With Ontario’s Progressive Conservatives (PCs) entering another four-year term, the development community is keeping close tabs on election promises made around housing affordability, including the pledge to build 1.5 million residential units over the next decade.

Sweeping reforms recommended through the government-commissioned housing task force this year come with urgency in a province of 15 million people and growing. Ontario’s housing market is said to be cooling, but beneath a decline in average prices lurks the overriding issue of supply—one fueled by new economic headwinds, labour shortages and rising construction costs.

During a post-election event hosted by the Urban Land Institute, Peter Norman, vice-president and chief economist at Altus Group, observed how the war in Ukraine is causing supply chain disruptions and higher commodity prices, with the challenge of inflation becoming suddenly more meaningful. There are also 20,000 vacant positions, as of June, in Ontario’s construction sector— double than about a year ago.

Moderator Chris Loreto, managing principal at Strategy Corp, noted that the industry is expecting aggressive action to meet the massive target for home starts, and panelists at the session, Ford Government, Second Term: Getting to 1.5 Million New Homes, all agreed there’s no going back to the housing status quo.

But questions remain about the reality of follow through. How can this agenda reasonably move forward in the Greater Golden Horseshoe and what gutsy policy changes could roll out to expedite the process? In doing so, how can the province realize a balanced housing mix so intensified areas don’t end up gentrified?

Good-bye to the status quo—what to expect in the next few years?

As it stands, there are an estimated 90,000 units currently in the pipeline for this year and into 2023. According to Altus data, Norman observed this number leans somewhat more to single-family than apartment starts in the GTA, which are down due to the sales pause in 2020, but likely to resurge next year when projects break ground. Going forward, the panelists expect much more ground-breaking to come, as there is now “a blueprint” to further action on supply challenges, with 55 recommendations stemming from the task force report.

“I am feeling optimistic we can make a big dent in supply and continue that upper momentum we need for 1.5 million over 10 years,” said Tim Hudak, chief executive officer of the Ontario Real Estate Association. “The Ford government has a very positive record when it comes to housing—the largest increase in housing starts that we’ve seen in over 30 years. We may not see that this year, but we are at least going in the right direction in getting supply. We built more homes in the 1970s than we did in the 2000s. No wonder we fell behind.”

There were post-election concerns that “high-performing” ministers would be shuffled out. On June 24, Doug Ford’s newly sworn-in 29-member cabinet returned Steve Clark to the role of Minister of Municipal Affairs and Housing and added an Associate Minister for housing. Michael Parsa, the member of provincial parliament for Aurora-Oak Ridges-Richmond Hill, will work alongside Clark.

“This is an opportunity to shape-it-up to do things differently, and I think there’s a recognition in this government that that needs to happen,” said Lorraine Huinink, director of rapid transit and transit-oriented development with the Region of Durham. “There’s a recognition that doing the same is not going to change the situation; we’re not going to relieve the crisis that we’re in.”

Dave Wilkes, president and CEO of BILD, said the industry needs to stay mindful of long-term structural challenges in the face of variable changes, reiterating how interest rates will come and go. “The biggest risk is that we get distracted by the short-term and fluctuations,” he said. “When we get out of this and the economy always does, we will still have a structural problem.”

On the municipal level, he does see an evolving discussion emerge of which he is most hopeful. “It’s a slow burn, but there’s a recognition that things have to change; there’s a recognition that government fees and taxes are part of the affordability challenge, and there’s a recognition that we need to look at things holistically different.”

What bold changes are expected?

Legislation tabled before the election vowed to speed up approvals at the municipal level, but recoiled from ending exclusionary zoning to spur the density of missing middle housing.

Michael Cook, land use planning and development lawyer at Blake, Cassels, & Graydon, said there’s some expectation that gutsy policy changes will address exclusionary zoning, which, he adds, isn’t a silver bullet. He also foresees continued reliance on the Ontario Land Tribunal—where developers go to seek arbitration on approvals. “I think it is easier to rely on the OLT than it is to move forward with bold public policy changes—hopefully I am wrong,” he said. “For far too long we’ve been relying on policies that aren’t solving the crisis.”

“Certainly, reforms to the Ontario Land Tribunal, I think, are another one that will move forward—hopefully putting more bodies there,” said Hudak. The Tribunal is under-resourced and faces a backlog of more than 1,000 cases. The task force report argues how opponents to even municipal-approved projects can appeal with a $400 fee—knowing the project could be delayed until its economic feasibility is quashed.

Answering the call for a large housing delivery fund to reward municipalities that commit to boosting supply is also expected from the PCs.

