Report shows province not on track to meet target of 1.5 million new homes by 2031

Throughout 2023, Premier Doug Ford, with his housing minister by his side, touted his government’s housing plan as the way to finally end the affordability crisis. But according to a recent report, housing construction “slipped” in 2023 — the first full year after Bill 23 came into effect, requiring “dramatic steps” to meet its own lofty targets. 

The latest policy report from the Ontario Real Estate Association (OREA) revealed housing starts were down in 2023 despite the province’s determination to have 1.5 million new homes constructed across the province by 2031 — more than double the historic rate of housing starts.

According to the report, “2021 had the highest level of housing starts in over 30 years, with a milestone 100,000 units; and 2022 had the highest number of rental starts since 1991 with 14,917 units. However, starts have slipped since then: the province saw 96,000 housing starts in 2022, and early estimates for 2023 come in at 90,000 units.” The statistics suggest significant construction activity, which anyone can see by the number of cranes in the sky and subdivisions popping up across the GTHA, but compared to the explosive growth that began in the ‘80s, the recent figures are not nearly high enough to achieve the average number of new units annually over the next eight years to reach 1.5 million new homes by 2031. About 175,000 starts would be needed each year to meet the goal, an unprecedented number, one that many municipalities have said is unrealistic in today’s climate of unpredictable financing costs, labour insecurity and hyper inflation in the building sector. 

“While initial legislative reforms were commendable — aligning official plans with provincial priorities, encouraging growth, and ensuring short-term land is available for homes — momentum has recently slowed due to high interest rates that are working against reforms.”

The report, which analyzed the progress the province has made on the recommendations by the Housing Affordability Task Force (HATF) to boost housing supply in Ontario, found that of the Task Force’s 55 recommendations, 76 percent have been fully implemented or are in progress. 

Data from several reports published last year show Ontario’s municipalities must dramatically accelerate housing starts if they hope to hit their own targets set by the Ford government. 

The PCs asked Ontario’s largest and fastest-growing municipalities to submit Municipal Housing Pledges, which would serve as blueprints to help construct the number of housing units designated for specific cities. 

In response, Mississauga approved “Growing Mississauga" in March as a roadmap to meet its target of 120,000 new homes — a mandate staff have said “puts an undue strain on City resources to build the same amount of homes in 10 years that would have been built in 30.” Staff also cautioned in the City’s latest pre-budget submissions to the provincial and federal government that hitting these targets requires dramatically increased infrastructure support. 

“Provincial legislation, housing targets, and Ministerial Zoning Orders have all increased and expedited the infrastructure burden for municipalities,” the City’s submission states. “Provincial and federal supports are needed to ensure communities have the necessary infrastructure in place to build the housing units required to meet demand.”

According to Mississauga’s housing plan, which outlines actions the City is taking to help get units built, Mississauga can accommodate 246,000 new residential units — significantly exceeding the target established by the province — based on current Official Plan policies. With new housing-focused policies, like the recent approval of fourplexes, the potential number of residential units that can be built will add significantly to Mississauga’s housing supply, which for decades was limited due to suburban-style zoning and approvals that concentrated on large, spread out single-family houses.  

“Mississauga can only accommodate this level of growth if infrastructure and services are in place and the development and building industry have the desire and capacity to build the new homes,” a spokesperson for the City told The Pointer.

In December, Housing Minister Paul Calandra wrongly claimed Mississauga had “some of the worst housing starts” in the province.

(X/Twitter) 

Despite the City’s efforts to meet its housing mandate, during the December announcement that terminated the dissolution of Peel, Minister of Municipal Affairs and Housing Paul Calandra accused Mississauga of lagging behind its housing targets under Bill 23, claiming it has “some of the worst housing starts in Ontario.”

The Minister’s rhetoric was out of line with regional data which show in the third quarter of 2023, the most recent data available at the time, Mississauga had 1,319 housing starts; more than Brampton which had 1,238; and more than all of Durham Region which had 753. 

“Housing data is complex and multifaceted and unfortunately, the metrics cities have control over do not line up with how the province is measuring our progress,” the Mississauga spokesperson said. “Simply put, the province is measuring ‘housing starts’ but as cities don’t build housing, it’s an inaccurate way to track our progress.”

“‘Housing starts’ are counted when the building’s foundation is finished; in a high-rise building, this could be many months, often years, after the building permit is issued by the municipality (after the builder has secured finances and aligned the trades/contractors, undertaken shoring and excavation and built each level of underground parking).” 

