News: Under-Supplied Housing Outlook in Ontario

Industry News Week of 11th Oct 2021.

Ontario needs 1M new homes in next 10 years, think tank says | National Post With Ontario’s population growing rapidly, one policy think tank argues that Canada’s most populous province will need about one million new homes over the next 10 years. Ottawa-based Smart Prosperity Institute and Ontario Home Builder’s Association arrived at the near-million home figure after exploring how many homes and what types of homes would be needed to reach the needs of the anticipated 2.27 million more people who will reside in the province over the next decade, according to the Ontario Ministry of Finance. Supply crunches in the Greater Toronto Area (GTA) put severe upward pressures on house prices, fuelling an 18.3-per-cent year over-year boost in average selling prices in September real estate data. The average cost of a home now rests at $1,136,280, according to data from the Toronto Regional Real Estate Board (TRREB) released Tuesday. The board called on the governments of all levels to address this housing supply issue, which they argue stands at a “critical juncture.” Surging house prices are prompting a number of young families to drive until they qualify, the report found. Between July 2019 and July 2020, 60,000 people left the City of Toronto and Peel Region for other parts of the provinces. “We need more housing supply and choice in communities across Ontario. The one million new homes that are needed over the next decade to respond and support young families can only happen if municipal councils approve the necessary mix of housing options in their communities.” See full article here.

Ontario realtors proposing changes to help housing crisis | The Toronto Star

As home prices continue to skyrocket upwards, it’s becoming increasingly difficult to get into the market. And according to realtors like Golfi, and the Ontario Real Estate Association, much of the problem lies on the supply side. “We're not building enough to keep up to the population, and we haven't built enough for a long time,” he said. For instance, new housing starts in Ontario have been stagnant for much of the past 40 years. According to data from Stats Can, after surpassing 30,000 a couple times in the early 1970s, quarterly new housing starts in the province have hovered around 20,000 for most of the time since. New starts peaked again in the mid 1980s, but have mostly been under 20,000 since that time. But in that same time frame, Ontario’s population has essentially doubled, from about 7.5 million in 1970 to nearly 15 million in 2021. Golfi said there’s also reason to be worried about the coming years. The coming end of the COVID-19 pandemic, for instance, will see a large resurgence of immigration. He also said one of the largest transfers of wealth is set to take place as younger generations inherit wealth from the baby boomer generation. “They've got to build more houses, but they won't be able to keep up to the pace, and it's going to take 20 years before they can even leverage it to a point where it's balanced,” Golfi said. In response to the ongoing housing crisis, OREA has launched a new campaign called Bring Affordability Home. “The epicenter of the crisis is supply. We're simply not building enough homes or enough variety in homes to keep up with demand,” said Tim Hudak, CEO of OREA. OREA’s campaign is calling for several changes to improve the prospects of home buyers. Part of the problem, Hudak said, are “these relics in the 1970s bylaws that restrict housing, innovation and choice.” See full article here.

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Shael Soberano, CFA Konfidis Inc. Chief Investment Officer

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