The Housing Crisis in Toronto: A Failing Report Card on Construction
Housing construction in Toronto has reached a crisis point, drawing alarming attention from officials and citizens alike. Recent findings from the Residential Construction Council of Ontario (RESCON) reveal that new home starts in the city have plummeted by an astonishing 58%. This data positions Toronto among a disheartening group of 22 municipalities—including Brampton—that received failing grades in a recent evaluation of housing developments.
A Deepening Crisis
A staggering 91% decline in housing sales coincides with the drop in new home starts. RESCON conducted its analysis across 34 municipalities in the Greater Toronto Area (GTA) and the Greater Golden Horseshoe, comparing current figures against averages from January to June from 2021 through 2024. Overall, the research indicates a significant 40% decrease in housing starts across the region.
Richard Lyall, RESCON’s CEO, spoke candidly about the crisis, stating, "The housing situation is actually much worse than people think it is, and it’s going to be even worse going forward." He emphasized the dire impact on younger generations, reflecting on how systemic failings have compounded the issue. "My generation has failed," he lamented.
Government Goals and Missed Targets
Notably, the Ontario government has consistently fallen short of its ambitious housing goals. The administration aims to construct 1.5 million homes by 2031, with a target of 125,000 new homes for 2024. Unfortunately, only 94,753 units were counted in the previous year, a number that includes non-residential developments like long-term care facilities and university dormitories.
The province’s fiscal accountability officer has highlighted that housing starts in 2025 are also lagging behind expectations. In fact, the first quarter of this year saw only 12,700 housing units begin construction—the lowest level since 2009.
Job Losses and Economic Consequences
The fallout from this housing slump extends beyond property development; it is beginning to significantly impact employment. RESCON estimates that the residential construction sector in Toronto has lost approximately 10,209 jobs in 2023 alone. Lyall expressed concern regarding the massive layoffs occurring across construction companies, indicating a dire outlook for workforce retention.
The Labourers’ International Union of North America (LiUNA) Local 183, one of Ontario’s largest construction unions, corroborated these findings. Director Jason Ottey revealed that a reduction in project opportunities has resulted in fewer working hours, creating a mismatch where too many skilled workers are vying for too few projects.
Long-Term Implications for Affordability
This significant decline in housing starts could have long-lasting implications on both affordability and market stability. Eric Lombardi, founder of More Neighbours Toronto—an organization aimed at addressing the housing crisis—voiced concerns about mimicking historical patterns seen elsewhere. He recalled how poor policy decisions precipitated a housing bubble and subsequent crash in Ireland in 2008, resulting in widespread bankruptcies among home builders.
"Bad public policy and a bit of investor exuberance led to a spike in housing prices through 2008 and then a housing collapse in the aftermath," he cautioned, emphasizing that the current trajectory could lead to similar pitfalls in Ontario.
Navigating Regulatory Hurdles
Among the proposals for easing the housing crisis, tax reform emerges as a credible option. According to Lyall, the costs associated with development charges have escalated dramatically. For instance, while development fees in 1999 were around $5,000 for a new home—equivalent to roughly $10,250 today—the current fee has skyrocketed to an astonishing $195,000.
Moreover, Ottey highlighted the excessive red tape and inefficiencies in the approval process as major barriers to timely construction. "There are too many regulatory hurdles," he stated, noting that these factors impede builders from actualizing their projects.
Government Response and Future Directions
In response to the crisis, the provincial government has claimed to ease some processes for municipalities and builders. Key measures include eliminating the full 13% HST on purpose-built rental housing and providing a 75% rebate on the provincial HST for new homes priced up to $400,000. Additionally, the government announced substantial investments through various programs intended to facilitate the construction of new homes.
Yet, the effectiveness of these measures remains in question. As Ontario grapples with regulatory reforms and attempts to remove obstacles, the urgency to address the deepening housing crisis grows more acute.
Conclusion
The recent report card on housing construction in Toronto underscores a dire situation that demands immediate attention. With housing starts and sales declining to unprecedented levels, the repercussions are far-reaching—impacting not only economic stability but also the future affordability of housing in the region. The stakes are high, and the need for effective solutions to break through the regulatory barriers has never been more urgent. As both the government and the industry reflect on this crisis, a cohesive strategy will be needed to reshape the future of housing in Toronto and beyond.
