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Ontario’s housing supply overstated by almost 1M units: OHBA/BILD

Study by housing industry organizations combats claims developers are 'sitting on lots'

A new report says Ontario's developers and builders are staying active in home building, and questions the amount of purported shovel-ready land given by the government. (Courtesy Keleher Planning & Economic Consulting Inc.)

A report commissioned by organizations representing Ontario’s developers and builders argues provincial authorities are overstating the amount of shovel-ready land - by almost one million housing units - fuelling a misconception the industry is “sitting on lots.”

The study, authored by Keleher Planning & Economic Consulting Inc., found land for 331,600 units is ready for construction in the near future, compared to an estimate of 1.25 million housing units from the Regional Planning Commissioners of Ontario (RPCO).

It also disputes the “narrative that has been put forward by the municipal sector that we as an industry, builder-developers, are sitting on lots on housing supply,” as the study suggests starts are at a 34-year high, according to Neil Rodgers, interim CEO of the Ontario Home Builders’ Association (OHBA).

The OHBA commissioned the report with the Building Industry and Land Development Association.

With the Ontario government proposing enhancements to policies that can strip permitting from projects that have not commenced construction, based on the idea not enough housing is being built, the report also argues such a change can further hold back housing supply.

Countering ‘misconceptions’ about housing supply

The Housing Affordability Task Force commissioned by the Ontario government released a report in 2022, recommending a ‘use-it-or-lose-it’ policy. Municipalities could withdraw infrastructure allocations from permitted projects that do not start construction within three years of issued building permits, subject to “adverse external economic events.”

But Rodgers said it is not the case that developers “aren’t pulling (their) weight” by sitting on serviced land and creating a housing supply shortage. The report found housing completions reached a 34-year high in 2023 with almost 77,900 units finished, driven by apartment units.

Keleher’s analysis also indicates, disputing RPCO’s claim of 1.25 million approved and proposed housing units, there are approximately 331,600 units which are actually development ready. Over 730,000 are under application or proposed, and others are approved via Minister’s Zoning Orders or as-of-right units.

Such disparities between government and private analysis of shovel-ready land was also identified by experts such as Frank Clayton, who compared Statistics Canada’s inventory of vacant land in the Toronto and Ottawa census metropolitan areas to an inventory by Malone Given Parsons.

Stronger use-it-or-lose-it powers not needed

The OHBA/BILD study also argues use-it-or-lose-it powers already exist in the Ontario Planning Act and Building Code. For example, chief building officials have the authority to “revoke a permit when construction has not commenced within six months of issuance, or where construction has been suspended, or discontinued for more than a year.”

“We’re asking ourselves the question: what more do municipalities need?” Rodgers said. Forming a “blanket legislative regime” that strips development rights is not what Ontario needs for a predictable housing supply, he added.

Citing a study from the U.K., Keleher contends adding more expiries of permits or additional costs will most adversely affect smaller developers and construction firms that together play a large role in helping meet market demand for housing.

“We will argue that we don’t think they need it. They’re saying use it or lose it? The same could be said for municipalities. Use your authority, or don’t,” Rodgers said.

Prescriptions from the report

Keleher lays out recommendations to address the problems identified in the report.

The most critical suggestion is a universal, transparent data bank for the private and public sector to draw from. Rodgers said there is currently no set of uniform data points to understand shovel-ready pending applications.

If the Ontario government is going to bring in a use-it-or-lose-it regime, he said municipalities should be required to furnish the province with data and information so all parties, both private and public, can monitor the effectiveness of their performance.

The report also recommends, among other steps:

  • consider the amount of unused servicing capacity held by non-residential approvals;
  • look at population forecasts in planning processes as minimums; and
  • phase large development sites to mitigate risk and improve chances of delivery of supply.

Rodgers also urges exploring more efficient approval processes to cut red tape at the municipal or provincial levels, and for the government and industry to look into different ways to build housing like modular and prefabricated housing.

“We need to find an efficient process that brings applications for housing units quicker through the planning approvals process, so our members can begin to build the homes that Ontarians need and want.”

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