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Ontario promised to build 1.5 million homes by 2031. A new report says that will likely never happen

Ontario is unlikely to meet its lofty goal of building 1.5 million homes by 2031 to alleviate the housing crisis, according to a new report from the Smart Prosperity Institute, an Ottawa-based think-tank.

There are so many bottlenecks that we need to address in the next five to 10 years.– Mike Moffatt, economist

During the housing crisis, there have been sharp increases in rents and real estate prices, and an increased rate of homelessness in the province. 

The think-tank’s report, looking at whether Ontario’s house-building goal is not only accurate but also attainable, is entitled “Ontario’s need for 1.5 million more homes.” It was published Tuesday by the Smart Prosperity Institute at the University of Ottawa.

The report says Ontario is already grappling with a shortage of about 500,000 homes and needs another one million to satisfy forecasted demand created by a growing population by 2031 — a goal Ontario is unlikely to reach.

“I would say, unfortunately no,” said Mike Moffatt, an economist with the Smart Prosperity Institute and the paper’s lead researcher. “There are so many bottlenecks that we need to address in the next five to 10 years.”

‘Bottlenecks’ likely to thwart Ontario’s efforts

Among them, Moffatt said, are the official growth plans of Ontario’s 444 municipalities, many of which are planning for much lower building figures for new housing than the ambitious target Ontario has set for itself. 

A crane towers over a row of houses in London’s west end in July. Up until 2015, Ontario had a well-functioning real estate market, but changes to federal immigration policy and the crash in the price of oil meant those seeking their fortunes in Alberta started coming to Ontario instead. (Colin Butler/CBC News)

As an example, in  London, the city needs almost 40,000 homes to satisfy demand created by its growing population by 2031, according to Moffatt, but the city’s official plan estimates it only needs about half that number.

“The London Plan assumes we’re going to build about 22,000,” Moffatt told CBC News, noting it’s not the only official plan that underestimates the amount of housing needed in the next nine years.

“Those really aren’t compatible with the provincial government’s housing targets,” he said. “So the Ford government has a difficult choice: do they approve all of these municipal plans knowing they are probably insufficient for the housing goal, or do they tell the municipalities to go back to the drawing board, which could ruffle some feathers?”

In other words, the province risks being accused of interfering in local affairs or criticized for creating sprawl by developing Ontario’s farmland, which is already disappearing at an alarming rate.

On top of this, Moffatt said, Ontario is grappling with a shortage of skilled trades, due in part to a rapidly aging industry where many older workers are looking to hang up their hard hats for good. 

“We need to essentially double the amount of people in the skilled trades at a time when many of them are retiring.” 

Moffatt said the province needs new policies that increase productivity in the housing construction business, but so far, those policies don’t exist. 

Still, the Progressive Conservative government said Monday it has already delivered “historic results” when it comes to building new homes. 

In an email to CBC News, Victoria Podbielski, press secretary to Housing Minister Steve Clark, wrote that Ontario broke ground on 100,000 new homes in 2021, “the highest level of new housing starts in a single year since 1987.” 

Podbielski added that last year, the province also built the most apartment units in a single year since 1991.

She said the province’s recent proposed strong mayor legislation would break down development barriers, while at the same time Ontario is spending $1.5 billion on skilled trades and last week, it brought together its housing supply action plan implementation team, made up of civic leaders from around the province. 

Ontario should have seen what was coming

Moffatt said how Ontario found itself in this predicament is a complicated tale with many twists and turns, but one the economist believes the province, developers and the real estate industry should have seen coming. 

More construction is shown in London this summer. To reach its goal of 1.5 million homes by 2031, Ontario would have to build at a rate of 458 homes a day over the next nine years. (Colin Butler/CBC News)

Up until 2015, Moffatt said, Ontario had a well-functioning real estate market, but changes to federal immigration policy under then Conservative Prime Minister Stephen Harper, and that have been expanded by Liberal Prime Minister Justin Trudeau, increased the amount of newcomers to Canada.

When the price of oil crashed in 2015, not only did more immigrants choose to settle in Ontario instead of Alberta and Saskatchewan, many Canadians who moved to Western Canada for economic opportunities started coming back. 

“When oil crashed in 2015, the flow reversed itself,” Moffatt said. “[Ontario’s] population growth rate almost doubled overnight, but we really didn’t change how we were building housing that led to the shortage we have today.”

He said despite the fact the federal, provincial and municipal governments are on the same team, none of them saw the current crisis coming. 

“Unfortunately no, and I think they should have,” Moffatt said, noting all three governments need to do a better job of working together to prevent these types of demographic crises. 

“It’s sort of the classic Canadian problem where we have three levels of government, all kind of operating on their own and the whole system lacks co-ordination. We didn’t really forecast this coming, but we should have. There was no excuse for us not to.” 

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