An Ontario task force that called for 1.5 million houses to be built in the province in the next ten years is on the right track but unlikely to hit its targets, say real estate experts.
“To try and just double [housing completions] overnight—it’s just not going to happen with the labour supply we have, that and plus all of the red tape and the political pushback you’re probably going to get from various parties and neighbourhoods and things like that,” Kavcic said in an interview with Epoch Times.
“Some of the recommendations in there seem a little bit wishful in that you’re just going to have a very quiet neighbourhood of single detached homes and all of a sudden, say, ‘Okay, go ahead and build three or four unit houses on my street.’ There will probably be pushback there, too. And I just don’t think it’s going to be as simple as they say.”
The report said fewer urban design rules would make housing easier and cheaper to build. It also calls for the housing approval process to be streamlined and depoliticized, with one means being province-wide zoning rules to prevent NIMBYism. The report advised municipal policies and zoning to facilitate greater density, especially to allow secondary suites to be built in homes.
“It doesn’t seem like a lot of the cities where people want to flow are ready to absorb it. There’s not a simple answer to this. There are a lot of different parts,” Kavcic said.
“We’ve kept interest rates just [sitting] too low for too long. And we’ve allowed the psychology in the housing market to become where there’s a lot more expectation that prices are going to continue to grow. Investors are buying second or third homes, or homeowners are holding back listings because they think prices are going to rise.”
Wendell Cox, a senior fellow with the Frontier Centre for Public Policy in Winnipeg, praised the task force report.
“I was very pleased [because] they acknowledged the necessity of building on Greenfield sites. I didn’t say Greenbelt, I said Greenfield sites, which is very good, because that is what drives prices in the urban area,” said Cox, who’s principal of Demographia, a St. Louis-based international consulting firm on housing.
Correction Underway
Cox said there is “no way” the housing targets could be met in a scenario where Toronto housing grew as fast as the rest of the province—even if its Greenbelt was opened up for development. He said there is already “a huge outmigration” to other Ontario locations. Kavcic agrees.“Pick a place, any place: Brantford, Tillsonburg, Woodstock, Collingwood—whatever name you want—and they are probably at least 50 percent higher than they were pre-COVID. That sounds crazy, but I’m not exaggerating,” said Kavcic.
“[If people can] work remotely, even if it’s like half the time, it opens up a lot of affordability and a lot of geography for people rather than being bound to within one hour of downtown Toronto.”
Kavcic says expected rate changes by the Bank of Canada will cool price growth, though he wishes such changes had been made six months to a year ago. In the longer term, he expects demand from the Millennial generation to diminish before the momentum to build more houses has run its course.
“When we look at a population pyramid in Canada or in Ontario, we’re probably a couple of years away from maximum housing demand from that cohort,” Kavcic said.
“The expression here would be that you can write mortgages and buy houses faster than you can build them. So that’s what you see in every real estate cycle going back through time… demand can disappear tomorrow. The supply is going to keep coming until it’s completed.”
