Lack of New Home Inventory Confirmed

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Lack of New Home Inventory Confirmed

When the Premier of Ontario introduced the Fair Housing Plan in April 2017, one of the items, out of the 16-point plan was to “Create a housing-supply team and housing-advisory group”. The team and group would respond to complaints about heavy regulatory burdens and lengthy reviews. Some members of the development industry have been voicing concern as the regulatory burdens and reviews have caused new building sites to go unapproved, causing a land shortage.

The Ontario Government responded to these reports saying that more than 55,000 sites for coveted detached homes, semis and townhouses are approved and close to shovel ready across the GTA.

Furthermore, developers have been expressing their concerns that municipalities have been approving too many high-rise condominiums and apartments and not enough ground related units. A ground related unit can be defined as either a detached, semi or townhome. According to the government’s figures, there was enough serviced land on greenfield sites in 2016 to build 56,762 new units of ground-related housing in Hamilton and across Peel, Halton, York and Durham Regions, with all of it sitting either fully approved or in the “draft approval” stage. Of those ground related units, 12,268 were registered, approved and ready for building permits that could be issued “immediately,” the province says, but were left unbuilt.

The province added, at the current level, ground related units such as detached, semi-detached and townhomes represent 3.85 years’ worth of supply, well ahead of the three-year minimum supply of serviced land that municipalities are mandated to maintain.

There had been speculation that builders were intentionally sitting on land, delaying construction in the interest of reaping larger profits. Bryan Tuckey, CEO of the Building Industry and Land Development Association has denied those allegations. However, Mr. Tuckey did add that the province’s numbers were based on out-of-date or incomplete information. “For example, most of those 12,000 registered units ready for immediate building permits have likely been sold, and so will be built this year.”

Frank Clayton, Senior Research fellow at Ryerson University issued a report declaring a “fundamental supply shortfall of serviced sites” for ground-related housing. There is just enough ground-related housing in the pipeline to sustain the current rate of building.

With demand, far exceeding supply we need to build more homes or the market won’t get better for anyone.

The release of the numbers comes just weeks before the Ontario Liberal Government is to announce changes to its two key anti-sprawl policies, the Greenbelt and the Growth Plan (which forces municipalities to grow more densely) for the Greater Golden Horseshoe.

What Does it All Mean?
One of the reasons we are in this current housing situation because of lack of supply.  When there is not enough supply, upward pressure is put on prices and buyers are left competing for properties. When developers can inject new builds into the market, buyers now have a selection in which to choose from and the pressure on price is relieved. The new Housing Supply Team and Housing Advisory Group that the Ontario government has created will take some time to take effect, if at all. Once started, the team and group will only meet quarterly. However, this begs the question, how much can they really get done on a quarterly basis? The issue of demand can only be solved with one thing, supply.

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