My Opening Remarks on the Housing Crisis, to the Standing Committee on Human Resources, Skills and Social Development and the Status of Persons with Disabilities

Thank you for having me here today — my name is Mike Moffatt. I am the Senior Director of the Smart Prosperity Institute, a clean economy think-tank housed at the University of Ottawa.

Over the past five years, home prices have doubled in Halifax, Kitchener-Waterloo, and on Vancouver Island. They are up a whopping 164% in my hometown of London, Ontario. Yet they have not risen at all in Regina, are up marginally in St. John’s, Newfoundland, and are up less than 40% in Winnipeg and Quebec City, barely above inflation.

Why are home prices skyrocketing in some parts of Canada but not others?

The answer is simple: In regions where housing completions cannot, or are not allowed to, keep up with population growth, we have skyrocketing prices.

Southern Ontario is one such region. Before 2016, Ontario’s population grew by roughly 120,000 persons per year every year, and house price growth outside the Greater Toronto Area was relatively modest.

The oil price crash of 2014–15 and the liberalization of federal policies governing international students caused an overnight population boom in Ontario, centred around Toronto, and population growth rates nearly doubled overnight, as we detail in the report One Million Ontarians.

In response to this population boom, Ontario changed almost nothing. Municipal planners all but ignored increased population growth. The 2017 revision to the provincial growth plan ignored the issue entirely, using population growth estimates that were several years out-of-date, which we detail in our report Forecast for Failure.

High population growth and low housing completions lead to housing shortages, skyrocketing prices, and an exodus from the Toronto region. In the year before the pandemic, 60,000 people, on net, moved out of the City of Toronto and Peel Region to other parts of the province. Last year, that figure rose to 72,000. The most common ages of those migrants were between ages 0–4 and 28–32. It was young families that were priced out of the Toronto region and were forced to “drive until they qualified” to other parts of Southern Ontario. This exodus caused Toronto’s population of children under five to drop to levels not seen since the 1970s.

Because of the restrictions on building child-friendly, climate-friendly homes in our cities, those young families were often ending up in small-town Ontario, where family-friendly housing was allowed to be built. In our report, The Growth of London Outside of London, we show that historically roughly 20 percent of housing completions in the London area were outside of the city of London, Ontario. Over the last decade, that figure has steadily risen to 41 percent.

While there are many benefits to small-town living, and while those homes may be child-friendly, they are not particularly climate-friendly. Families are being pushed into neighbourhoods that are not walkable and will never have access to public transit. This sprawl leads to increased infrastructure costs and strains big-city municipal finances. Those families will visit London to shop, work, and learn, using local infrastructure but not paying municipal taxes to the City of London.

With increased immigration targets, and rising numbers of climate refugees and refugees from Ukraine, Ontario’s population growth will remain strong, creating a further need for family-friendly housing. Regions that cannot build that housing should expect to see population outflow, and labour shortages, leading to slow economic growth.

The federal government, and all four major Ontario provincial parties, have been committed to setting a target for 1.5 million net new housing units in Ontario over the next decade, a doubling of housing starts from the previous decade. We believe this is an appropriate target; however, we caution against the thinking that “a unit is a unit is a unit.” Ontario has been able to increase the construction of small, high-rise apartment units in our major cities and single-detached homes in our exurbs. What is missing is child-friendly, climate-friendly housing within our cities. Whether through the Housing Accelerator or other policy levers, the federal government should ensure they are not just incenting more of the same but instead ensure that their housing policies are compatible with their economic and climate goals.

I look forward to your questions.

SPI Housing Reports:

  • The Growth of London Outside London: The Increasing Share of Housing Construction Occurring Outside of the City Limits
  • One Million New Ontarians: As Ontario’s population booms, policymakers must adapt new housing supply to meet demographic-based housing demand
  • Forecast for Failure: How a broken forecasting system is at the root of the GTAH’s housing shortage and how it can be fixed
  • Banning Blind Bidding: Would it slow the growth in Canadian real estate prices?
  • Baby Needs a New Home: Projecting Ontario’s Growing Number of Families and their Housing Needs
  • Priced Out: A lack of housing options for working families in the Goods Production & Distribution District of Canada’s Innovation Corridor
  • Ontarians on the Move — Local Intelligence Report — Hamilton

--

--

Mike Moffatt

Senior Director, Smart Prosperity. Assistant Prof, Ivey Business School. Exhausted but happy Dad of 2 wonderful kids with autism. I used to do other stuff.