On October 25, 2022, the Ontario government introduced the More Homes Built Faster Act.
It is a bold plan to address the housing crisis by building 1.5 million homes over the next 10 years.
As a first step, ambitious housing targets were assigned for growing municipalities to meet.
In order to give an extra push, Premier Doug Ford announced a $1.2 billion dollar Building Faster Fund in the summer this year.
The fund will be awarded in a 3 year period.
$400 million dollars per year will be distributed to municipalities that can reach at least 80% of their housing target.
If they don’t hit this 80% threshold, they will receive nothing.
And for those that exceed the full target, they will get bonus money.
What does the first year report card look like?
There are 50 participating municipalities, how many of them were able to meet the 80% target?
The majority of municipalities failed.
76% failed.
38 out of 50 municipalities did not qualify for funding.
So how does the government measure the targets?
It is based on housing starts, so as long as construction has started, the unit will be counted towards the target.
Let’s take a look at a few towns and cities in the Greater Toronto Area.
At the second bottom of the list, we have Newmarket.
As of the end of October, Newmarket only had 58 housing starts in 2023, that’s 7% of the target.
The biggest roadblock for Newmarket to build more homes is human waste.
They don’t have the infrastructure to handle it.
They will need to tap onto an existing facility to drain into Lake Ontario.
But the new system won’t be ready until 2027.
It just seems physically impossible for Newmarket to meet the target.
Let’s take a look at Richmond Hill.
478 housing starts in 2023, that’s only 24% of the target.
Mississauga, 2,156 housing starts, only 25% of the target.
Markham, 1,032 housing starts, 32% of the target.
Vaughan, 1,303 housing starts.
The city of Vaughan issued more than 6,775 building permits this year but completed just 42% of its target.
Oakville, 1,335 housing starts, half way, hitting 55% of the target.
Most municipalities are not just failing, they are actually quite far off from the targets.
So is there anyone who can meet the target?
There are 3 in the Greater Toronto Area.
Pickering, 951 housing starts, that’s 100% on target.
Whitchurch-Stouffville, 694 housing starts, 145% of the target.
Toronto, 26,140 housing starts, 125% of the target.
The City of Toronto alone will receive more than $76 million dollars, plus a bonus for exceeding the 80% threshold.
So it seems our biggest city is doing much better than expected, so does that mean we won’t have a supply shortage, at least in the City of Toronto?
Here’s the thing.
The target measurement is based on housing starts.
For construction to start this year, those units were typically sold in the past 2 years.
2021 and the first half of 22 were the peak times for pre-construction condos in Toronto.
That’s why we can have so many housing starts this year.
But since the interest rate hikes, pre-construction sales have dropped at least 80%.
In fact, 2023 is the coldest year in a decade for pre-construction sales.
And this is going to be reflected in the next 2 years’ housing starts.
It is a delayed measurement.
I think Toronto will have a very hard time meeting the target next year.
And Toronto is just one city.
What about the other 38 that are already failing hard as of today?
Some cities don’t even have the infrastructure to support more homes.
The province can set the targets but they cannot force developers to build if they cannot even make sales.
If we cannot build more homes and new people keep coming in, then what’s going to happen?