Rockier road to 1.5M new Ontario homes, construction industry insiders say

Ontario faces a tough road to meet its goal of building more than a million new homes.

Construction industry insiders say the latest government policy reversal and elevated interest rates wreak uncertainty for developers.

On Monday, Housing Minister Paul Calandra announced the province would roll back boundary expansions it imposed on several municipalities, including in Peel, York and Halton regions. Calandra said he made the decision after a review found there was "too much involvement" from his predecessor's office in the process. 

The news was met with disappointment from the Building Industry and Land Development Association (BILD), a GTA-based construction advocacy and lobby group. CEO Dave Wilkes said this week that the so-called white belt land — land with potential for development just outside of existing urban boundaries — was identified through an "extensive and exhausting process.

"As it gets rescinded and pulled back, that land is no longer available for growth. That land is no longer available for new homebuyers. And it will seriously impact the ability to meet the provincial objective" of 1.5 million new homes by 2031, he told CBC Radio's Metro Morning. 

Population growth projections for some municipalities affected by the initial boundary expansions means more land is needed to build the right mix of housing for "what the market is demanding," Wilkes said, particularly single-family homes.

"We do have a structural problem," Wilkes said. 

"If we don't address that structural problem by identifying land for growth, by building infrastructure like sewers and roads in those areas and building them now … we're never going to get out of this affordability challenge."

LISTEN | Construction industry group says more land needed for housing goals:

The province is already far behind on its housing target, according to an independent analysis which says the annual pace of construction needs to nearly double to 150,000 by 2025 to have any hope of hitting it. 

Private sector projections cited in the province's 2023 budget forecast no more than 83,000 new housing starts in any year until 2026. Notably, however, those estimates were made before the federal government's recent move to eliminate GST on purpose-built rentals, with Ontario then promising to eliminate the provincial portion of the tax.

The province said the urban boundary expansions were another part of the wider plan to boost construction. But in some instances, the changes were unilateral and made over city staff and council objections. 

Maureen Wilson, councillor for Hamilton's Ward 1, takes issue with the contention that the expansion process was fair or transparent. She notes that on Nov. 4, 2022, the same day the province announced it was opening 15 Greenbelt sites for development (a decision since reversed), it also said it was adding 2,200 hectares to Hamilton's urban boundary. That's an area roughly the size of Orillia, Ont.

Wilson told Metro Morning the move would have only encouraged more sprawl for expensive detached homes.