Can politicians’ promises, plans and programs really fix the housing crisis? It’s an important question to ask in the face of Ontario’s dismal housing performance so far this year.
Ontario Premier Doug Ford promised two years ago that his province would build 1.5 million homes over a decade. In the first half of this year, just 36,371 new homes were started in Ontario urban centres with populations greater than 10,000 people according to the Canadian Mortgage and Housing Corporation (CMHC). That’s down 14 per cent from last year and the most recent numbers are troubling. In June of last year, 10,114 new homes were started. This year the figure was just 5,681.
Toronto has been particularly hard hit. Despite a long-standing housing shortage, sales of new condos dropped to a 27-year low during the first half of this year according to Urbanation Inc., a real estate research group. Only 3,159 new condos were sold in the first six months of this year, a 57 per cent decline from last year and 72 per cent below the 10-year average.
If you’re Doug Ford, it’s difficult to call that success, especially after spending so much political capital on the housing file and getting his government in trouble with now-cancelled plans to build on the Greenbelt.
Ford has put in place a $1.2-billion Building Faster Fund to reward cities that meet or come close to his housing targets, but it’s difficult to identify substantial progress. In 2021, the year before Ford’s new plan, Ontario had just under 100,000 housing starts. In 2022, the number dipped to about 96,000. Last year, the government claimed that 109,000 new units were built, but it added basement apartments and long-term care beds to goose the numbers. There were only 89,297 housing starts, excluding the new categories added. One could make an argument for basement apartments, but long-term care beds? Why not include hospital beds?
The Ford government isn’t averse to fun with figures to create the appearance of relative success, but even its new and improved way of counting leaves the province far short of the average of 150,000 homes a year required under the plan. The idea that Ontario could produce 50 per cent more homes annually than it has in the past has always seemed either ambitious or unrealistic, depending on your point of view.
Most of Ontario’s efforts to solve the housing crisis have focused on the supply side. The government has attempted to speed up housing approvals and boost the supply of construction workers. That’s useful, but it doesn’t matter much without buyers who can afford the product.
Potential demand remains huge, but the combination of high prices and high interest rates is keeping would-be buyers out of the market. While rates have gone down a bit, don’t expect major salvation there. Buyers can get a five year, fixed rate mortgage for about 4.5 per cent. That’s in line with historical norms.
In the short term, the best thing Canada can do is to reduce housing demand, and as it happens, there’s a way to do it.
Statistics Canada reported that in the first quarter of this year, there were 2.8 million people in the country with temporary status. This includes international students, temporary workers and people seeking asylum. That’s 6.8 per cent of the total population, up from 3.5 per cent just two years ago.
The provincial government doesn’t control that number. The federal government does, at least nominally. The Justin Trudeau government has announced plans to reduce the numbers to five per cent of the population over three years. It’s not much, and it’s not quick.
This is a tough issue for Ford. Ontario businesses rely on low-paid foreign workers and its universities and colleges rely on foreign students. Reducing the number drastically would create problems in both sectors, but sometimes governments have to pick their poison.
The overdue process of weaning the post-secondary sector off high foreign student tuition has already begun. As for businesses, Ontario had a seven per cent unemployment rate in June. It’s time to start hiring people who have permanent status in the country, not temporary foreign workers.
An adequate supply of housing is a high priority for Ford, but so far, it’s not working out despite his best efforts. Slowing population growth won’t solve all the province’s housing problems, but it will help. It’s certainly easier to achieve than a 50 per cent increase in the housing sector’s capacity.
Ford needs to make this point forcefully with the public and with his federal friends. Without a reduction in demand, his housing fix is never going to work.
Randall Denley is an Ottawa journalist. Contact him at [email protected]