The spokesperson noted Ontario municipalities are all at different stages of growth and development which makes comparing housing starts “even more problematic.” As of the end of December, Mississauga had over 11,000 units under construction but with the city already built out to its municipal boundaries, the nature of Mississauga’s current developments — “which [are] predominantly complex” — are in-fill, high-rise buildings. This, the spokesperson explained, means a project can take several years to move from sales and marketing through to construction start and completion. In contrast, building low-rise subdivisions in the outskirts of urban areas is much faster and simpler than building complex high-rise towers in cities like Mississauga that are already built out.

“With millions of dollars on the line, it is important that we be measured on areas we control and not be penalized on market factors and/or the business decisions developers make as to when to plan new development or start construction,” the spokesperson said. 

Municipalities are under pressure — despite factors outside their control — to expedite housing starts, and provincial data indicates the benchmark of 150,000 homes per year, every year, to reach 1.5 million homes by 2031 is not being met. The province’s housing supply progress tracker, which follows municipalities’ progress toward their mandated objectives, shows the majority of municipalities are falling behind the targets set by the PCs. 

“Since setting the 1.5 million unit target in 2021, Ontario has seen 285,377 new starts — meaning we are just 19% of the way there as we enter 2024; and the Government’s own supply projections for the next few years fall short of what is needed,” the OREA report emphasizes.                                 

According to the provincial tracker, as of its last update on January 19, only 12 municipalities met or exceeded their housing targets in 2023, while 38 have not met their targets to date. Among Ontario's largest cities, Toronto is leading the way, having exceeded its 2023 targets by 146 percent. In contrast, the tracking tool reported Mississauga met 27 percent of its target for last year and Brampton only achieved 35 percent of its goal.

Data from the Canada Mortgage and Housing Corporation (CMHC) show Ontario had 85,770 housing starts, defined by the CMHC as the moment concrete has been poured, in 2023. Housing starts in the fourth quarter of 2023 sat at 20,482, down from 26,188 during the same period in 2022. In the final quarter of 2022, the total number of housing units under construction was 171,425, while housing completions were only at 18,670.

In early 2023, private sector projections cited in the province's 2023 budget suggested the province was already off target, with no more than 83,000 new housing starts forecasted in any year until 2026. 

At the current rate, the annual pace of construction would need to nearly double to 150,000 by 2025 to have any hope of achieving the PC’s ambitious goal.  

Current projections estimate the pace of construction would need to double to achieve the province’s housing target of 1.5 million homes by 2031.

(Alexis Wright/The Pointer) 

When the province first introduced its housing plan, Ford and his housing minister laid much of the blame for the pace of home construction on municipalities, claiming they were not approving projects quickly enough.

Statistics tell a different story. 

The Regional Planning Commissioners of Ontario reported in March that municipalities across the province were sitting on more than 1.25 million potential housing units already in the development pipeline and approved for construction. Those calculations are based on numbers from late 2022, before Bill 23 was officially passed. 

The figure reflects the number of homes developers have been approved for permits to build, but have not yet materialized. Once approved by municipalities, there is no set timeline for a developer to build the homes.

“The City’s role in delivering housing is to review development applications and issue building permits,” the Mississauga spokesperson told The Pointer. “It is the responsibility of the developer/builder to start construction after the permit is issued – the timing of which is outside the City’s control.”

“In some instances, we’re seeing that some developers are securing land use permissions but are not moving to pull building permits and start construction.” 

As cities sit on a mound of incomplete developments, municipalities, according to Ontario Big City Mayors (OBCM), are blaming “a system that measures what they can’t control.” The advocacy group says provincial housing fund criteria, like the rules set out in the province’s Building Faster Fund — which uses housing starts as a benchmark to measure eligibility for funding — “unfairly penalizes municipalities who do not have control over housing starts” once a development application is approved. 

In August, during the 2023 Association of Municipalities of Ontario annual general meeting the Ford government introduced the fund as an incentive that “will reward” municipalities that meet the PCs’ ambitious housing targets and threatens those who don’t comply. The up to $1.2 billion in funding over three years is contingent on municipalities meeting or exceeding the housing targets they have pledged to achieve by 2031. The fund is meant to support housing-enabling infrastructure and other related costs that support community growth in municipalities.

Under the program, funding for municipalities that reach their targets would be based on their share of the overall housing supply goal and their performance compared to their annual assigned targets. Performance, the province explained, will be evaluated by comparing the municipality’s number of housing starts and additional residential units created annually against the annual target — a requirement OBCM requested the Province reconsider and consult on further.

