2024 will be a pivotal year from homebuilding in the GTA
March 12, 2024
As 2024 begins, we are at a pivotal moment in the debate on housing and employment space supply and affordability in the Greater Toronto Area and Ontario, with new housing and employment space being buffeted by a number of often countervailing forces.
Last year will go down as one of the worst years on record for new home sales in the GTA. Housing starts follow sales, and with low sales, we can expect to see new housing starts dip, which will negatively affect future supply at the very time we will need it the most.
Concerted action
As population expands rapidly, we must have concerted action to make sure the region gets the supply it needs.
First, interest rates have to moderate. The rapid run up in interest rates, as the Bank of Canada fights inflation, is causing many prospective new-home buyers to sit on the sidelines. It is also making it more difficult to finance new projects. This is cutting off the lifeblood of the industry and new supply will suffer as a consequence.
Second, there needs to be predictability and stability in the regulatory environment for new homes and land supply. While there has been tremendous progress in modernizing the regulatory framework to support the provincial objective of building 1.5 million new homes, more needs to be done.
Supportive infrastructure
Third, we need a renewed focus on supportive infrastructure. There are many areas across the GTA where constraints in infrastructure, such as sewer capacity, electrical infrastructure and the like, are limiting the ability to build housing in a timely manner. Addressing this is costly and cannot be done solely by municipalities, nor by loading all the cost on the backs of new-home buyers. We must recognize that a new funding model for housing supportive infrastructure is crucial to achieving the objectives of added supply and increased affordability in the province.
Last, as identified in multiple BILD municipal benchmarking studies, lengthy approvals for new housing projects in the GTA are among the worst in North America and add tens of thousands of dollars to the cost of a new home. Cutting red tape and speeding up the approvals of new homes must be prioritized to unlock the housing this region desperately needs.