The answer to that depends on your perspective. The soaring costs of homes in Southern Ontario have been something to behold since the late 1990s. Using the Toronto Real Estate Board as a proxy for Southern Ontario, we’ve seen the average price of a single-family residential home go from $109,094 in 1985 to $1,189,759 in 2022.

 

That’s a compound growth rate of 12.64% over 37 years. It would be pretty impressive if you owned a home and could experience that growth, mainly if it was on a principal residence and the gain wasn’t taxable.

 

But what if you didn’t own a home during this time? What if you had been trying to enter the housing market for years, and it felt like you were running to jump onto a train that was speeding away from you?

 

This is where the nuance of the housing crisis comes into play. The headline should actually read, “Ontario has an affordable housing crisis.” The lack of options hits those looking to own or rent their first home, not those looking to upgrade or downsize. At Allan Bush Investment Team, we have had clients who have been with us for years, raised their children, and had them complete their post-secondary education, only to return home again because they couldn’t afford to live anywhere close to where they were working.

 

In late spring of 2023, Premiere Ford vowed to build 1.5 million homes by 2031. A Smart Prosperity Institute August report says Ontario already has a shortage of about 500,000 to satisfy forecasted demand created by a growing population by 2031 and is unlikely to reach the goal.[i]

 

How will we solve this crisis if we are already this far behind? The answer to this question isn’t straightforward.

 

Affordable housing includes ownership or rental. Given that the cost of the land a home sits on in Southern Ontario seems to be one of the biggest drivers of the soaring prices, the logical progression would be to go with higher-density buildings where the land doesn’t play as large a role in the value of the residence. This plan seems excellent on paper until you approach any of Ontario’s 444 municipalities and hear that not only do many of their residents not want the high-density building, but they are already concerned with their quality of life as their once quiet towns or hamlets have become crowded and traffic-laden.

 

The term NIMBY springs to mind as we ponder the most appropriate solution. The not-so-old phrase reflects the sentiment that while people may acknowledge the need for particular facilities or developments, they prefer to be located elsewhere, away from their residential areas. The attitude can be perceived as selfish or short-sighted, but as it can take 3 or 4 times the amount of time to get across town today as it did ten years ago, we can certainly understand the sentiment.

 

Considering that 65-75% of Ontario’s nearly 15.5 million population[ii] lives in the Golden Horseshoe extending from Oshawa to Niagara Falls, it is no wonder people are feeling a bit cramped. Try making a day trip into wine country on a weekend now compared to five years ago, and you will likely notice a massive change in traffic patterns.

 

All this is to say that the housing solution isn’t as simple as building more dwellings. Where do you build them? Will the infrastructure handle the additional load? What will happen to the quality of life of the current residents of those municipalities?

 

If you’ve spent much time in other parts of the world, you will realize that, as Canadians, we haven’t had to suffer the plight of urban sprawl and the overpopulation you find in many other countries. The likely consequence of an increasing Canadian population wanting to live in the same geographic area will be the proliferation of high-density housing. There’s just no way around it, and the days of quaint, small Ontario towns anywhere near the Golden Horseshoe will soon become a distant memory.

 

 

[i] Ontario promised to build 1.5 million homes by 2031. A new report says that will likely never happen | CBC News

[ii] Ontario Demographic Quarterly: highlights of second quarter | ontario.ca