Ontario Construction News staff writer
Affordability in Ontario has never been worse, according to a new report by Mike Moffatt at the Missing Middle Initiative, commissioned by the Ontario Home Builders’ Association (OHBA).
“We’re calling on all three levels of government to work together to make more land available for new developments, cut exorbitant fees and taxes, streamline approval processes and invest in the infrastructure necessary to support new homes,” he said.
The report shows that most major metro areas in Ontario are “completely unattainable” for middle-class households, and details how affordability has deteriorated in the last twenty years across the province, with none of the areas analyzed being deemed “affordable.” Notably, while house prices have more than doubled since 2005, inflation-adjusted wages have only risen 16% in the province. This stark contrast highlights the desperate situation people find themselves in when hoping to buy a home.
“Young people are out of options when it comes to housing in our province,” said Scott Andison, CEO of OHBA. “Unfortunately, unless you earn far above the average salary or can get assistance from family members, your hopes of buying a home in Ontario are slim. We should not be in a situation where most communities in our province are unaffordable.”
The report reveals that the price-to-income ratio for major markets including the Greater Toronto Area (GTA), Hamilton, Kitchener, Waterloo, Guelph and Barrie exceeds 7. This represents an increase of over 100% over the last twenty years and means that home buyers are purchasing homes that cost over seven times their pre-tax income. Those looking to enter the market spend significantly more time saving for down payments and almost double what they previously did on housing costs.
“This situation is unsustainable. In the GTA, people spend over 65% of their monthly income on housing; buying a single-family detached home is a pipe dream,” remarked Kirstin Jensen, Vice President of Policy, Advocacy and Relationships at OHBA. “We need real solutions for Ontarians to be able to afford homes again, especially young people. This means cutting taxes like development charges, streamlining approval processes at the municipal level and investing in infrastructure to support new homes. We need to get serious.”
In the last twenty years, single-family homes across Ontario have gone from relatively affordable to “deeply unaffordable” or “completely unattainable.” The rise in unaffordability in areas outside of the Greater Toronto Hamilton Area (GTHA) has largely occurred since 2014 and coincided with the increasing migration outside of the GTHA as young people look for affordability. This increase in demand in these other urban areas drives up prices and creates a snowball effect.
“The lack of real wage growth is a significant factor in deteriorating affordability in Ontario, as demand for homes has skyrocketed. Balancing this increase in demand with an equally substantial increase in supply is the only way to manage affordability and make housing once again attainable for Ontarians,” the report concludes.
