The provincial government recently promised action on skyrocketing hydro rates, now we need them to turn their attention to our housing supply crisis and resulting pricing challenges in the GTA.
The provincial government announced an initiative to reduce hydro fees for Ontarians a few weeks ago. The price of electricity in this province has increased dramatically over the last dozen years. By most accounts, the increase was due largely to the government’s policies and the government was under growing public pressure to address the issue. According to media reports, some consumers had seen their rates triple in a decade.
Like hydro, housing prices in the GTA – and increasingly in the areas around it – have risen significantly over the past decade. As with electricity, government policy is a major contributor to the increase in prices. Government policies have both directly and indirectly impacted the supply of housing in the region. We are not building enough housing to support our growing population or consumer demand and as a result the price of housing has skyrocketed.
A couple of recent studies have brought to light how bad our housing challenges are. According to the 13th Annual Demographia Housing Affordability Survey, Toronto has the distinction of being the world’s 13th least affordable housing market. We came in just behind London England. The study also found that when you look at prices across our region as a whole and compare them with those in the New York City metro area, home prices are significantly more expensive here than in the New York.
Meanwhile, Canada Mortgage and Housing Corporation released a report a few weeks ago that flagged how GTA price increases are spreading out to the outer reaches of the Greater Golden Horseshoe. CMHC has been tracking the uptick for years in Hamilton, Barrie and Guelph as more and more consumer looking to buy single family homes were forced outside the GTA. Now they are seeing the effects of what we call “drive to you qualify” in the St. Catharines-Niagara region and in Kitchener-Waterloo.
We all know how hard and expensive it has become to buy a home in the GTA. Despite unprecedented prices, fewer people are listing their homes and there are far more people looking to buy homes than there are homes for sale.
On the new homes side, builders and developers are quickly selling any product that they can bring to the market and builder inventories are at never seen before lows. Today there are fewer than half the number of new homes available in builder inventories than there were a decade ago.
In the GTA in December 2006, there were 11,602 new single-family detached homes available to purchase in builder inventories. In December 2016, there were 742.
I hear stories from our members about would be home buyers sleeping in their cars so that they can be near the front of the line when the sales office opens. One member told me how a thousand consumers come to a product launch where fewer than a dozen homes were on offer. The townhouse development in York Region sold out in an hour. Some members are forgoing traditional sales launches all together because they have hundreds of potential buyers registered for every home in the development and they don’t want to disappoint buyers they can’t accommodate.
We are the land development and home building industry, why don’t we just launch more projects and build more homes? Unfortunately there are many barriers in the way, most of which government could help us resolve. Some of the solutions, such as fixing the approvals process by reducing excessive red tape and modernizing local zoning bylaws so that they align with provincial intensification policy, could be achieved without additional costs.
The time has come to acknowledge that we have a housing problem in the GTA. It is time for government to recognize that we can all work together on solutions to address our housing supply crisis so that today’s new home buyers and future generations have a place to live and access to homes they can afford to purchase.