“The most obvious things moving forward are the carrots because they are easier than using sticks,” said Hudak. “The municipalities that are playing ball . . . adding on new homes and welcoming newcomers to their community, while ensuring their young people have a place to call home, reward them for that. Their projects for transit, new roads and bridges and recreational projects go to the top of the list.”

As part of the More Homes for Everyone Act, 2022, the Community Infrastructure and Housing Accelerator (CIHA) was introduced. The tool, which requires municipalities to consult the public when they wish to issue a zone change, is similar to Minister’s Zoning Orders (MZOs), which give the minister of municipal affairs and housing the power to decide.

Such a tool not without opposition. In April, the National Farmer’s Union of Ontario voiced concern that the problems associated with MZOs are replicated with the accelerator tool, which “neither specifies affordable housing as its aim, nor does it adequately protect agricultural land outside of the Greenbelt.”

From a municipal perspective, Huinink sees “more certainly” around the CIHA, with “a bit more collaboration and partnership coming.” “It won’t work if you have people digging in your heels,” she said.

When it comes to municipal finances, Wilkes believes it’s a priority issue that requires “a very structured conversation.” Property taxes and growth funding tools are currently the only ways to pay for growth in municipalities. On the same topic, Huinink observed that a carrot-and-stick approach to municipal finance reform is best. “When you ask for stretched resources to be innovative to change, they won’t; they simply can’t.”

Supply means prioritizing the right supply

“It’s not just about supply; it’s about the type of supply and I do believe the market will play an influence on that and people will express their choice through the products that they’re demanding,” said Wilkes.

“Through things like the accelerator fund, we can’t be so laser-focused and say supply, supply, supply. It’s got to be the right supply.”

As a board member of non-profit Black Planner’s and Urbanists Association, Cook highlighted how the housing affordability crisis is affecting BIPOC communities.

In its response to the task force report, BPUA identified several areas for further consideration, such as including more moderate-low-income community members in the planning process and defying housing needs through the planning approvals processes.

“There is a fear of consultation with communities,” said Cook. “A lot of that is because the communities we’ve heard most vocally from aren’t communities that need housing—probably communities that have paid off mortgages a long time ago.”

“One of the ways we have to move forward is to continue community consultations, but with the right communities,” he added. “If you talk to those people, you’ll hear them making the supply arguments as well. These are allies in the fight and we need to keep them engaged and do a better job of engaging them.”

The BPUA also recommended various types of funding moving forward. Last year, the City of Toronto adopted an inclusionary zoning policy, requiring new residential developments to include affordable housing units.

“The way the City of Toronto moved forward with inclusionary zoning is the wrong way because it’s putting all of the burden on the developer and not going to get built if there is no government investment,” said Cook. “The best affordable housing comes when the government and the private sector are partners and we need to see more of that as well.”

“If you want the market to provide affordable housing, the government absolutely needs to step in and make that proforma whole,” said Huinink. “You do that by looking at where the costs are. If you can afford to bring a battery plant to this province, you can afford to put the (development charges) back into the housing; you can afford the land transfer tax deferral. Those are the only ways you will incent the market to provide what has not typically been provided.”

As a board member of Habitat for Humanity GTA, she stresses the importance of governments empowering and partnering with non-profits to help deliver affordable housing.

“This is a crisis—the people who stock our shelves, drive the buses, who help us in our hospitals—they need to live where they work,” she said. “Soon, we will not have that kind of balanced community. We need to be jumping on this big time.”

More commercial-to-residential conversions, including for underutilized government buildings to open up capacity, is something on Hudak’s radar. “One thing the task force called that I hope is enforced is the as-of-right ability to have a secondary suite in your home,” he added. “It supports renting, it helps pay down a mortgage faster, but it enables a quality place to live in pretty well any place in Ontario.”

Leading up to the election, all four major political parties made housing a key point of their platforms, with the PCs more recently pledging to an “aggressive” housing plan. Even so, there are risks that could potentially hinder momentum on getting supply rapidly built.

“If we move too quickly without bringing other folks along, you’re going to hear from the public and that can throw us off quickly,” said Huinink. “We need to be very measured and careful about how we no longer carry on with the status quo.”

“The industry needs to stay woke and keep collaborating,” added Cook. “If we fail to deliver, you’re going to hear municipalities start to push back.”

Meeting targets requires radical shifts, added Wilkes. “I do believe we need to rock the boat a little bit in order to create change; I think some turbulence in the way we do things is appropriate and I remain hopeful.”