Ontarians on the Move, 2021 Edition #18 — Ontario’s pre-pandemic housing shortage was a uniquely Ontario problem.

Eighteenth in (what I hope) will be a series on population growth, migration, and what’s going on with Ontario’s housing market. Previous piece: Ontarians on the Move, 2021 Edition #17 — Waiting for Seniors to “Age Out” of their homes is not a solution to Toronto’s family housing crisis.

TL;DR version: Between 2016 and 2020, Ontario’s population and number of households boomed, but homebuilding (of all forms) did not, leaving the province short roughly 100,000 homes in just four years. This was a near-uniquely Ontario phenomenon, as homebuilding in British Columbia, Alberta, and Quebec kept up with population growth.

One of the most frequent questions I get during this series is “what about other provinces?” I don’t really have the time (or knowledge) to write a series on Manitobans on the Move, but I have been left wondering whether Ontario’s housing shortage (and the drive until you qualify and musical chairs effect it caused) was happening across Canada or it was a uniquely Ontario thing.

So I decided to find out.

First I needed data for all of Canada. Back in Part 16, I used “primary household maintainer” (PHM) data from the CMHC. By the time I wrote Part 17, I was able to get the equivalent data from Census 2016. This has two big advantages:

1. The data is from 2016, not 2011.
2. The census data has separate categories for 65–74, 75–84, and 85+ year olds, whereas the CMHC lumps them together into a single 65+ category.

To start, here’s the percentage of the population, by province and age, which is the “primary household maintainer” of a home (this includes both owners and renters, of every form of housing):

Source: Census 2016.

For Ontario, the three “under 45” categories jump out at me. For 25–to-34 year-olds, Ontarians are the least likely to be a primary household maintainer, and for 35–to-44 year-olds, they are tied for near last with British Columbia. This is not surprising given the low availability and high price of housing in those two provinces. Young people (a definition that we’re stretching all the way to age 44, because that’s my age and as such is a good benchmark for youth), put off starting families and live with roommates or parents due to a lack of housing options they can afford.

As in the previous two pieces, we can take these percentages to translate population growth into growth in the number of households. We do this by taking the population growth for each cohort and multiplying the head-of-household rate to estimate the growth in the number of households:

Sources: Census 2016 and Statistics Canada.

Three things stand out to me in this chart:

1. The estimated percentage growth in the number of households between 2016 and 2020 was almost identical in British Columbia, Ontario, and Alberta, which were the 2nd to 4th fastest growing provinces by this metric.
2. PEI! WOW!
3. Almost no growth in the number of households in Newfoundland. Effect of the oil price crash of 2015, perhaps?

Next we can compare the growth in the number of households to the growth in the number of homes. Because the population data is estimated for July 1 of each year, we’ll examine the number of homes of all forms (semi-detached, high-rise apartment, you name it) that were completed from July 1, 2016 to June 30, 2020 (using this data from Statistics Canada). This method tends to overestimate the amount of new housing supply, as it doesn’t take into account demolitions, so it will tend to understate the housing shortage issue. But it’s close enough for our purposes:

Sources: Census 2016, Statistics Canada, and Statistics Canada.

Ontario, British Columbia, and Alberta all experienced an estimated 7% rise in the number of households between 2016 and 2020. Both Alberta and British Columbia were able to keep a one-to-one ratio between net new household formations and the number of homes (of all forms) completed. Ontario, however, was not, with home completions lagging behind household formations by nearly 100,000 units in just four years.

This should raise a whole lot of questions. Well, just one: Why can Alberta and British Columbia build enough homes to keep up with population growth while Ontario cannot?

A few other things jump out at me:

1. British Columbia built more than one new unit per net new household. Perhaps catching up for past underbuilding? Worth investigating in a future piece.
2. Unlike Alberta and British Columbia, PEI shares Ontario’s challenges with homebuilding not being able to keep up with population growth.
3. Newfoundland and Labrador, on the other hand, completed many new homes despite almost no growth in the number of households. Looks like they were anticipating demand that never materialized, which would support the “oil price crash of 2015 wrecked everything” thesis.

Eagle-eyed readers with long memories may have noticed that this piece is estimating that Ontario underbuilt by 92,772 homes, while Part 16 the estimate was over 100,000. What’s going on?

The answer: Changes, between 2011 and 2016, in the percentage of the population that is head-of-household. Here’s Ontario’s data side-by-side for 2011 and 2016.

Source: Census 2016 and Number of Households by Household Type: 1976–2036.

Household formation rates for the young (where “young” extends into middle-age), in Ontario, is falling due to a lack of available housing options they can afford. Our young adults are putting off renting or buying their first home, starting a family, and raising kids, and instead are living with roommates or Mom and Dad. There’s nothing at all wrong with having roommates or living with your parents (mine are great), but that should be a voluntary choice that people (and their parents) make, not one that’s forced upon them by economic circumstances.

When the data for Census 2021 is released, I think we’ll find that there weren’t literally 100,000 more households formed than houses available. Instead what we’re likely to see is another huge drop in household formation rates among young Ontarians, so the number of net new households is much closer aligned with the number of net new homes.

We should consider this 100,000 (or 92,772) estimate as the number of new phantom households in Ontario. Households that would have been formed, but were not, because of a lack of housing. This province is solving its housing crisis by simply shutting young people out of the market entirely. We need better solutions.