5 DECEMBER 2022 — With more than 150 member companies, the Waterloo Region Home Builders’ Association (WRHBA) is the voice of the home building, land development, and professional renovation industry in the Waterloo Region. The building and renovation industry provides more than 22,000 jobs in the Region, pays over $1.5 billion in wages annually, and generates over $4.5 billion in investment value. WRHBA is affiliated with the Ontario and Canadian Home Builders’ Associations. WRHBA members construct nearly all of the new housing in the Waterloo Region, and some of our members also renovate the existing housing stock and build purpose-built rentals.
Chances are, you recently came across ads by the Waterloo Region Home Builders Association in support of Bill 23, the More Homes Built Faster Act, 2022.
We have vocalized our support as it will help Ontario’s critical lack of housing supply and reduce the cost of housing. It takes too long to get building approvals, and it is difficult to add gentle density. On top of that, new home buyers are unfairly burdened with escalating government fees and charges. Bill 23 addresses all of these challenges.
It is important to understand that given the existing housing supply situation throughout Ontario and the Greater Golden Horseshoe (GGH) in particular, affordability and supply challenges have an impact across many Regional housing markets. Waterloo Region, for example, is not isolated from the housing situation in neighbouring regions and is impacted by the housing supply challenges those areas face.
For over a decade now, the industry has been sounding the alarm that we have a housing supply problem across the province. This shortfall significantly contributes to the affordability challenge facing home buyers and renters. The provincial government and the housing industry have invested significant resources to study the housing supply and affordability problem. As our collective research into the topic grew, so did our understanding of the scale and scope of the problem. We now know, thanks to Ontario’s Housing Affordability Task Force, third-party verification from Ottawa’s Smart Prosperity Institute, and Scotiabank research, that the shortfall has been persistent since 2009 and that the amount of new housing needed to bring balance is much larger than we thought.
In Ontario alone, we need to build 1.5 million homes in the next decade to restore balance in the market and begin to restore affordability. That is because growth forecasts by the Ministry of Finance estimated the population would grow by nearly 2.3 million people in the next decade. In addition, the federal government announced on November 1 of this year that it plans to increase immigration targets for Canada to 500,000 people per year by 2025, which is a significant increase beyond current levels and equivalent to adding a new city the size of Ottawa every two years.
To put the challenge of building 1.5 million homes in a decade into perspective, consider this: 2021 was the best year for housing starts in Ontario in a generation. In that year, the industry delivered slightly more than 100,000 new homes. To meet the objective of building 1.5 million homes in a decade, we need to increase housing starts by 50 percent and keep building at that rate for ten years—a monumental challenge. Not meeting that challenge would adversely impact Ontario’s and Canada’s competitiveness and the Region’s livability and economic viability. To frame why we are in a housing supply and affordability crisis right now, we cite three root causes that have been highlighted repeatedly by industry research and the research of others:
- It takes too long to obtain approvals to build new homes, with too many parties involved and too much duplication.
- There are too many added costs on new housing in the form of fees, taxes, and charges from all layers of government.
- In many areas, including Waterloo Region, land supply is severely constrained, or land is zoned in such a way that adding density or new homes is very difficult. This not only makes it challenging to add supply but also significantly drives up the cost of land.
WRHBA and its members support Bill 23 because it will make it faster, easier, and less costly to build new homes.
First, Bill 23 addresses rising costs for buyers. Currently, up to 25 percent of the cost of an average new home in southern Ontario consists of government fees, charges, and taxes. This can add as much as $250,000 to the cost of a typical single-family home in some municipalities. Municipal fees and charges have been escalating significantly, with development charges increasing rapidly. Some GTA municipalities have seen increases of up to 800% in the last decade and a half.
In addition, municipal reserves for parkland cash-in-lieu payments, section 37 payments, and development charges have also increased drastically, with some municipalities sitting on more than $5 billion in reserves. These fees are rolled into the cost of the home and passed on to new home buyers. Given the scale of accumulated municipal DC reserves and the stated amounts of committed spending over the next 5‐10 years, in many municipalities, roughly 5‐6 years of committed spending is fully covered by existing reserves. This suggests that there should be little to no short-term impact on spending from Bill 23 changes.
Second, Bill 23 makes it easier to add supply and density with new as-of-right provisions. Currently, there are vast swaths of the GTA where existing neighbourhoods are experiencing declining population density. This is occurring as the population ages and young people and families—the 22-42 age demographic and their children—are moving out, often past the Greenbelt, in search of housing they can afford. While not as prevalent locally, this issue still affects and puts pressure on housing demand in Waterloo Region. Our members have reported a high number of sales to people looking to migrate to the Waterloo Region due to affordability compared to the GTA, and the same is true of resale homes. The More Homes Built Faster Act enables and promotes greater density within urban boundaries, with new as-of-right provisions across existing neighborhoods and around major transit areas. These measures are the very definition of anti-sprawl, adding gentle density across existing neighbourhoods and significantly increasing density around transit infrastructure – precisely where it should be – and enabling the highest and best use of land.
Lastly, and most importantly, Bill 23 will enable the building of more housing by introducing a culture change that is desperately needed. When viewed in conjunction with Bill 109, it signals to municipalities that they must approve new housing in a timely manner, as required by provincial legislation. It also encourages parties such as conservation authorities to focus on their core priorities.
Notwithstanding media coverage to the contrary, Bill 23 does not make any changes to the Greenbelt. While the consultation on changes to the Greenbelt was announced the same day that Bill 23 was introduced, the Bill itself does not propose changes to the Greenbelt.
Bill 23 rejects the status quo of NIMBYism that can hinder the addition of new homes. Finally, it focuses on more homes for people in all communities in Ontario, including Waterloo Region.
This is a culture change that is required across Ontario.
We have endured a significant housing supply crisis in Ontario for a long time. As people leave the Region searching for affordable housing, the problem spreads to other parts of Ontario. This is a policy and process-driven crisis, and the pathway to beginning to address it is clear: greatly increasing the supply of homes by speeding up approvals and building, thus contributing to improving affordability and securing the long-term competitiveness of our Region and province. Bill 23 establishes a bold vision and provides the leadership to get us there.
WRHBA is prepared to work in partnership with all levels of government to implement Bill 23 so that we can collectively solve this problem.
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For further information, please contact Marie Schroeder, Executive Officer, at Marie-Schroeder@wrhba.com.
Since 1946, the Waterloo Region Home Builders’ Association (WRHBA) has stood as a pivotal key stakeholder in community development and an economic contributor in Waterloo Region. WRHBA member companies have worked to help shape the robust and thriving communities across our municipalities and townships for 76 years. The WRHBA works with the government at all levels. It regularly facilitates discussions between the industry and the federal, provincial, regional, and local governments to establish fair and effective policies that affect development, building, and home ownership in Waterloo Region.