Ontarians on the Move, 2021 Edition. #6 – We need to pay attention to migration patterns and “drive until you qualify”. Here’s why.

Sixth in (what I hope) will be a series on population growth, migration, and what’s going on with Ontario’s housing market. Previous piece: #5–20 Years Ago, Torontonians were moving to Peel and York. Now they’re moving to Barrie, Oshawa, Milton, St. Catharines, and London, making for much longer commutes.

TL;DR version: Many Ontarians are critical of the provincial government’s highway expansion plans. I share their concerns. But their proposed responses and solutions show a lack of understanding of the underlying causes of the demand for highways. While it’s true that “highways cause sprawl”, critics also need to ask “what causes highways?” Ontario is growing by one million people every five years, and urban housing build is not keeping up, pricing families out of urban centres and causing them to have long commutes to where they work. When that happens, they’re going to want highways.

The Ford Government’s highway expansion plans have generated a fair bit of criticism on Twitter. I absolutely share those concerns. I thought it would be helpful, as part of my Ontarians on the Move series to explain why we likely have a lot more highways in our future, and what we’d have to do to if we don’t want decades of further highway expansion.

So “Why more highways?” That’s a question with a simple answer:

Families are being forced to scatter across the province, further away from the province’s key economic centres. They’re going to want to be able to leave their homes to go to work, to go shopping, and to visit friends, family, and entertainment venues.

Here’s what you need to know.

Ontario’s population has increased by over one million people over the last five years, largely due to international non-permanent residents (students, workers on visas, etc.) and international immigration. It is likely to add another million in the next years, possibly the next four. That’s a lot of people, and they need to live somewhere.

That population growth is outpacing our ability (and, frankly, to our collective desire) to build new homes in our biggest, most economically dynamic cities, like Toronto. This creates a “musical chairs” effect for young families looking for housing. If you have three families all wanting the same house, only one family win (that is, only one can end up buying it), causing the other two families to have to look somewhere else. The one that wins is the family that’s willing and able to pay the most, and the competition between the three drives up prices.

The other two families, having been priced out of the market, start to look further afield for housing they can afford, a process known as “drive until you qualify”. That is, get in the car, and drive far enough away that the home prices are low enough that a bank is willing to qualify you for a mortgage that’s large enough to buy the house.

Nowhere in Ontario is more emblematic of this “musical chairs” effect than the Kitchener-Waterloo market, where families priced out of Toronto are buying houses there, pricing existing residents out and causing them to buy homes in Woodstock, Brantford, and Tillsonburg when they want a place large enough to raise a family.

We have some data on this. The previous entries in our series looked at data at the Census Division level (in Ontario, to a very rough approximation, a Census Division is a County). This data set has two big advantages: There is 19 years worth of data and the 49 Census Divisions (CDs) cover the entire province. But it has one big drawback: While it can tell you which CDs are gaining new residents from the rest of the province, it cannot tell you directly where they are coming from.

Fortunately, there is a series that can provide insights into that question, but it has some limitations. Statistics Canada has a series with the lengthy name Interprovincial and intraprovincial migrants, by census metropolitan area and census agglomeration of origin and destination. What this means in human speak is “how many people moved from one Canadian city to another”. A “census metropolitan area” (CMA) is simply a metro area of 100,000 people or more, and a “census agglomeration” is a metro area of 50,000–100,000. Since these are metro areas, they don’t follow municipal boundaries; Toronto CMA includes Mississauga, Brampton, and Markham (among others), London CMA includes St. Thomas and Strathroy. So we cannot directly compare CMAs and CAs to CDs — the boundaries are different.

The Statistics Canada series only has 3 years' worth of data, ending on July 1, 2019, but it is enough to see some patterns. Here are the biggest sources of net domestic inflow into the Kitchener-Cambridge-Waterloo CMA over those three years. Not surprisingly, Toronto tops the list:

And here’s where K-C-W is seeing net outflow to:

“Non-Metro Ontario” is my shorthand for the Statistics Canada category “Area outside census metropolitan areas and census agglomerations, Ontario” which is stat nerd talk for “people who don’t live in or near a city”. In other words, rural Ontario.

It’s not realistic to think that residents of the Tri-Cities are moving, on net, to Woodstock or Brantford or Mitchell or Ingersoll or Delhi or East Zorra-Tavistock or Whalen Corners because they have stronger labour-markets and higher-paying jobs than Waterloo. Some are moving there because they’re retirees cashing out of expensive K-C-W real estate. Most are young families looking for a house they can afford, while still working in K-C-W. Some may be able to telecommute, others are taking a daily trip up Highway 24 or on the 401. (Sadly, we don’t have great data on what proportion of people making the move end up commuting. Our best data on commuting comes from the Census, which is on a five-year cycle. The next one should be eye-opening).

The economic boundaries of the tri-cities have been stretched to Woodstock and Brantford (and a bunch of small cities in between) thanks to local workers being pushed out of the housing market and “drive until you qualify”. This is sprawl, and sprawl on a massive scale.

This locks us into a never-ending cycle, where more sprawl leads to more highways which leads to more sprawl which leads to, well, you get the idea. We forced families out of the cities, which has environmental and political consequences.

A number of policy solutions are often proposed as an alternative to highways, but none get at the core of the problem.

Rural broadband: Helpful, but not sufficient. There are a lot of jobs that can’t be done remotely and people are still going to want to travel to larger centres for a variety of work reasons. Take a nurse and a receptionist that work at St. Mary’s General at Kitchener and they’re wanting to start a family. Given the massive home price escalation in the local market, they’re probably going to have to “drive until they qualify”, perhaps some distance, for a home. This is a problem!

Enhanced train service: Helpful, but not sufficient. If it were only one or two communities that were seeing an influx of “drive until you qualify” families, we could simply build rail those places. But those families are moving everywhere. Are we really going to extend GO service to Tillsonburg? To Goderich? To Whalen Corners? Where does it end?

I like broadband. I like trains. But let’s be clear what this “broadband plus trains” alternative is – continued sprawl across the province, with massive losses of some of the best farmland in the world, along with a loss of biodiversity. That is not an environmentally friendly solution! And it’s not one that would stop, or even substantially slow down, highway expansion.

In order to solve the problem, we must address the root cause, which is a mismatch between population growth and the amount of new housing build in urban centres.

If we do not align our immigration and international student policies with our housing policies, we’re going to continue on the same path of housing “musical chairs”, with more families having to “drive until they qualify” for housing causing sprawl and increased demand for highways.

There are two ways we could do this, of course. One solution would be to simply slow the rate of population growth by reducing our immigration targets. A better solution, in my view, is to increase the supply of housing in our cities, particularly Toronto.

Part of the solution is for governments to build more affordable housing, which is vitally needed. But if we want more urban housing, we’re going to have to take a long look at the maze of rules and regulations that make building family-sized infill properties nearly prohibitively expensive, if not impossible.