigration is expected to more than double by 2025, further tightening housing conditions.
The OCC issued a list of recommendations for both government and industry leaders to tackle the provincial housing crisis. Among them were prioritizing immigrants trained in skilled trades, incentivizing and promoting skilled trades careers domestically, and supporting the construction of housing for both post-secondary students and seniors.
As an example of how to encourage employment, the OCC highlights the Catalyst Housing model currently being pursued in the Muskoka, Parry Sound, Almaguin, and Algonquin Park region, which aims to attract workers by providing below-market rental housing, as well as career, life skills, and financial literacy training, for two years, during which time participants would work in the regional tourism industry.
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As for building housing, the OCC says ensuring there's a mix of housing along the continuum is critical to meeting Ontarians' needs.
"Currently, housing development targets and policy levers do not fully reflect different household incomes and compositions, nor do they account for external socioeconomic pressures, such as the rising cost of living," the report reads.
One roadblock, however, is that there seems to be an issue when it comes to the very definition of "affordable." It can vary from one government body to another, and even from program to program within the same level of government. The most widely used criteria tends to be 'housing that costs less than 30% of household income before tax,' but certain housing policies use market-based valuations, such as 80% of the average market rent. Because of this, "housing deemed to be 'affordable' is increasingly out of reach for households in needs," the OCC writes. Establishing a common definition that takes regional variations in market rates and cost of living into account will be part of the solution.
Although building more of the topic-du-jour "missing middle" housing is certainly necessary, more attention needs to be paid to the lower end of the housing spectrum, the OCC says. And as important as building new housing is, preserving the existing stock is crucial.
To achieve these, the OCC recommends more incentives to build all along the housing continuum in the form of dedicated funding streams, tax credits, and exemptions. Additionally, all levels of government should develop a rental housing acquisition strategy to preserve existing stock, as well as leverage surplus public lands for affordable housing development.
The report also highlights the potential for conversions and retrofits of existing buildings as office vacancy continues to grow across the country. The practice hasn't quite taken off in Ontario yet -- although the City of London recently announced plans to consider an incentive program -- but it's seen some success in Calgary where a number of downtown offices have been converted for residential use, adding 700 new residential units to the area.
Even if the government were to adopt these changes, the growing elephant in the room is Ontario's shrinking number of housing starts -- something the provincial government itself is predicting will keep dropping over the next few years. Right now, there are 1.25 million potential homes in Ontario's development pipeline, but CMHC estimates that an additional 1.85 million would be needed to restore affordability. To tackle this, innovation will be key. The OCC suggests that government and industry leaders alike support the development of new technologies and techniques, such as modular construction and 3D-printed housing, both of which have much shorter construction timelines than traditional building methods.
A 3D-printed house in Leamington, Ontario (nidus3D)
But before building can start, developers need to obtain approvals, and slow-moving development application processes have been a thorn in developers' sides for quite some time, with many calling for a system overhaul. The OCC notes that it takes, on average, 10-11 years to go from planning to completion, and recommends all levels of government review their processes and incorporate new streamlining technologies such as e-permitting.
Interestingly, the OCC also recommends expanding inclusionary zoning -- something the Ford government controversially scaled back last year. Under new legislation approved in November, a 5% cap was placed the number of affordable units that can be required under inclusionary zoning, with a maximum 25-year affordability period. This came in stark contrast to the City of Toronto’s inclusionary zoning policy, passed in 2021, that calls for 22% affordable units by 2030 with a minimum affordability period of 99 years.
"Delivering on affordable housing supply," the report says, "will require meaningful and timely development, approvals, and consultations, gentle densification that utilizes the built environment, and investments in the expansion, maintenance, repair, climate resilience and adaptation of municipal assets to support densification and ensure thriving, complete communities."
