Who Is Actually Benefiting From the New Homes Built Faster Legislation?
A closer look at the announcements from the Ontario Government made on October 25, 2022
What Was Said
• Reducing bureaucratic costs and the red tape that delays construction and increases the prices of new homes.
• Actively promoting more home development near transit stations.
• Helping Ontarians create ‘gentle density’ housing.
• Protecting new homeowners.
• Discovering new ways to support renters in becoming homeowners.
As a list of actionable items, it seems pretty great. However, the execution of those actions is shaky.• Allowing the use of provincial land to build attainable housing.
Is It Possible?
There is no doubt that Ontario needs those 1.5 million houses. However, reducing red tape and speeding up the approval processes is only a tiny part of the story. Although whether these additional factors have been taken into account is unclear, it’s essential to realize that significantly more issues must be considered.
Let’s assume that the Ontario Government successfully aims to streamline the processes for approval and reduce the red tape. That saves new buyers in new developments some money, which is fantastic. But that’s assuming two things: that the houses get built and that other factors don’t mitigate the price drop.
Let’s take a look at the job market right now. We are facing a labour shortage. Premier Ford points out at the beginning of the announcement that currently, Ontario has 380,000 jobs that remain unfilled. Building houses takes a specific skill set, as well as manual labourers. Are there enough available specialized individuals to fill those jobs? If not, how are you going to get them? All of the options cost money and time. Who is going to pay that difference?
Material costs have increased significantly over the past two years. Anyone who has tried to do any home renovation knows things are expensive and hard to get. Wait times for simple construction items are long. There is no way to know when that will ease up. So who will pay those extra costs for the delays due to not having the suitable materials on time?
The availability of land is probably not an issue between building high-density housing (condo buildings, apartments, etc.) and the land already owned by developers. So 1.5 million homes isn’t an unreasonable target. But with municipalities being limited on development charges, they won’t necessarily have the funds to maintain and upgrade the infrastructure to handle the additional wear and tear due to the increase in population.
How is This Going to Affect the Housing Market?
The short answer is it won’t.
A lot of this legislation is for the benefit of the developers, not new home buyers. Skipping environmental protection in favour of simply looking at flooding and erosion impacts isn’t good for anyone. Capping development and parkland charges limits municipalities and will mean failing infrastructure and less green space. And when has the mantra of ‘faster, more, and cheaper’ ever created a quality product?
The Ontario Government's plan will have a negligible effect overall, especially now when there is lower house demand, ever-increasing interest rates, and the highest inflation rate in 39 years. Nothing will change, and developers will likely not begin new projects until there is better affordability for buying a house.
Moving Forward
Things seem a little bleak right now, with interest rates at the highest since 2008, inflation making everything more expensive, and the housing market slowing down. But there’s light at the end of the tunnel. So if you can, hunker down, make a budget, and reach out to your local agencies for support.
The Mayer-Harman Team will keep you updated on the latest developments in real estate news.
