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A lack of housing supply has once again been called the most significant contributor to worsening housing affordability in Ontario and, by extension, Canada.

A new report by the Ontario Housing Affordability Task Force said simply that not enough homes have been built, contributing to the erosion of affordability in Ontario.

The task force has come up with dozens of recommendations to improve the situation, identifying measures to reward municipalities that proactively build new housing and limit naysayers’ ability by proposing restrictions on the stalling powers of local governments and NIMBY (not in my back yard) residents.

The task force pointed out average incomes in Ontario have increased by 38 per cent since 2011, but housing prices have almost tripled. The widening gulf between housing prices and incomes is frustrating Ontarians.

Its report said demand-busting measures to cool housing markets have either not worked or provided only temporary relief. This should be an essential finding for supply skeptics, who exclusively blame foreign buyers, investors and others for Ontario’s rising prices and rents.

The task force presented several examples of how it takes years to get approval for new construction in Ontario. Such delays add millions of dollars to construction costs. In addition, local governments have adopted regulations and practices that exceed Ontario’s Planning Act provisions and are responsible for dragging out consultations, further delaying the supply of much-needed housing.

Even when professional planning staff recommend new developments, municipal councils sometimes reject the proposal or require additional compliance that can take months or years to do, causing delays or outright abandonment of the project.

The task force identifies the nexus between the NIMBY residents and NIMTO (not in my term of office) politicians, who have combined to successfully slow the pace of residential development. The NIMBYs, who often use the pretext of preserving a neighbourhood’s character, hold leverage over municipal councillors. Even when a development proposal makes sense, the councillors turn into NIMTOs.

Even without explicit municipal approval, the report recommends housing proposals be “as of right,” or approved automatically without rezoning, to disarm the NIMBYs and NIMTOs. For example, if city authorities delay a proposal to densify an area near a transit station, the planning approvals should automatically happen, given the apparent benefit of improving population densities near transit stations.

Furthermore, the report recommends placing limits on endless public consultations and proposes punitive damages against those whose delay tactics are motivated by sheer self-interest.

The report also recommends streamlining myriad planning regulations that differ by municipalities or even within municipalities in an effort to remove ad hoc decision-making and reduce uncertainty.

The report’s most important recommendation is the target to build 1.5 million more homes in the next 10 years. But that much construction will require much more than just countering the NIMBYs and NIMTOs given that Ontario only started construction on 817,000 dwellings in the past 10 years.

Building an additional 800,000 homes over what would have been built normally will require some major initial steps, such as access to developable land, construction loans at favourable terms, availability of skilled labour and stable supply chains for construction materials.

Consider accessibility to developable land as an example. The report estimates that almost 70 per cent of the land in Toronto is reserved for single- or semi-detached dwellings. Such exclusionary zoning practices must be eliminated across Ontario by using provincial mandates that override any local bylaws against situating new development in already built-up areas.

However, it would be naive to assume that all new construction will be absorbed in the built-up areas, warns David Amborski, a professor at Ryerson University and a member of the Task Force. “Developable and serviced land is in short supply for infill and greenfield development,” thus requiring more serviced land to accommodate hundreds of thousands of new Ontarians.

An increase in construction activity will likely worsen trade and skilled labour shortages. But the federal government can play a significant role here by prioritizing skilled labour for immigration. Furthermore, the feds can partner with the provincial government to leverage funding for new developments, especially purpose-built rental housing, and enhance the ability of the proposed Ontario Housing Delivery Fund.

Similarly, the federal government can strengthen supply chains that bring construction materials from overseas and other parts of Canada.

One way or another, the task force’s recommendations must be implemented to address rapidly escalating housing prices. The provincial government has an opportunity to base its reelection strategy on enhancing housing supply for the upcoming provincial elections in June.

Millions of Ontarians whose housing plans were frustrated by growing prices and rents are likely to reward solid platforms to tackle the worsening housing affordability.


Story by: Financial Post