We Already Know Ontario Will Likely Miss Its 2031 Housing Goal. So Now What?

Ontario is facing a significant challenge in meeting its ambitious goal of building 1.5 million new homes by 2031. Experts point to high land costs, increased interest rates, rising development fees, and bureaucratic delays as key obstacles hindering progress. These factors have collectively slowed development across the province, raising concerns about the feasibility of the housing target.

The construction industry has been particularly affected by these challenges. Richard Lyall, president of the Residential Construction Council of Ontario (RESCON), highlights that increased development charges, excessive red tape, and federal sales taxes are major contributors to the slowdown in new home construction. Additionally, Justin Sherwood of the Building Industry and Land Development Association (BILD) notes that construction costs have surged, with condominium building expenses rising by nearly 80% and single-family home costs by 98% since late 2019.

High interest rates and inflation have further exacerbated the situation. The increased cost of borrowing has made it difficult for developers to finance new projects, leading to a decline in pre-construction sales since mid-2022. This downturn has rendered many new projects financially unviable, resulting in a significant drop in housing starts. Sherwood emphasizes that government-imposed taxes and fees, which add about 25% to the cost of a new home in the Greater Toronto Area, need to be addressed to make housing more affordable.

In response to these challenges, the Ontario government has set housing targets for the province's 50 largest municipalities and established a $1.2 billion Building Faster Fund to incentivize meeting these goals. However, without addressing the underlying issues of high costs and regulatory hurdles, these measures may fall short of spurring the necessary increase in housing construction.

The potential shortfall in meeting the 2031 housing goal has significant implications for Ontario's growing population. A continued housing shortage could exacerbate the existing housing crisis, making it increasingly difficult for residents to find affordable homes. This situation underscores the urgent need for comprehensive strategies that tackle the root causes of the slowdown in housing development.

Moving forward, collaboration between government, industry stakeholders, and communities will be essential to overcome these challenges. By addressing high development costs, streamlining regulatory processes, and reconsidering tax structures, Ontario can create a more conducive environment for housing construction. Such efforts are crucial to meet the province's housing needs and ensure that the 2031 housing goal becomes an attainable reality.