Mike Moffat of the Smart Prosperity Institute is a man who knows more about the economics of housing than I ever will. I interviewed him for TVO.org just a few months ago. He’s continuing to sound the alarm over unstoppable forces and immovable objects in our housing sector. In a new report, he crunches the numbers for both recent population growth and forecasted growth out to 2031, looking not just at the raw population but also at the expected number of new family units — some people will live alone, others in couples, and some as families with children. This is all an estimate, of course, but Moffat concludes that, between now and 2031, Ontario will add more than 900,000 family units of any size and description.
In order to house them, it necessarily follows that we will need more than 900,000 new housing units, in the appropriate mixture of composition (bachelor apartments for some, family-sized units for others). This is the minimum required to not make our existing problem worse. It wouldn’t actually do anything to improve our current woes. Moffat’s report, looking back at the past few years, finds that we are already falling behind in building new housing units fast enough to keep up with new family units, to the order of almost 65,000 houses since 2016. He also adds a cushion of 25,000, just to be prudent, and comes out with a nice round number: we need a million new homes by 2031.
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The report is online and worth your time to check out. It’s not my intention to entirely summarize it nor to question Moffat’s analysis — I simply don’t have the expertise to do that. I’d be outgunned if I tried (not that I wish to). It’s the top-line numbers that strike me as interesting. Can we build a million new homes in 10 years? Sure. But that would be a big increase in recent construction levels. We built just under 350,000 over the past five years. Sustaining that rate would get us 700,000 over 10. That’s a lot of new houses, but it’s not enough. We’d need to sustain the rate of the past five years and add an additional 50 per cent and then sustain that for a decade. And remember, this doesn’t do anything but keep up with growth, leaving a little bit left over to compensate for the shortfall of the past five years (with a small reserve built in).
It is always important to break things down into the proper categories in order to understand the challenges we face. What Moffat has concluded is necessary is not impossible. We put it into the possible category. But then, in that category, there are two subcategories, I think: “likely” and “unlikely.” Building a million new homes is almost certainly possible, but whether it’s likely is up for debate.
At a recent dinner party (we can have dinner parties again!), I was chatting with neighbours about when they’d moved into our midtown Toronto area. We all have children around the same age and are all in roughly similar phases in our careers. Some of us were here a year or two earlier or later than the others, but the stories were all generally similar: once we’d settled into our careers and begun having families, we had to decide on a place to live that would leave us both accessible to our employment areas and provide a safe and enriching environment for our children. We had that in common.
Something else we had in common is that, thanks to the absolute explosion in real-estate prices, none of us would today be able to afford to buy the homes we already live. Just this morning, as I sat down to write this column, I pulled up a map showing all the houses for sale in the immediate area. The first thing that I noticed is that there are very, very few of them. That’s probably not unusual for this time of year, but there were only six — six! — comparable houses for sale in my neighbourhood, and the prices ranged from roughly double what we paid seven years ago to close to four times what we paid.
When I scrolled up the map to peek at the 905 neighbourhood where I grew up and at another where we’d lived shortly after getting married, yikes. Forget it. It’s even worse.
Against this backdrop, consider what my colleague John Michael McGrath wrote here earlier this week about Toronto city council’s steadfast refusal to do the bare minimum to make housing safer and more affordable for the poorest, most vulnerable among us by legalizing rooming houses in more areas of the city. (He reserves appropriate measures of scorn for provincial dysfunction, too.) We are faced with major challenges, and our response is ... uhhh, inadequate. (My editor insists I do not swear in these columns. I trust the reader to fill in the “uhhh” with something more potent.)
I’ve been thinking a lot about Stein’s Law, named for the U.S. economist Herbert Stein, who expressed something profound through a delightfully flip, terse quip. Stein’s Law is simply this: “If something cannot go on forever, it will stop.” You don’t know when or how or why it will stop, but it will.
The housing status quo in Ontario cannot go on forever. Therefore, it will stop. We can try to make smart policy choices that result in that stoppage being a controlled, planned, and happy transition to something else, or we can continue to ignore it until housing stops being an economic issue and becomes one of escalating social instability (it might be too late, but let’s be optimists). The status quo would stop then, too. We probably wouldn’t enjoy the process.
After the past 19 months, it’s hard to retain any faith that our elected leaders, at any level, are capable of seeing approaching danger and mitigating it through proactive policy responses. Moffat and others are sounding very, very clear and explicit warnings of what is coming our way. We can do something about this. But, again, remember those two categories: Action is possible, but is it likely or unlikely?
Readers may decide for themselves. To me, that’s not a hard call to make. Brace yourselves. It’s going to get interesting.