The advocacy group put forward a motion in October calling on the PC government to reconsider the requirements of using housing starts as a determining factor for funding eligibility recognizing “municipalities can fast track approvals, but do not build homes,” adding that “due to issues beyond the control of municipalities (high interest rates, mounting material costs, labour shortages, utilities etc.), the pulling of permits by developers may be stalled.” 

“Municipalities want to qualify for funding based on permits issued, not housing starts,” a release from OCBM stated. Municipalities “say they could lose out on millions of dollars in provincial funding for housing-related infrastructure due to factors beyond their control, unless the government makes a simple change to the criteria.”

In November, during what the province billed as its first annual housing forum, the province’s housing minister shot down the request from OBCM for the change in funding criteria that would help municipalities qualify for grants to build critical infrastructure needed for the construction of new homes.

“As a City, we have consistently commented to the province — both on our own and through our membership in the Ontario Big City Mayors — about the need for a consistent approach for all cities to collect and report on accurate and meaningful data that we can control,” Mississauga’s spokesperson explained, something that is “important from a funding perspective” as the province uses housing starts as a measurement for funding.

Municipal officials are currently participating in consultations with Queen's Park “to determine more appropriate measures” for the Building Faster Fund “to ensure Mississauga is measured on metrics within our control such as land use permissions (from development approvals) and building permits issued (from building approvals).”

But a lack of funding for infrastructure is not the only obstacle preventing municipalities from getting homes built.

Municipalities argue funding incentives like the Building Faster Fund should not be based on housing starts as this is out of their control.

(Government of Ontario) 

Even before the PC government’s reversal of Greenbelt land swaps and the provincially forced urban boundary expansions, external factors like rising interest rates — which wreak uncertainty and makes building more expensive for developers — inflationary pressures on supplies and the on-going labour shortage that don’t fall under municipalities’ purview have been creating a volatile environment, restraining the number of new housing starts. 

While municipalities recognize the role they play in getting housing built, they “do not build homes, and even with our improved processes we are seeing productivity issues impacted by labour shortages, supply chain delays and financing,” OBCM stated in August in response to the release of Working Together to Build 1.5 Million Homes — a report that calls on all levels of government, industry, and labour actors in the housing system to work collaboratively to achieve the provinces housing target.

“Municipalities cannot control these outside factors that are delaying already approved projects from being built, but we want to be part of the solution to help get shovels in the ground.”

But as noted in a November report from Keleher Planning and Economic Consulting Inc., none of this matters “if the underlying infrastructure cannot be built in an adequate or timely manner to allow housing supply to be built at pace with housing demand.”

“Many municipalities in Ontario are struggling with obtaining sufficient funding to construct needed major infrastructure investments for water treatment plants, sewage treatment plants, and distribution/collection networks,” the report states. 

In the early days of Bill 23’s implementation Mississauga conducted its own preliminary research to determine the unprecedented financial demands of the PC government’s accelerated housing plan, which revealed the City stood to lose an estimated $815 to $885 million in development charges for infrastructure over the next decade, according to an overview presented to Council in November 2022 as the legislation was in the final stages of it's approval.

These estimates do not include the billions that will be needed to create all the infrastructure, such as waste water, drinking water, storm water, community centres, libraries, roads, waste management, fire services, policing and paramedics to support the new homes.

Without compensation from the Province, the erosion of revenue forecasted by staff as a result of Bill 23 will make it next to impossible for local governments to fund the infrastructure required for the mandated hyper-growth — leaving municipalities in a choke hold. City staff previously told council members that without a corresponding increase to provincial grant funding, City Hall would need to cover the cost of lost revenues either through reducing services or transferring the bill onto the shoulders of Mississauga’s taxpayers.   

The latest estimates from staff project an additional 8 to 10 percent property tax increase will be required to pay for the lost revenue.

The City argues in its latest budget submission that the Building Fast Fund, and the water/waste water funds announced in 2023 “are not sufficient” to compensate Mississauga for its financial losses. Along with OBCM, staff criticize the funding criteria for measuring municipalities on housing starts, which is something beyond their control.

“Property taxes do not provide enough revenue to maintain our current infrastructure and to provide the necessary infrastructure to enable the development necessary to support new housing and build complete communities,” it stated, adding “Without additional funding, the cost will have to be passed on to taxpayers or service levels/ infrastructure programs would have to be reduced, potentially delaying housing starts.”

The City requested the province increase funding for housing infrastructure needed to meet the province’s targets, “and measure municipalities on units approved, not housing starts.”

Email: [email protected] 

Twitter: @mcpaigepeacock

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