The quick fix, Part 1: How Ontario can improve its housing situation — now speaks with the Smart Prosperity Institute’s Mike Moffatt about zoning, labour-market shortages, and making sure family housing is actually for families
By Matt Gurney - Published on Aug 16, 2021
Since roughly 2017, such places as London and Sarnia have seen sizable population and home-price increases. (Graeme Roy/CP)



This is the first instalment in a five-part series looking at what Ontario can do now to address systemic issues that the COVID-19 pandemic has brought into sharp relief.

Last month, here at, I interviewed a series of experts on big, system-wide challenges the province will be facing as it exits the pandemic. But there was so much more that could have been covered, so we’re doing it again: five more articles about specific challenges the province faces today — this time, with a greater emphasis on what can be done now. It will take many years to build new hospitals and train thousands of new nurses, but what can be done in weeks, months, or even just a few short years?

First up, to talk about Ontario’s long-standing housing shortage, is Mike Moffatt, senior director at the Smart Prosperity Institute, a policy think tank based at the University of Ottawa. 

Matt Gurney: Mike, we’ve talked about this issue a ton of times before, but let’s just start from zero. What was the housing situation in Ontario two years ago, before the pandemic?

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Mike Moffatt: Sure. Well, let’s start in, say, mid 2015. The market was pretty hot across southern Ontario; prices had been going up about 8 per cent to 10 per cent a year. It was very uneven. We had a big spike in the GTA in 2017 and then a small correction. 

But, now, 10 per cent a year seems fairly modest next to the 40 per cent we had last year. But when inflation is only going up 2 per cent, to have that 10 per cent appreciation in housing was obviously a big challenge. 

It all started around the Toronto area, and that actually goes back earlier than 2015. What essentially kept happening was, as Toronto had housing shortages, you had this sort of exodus of families, first going out to Peel Region, then Halton and Milton, or Oshawa in the east, and so on. And what happened is those places started to have housing shortages and price escalation. Those price escalations and housing shortages then propagated throughout the province. 

So, by 2017, Kitchener-Waterloo is getting really, really hot and having housing shortages. Then, by late 2017, it’s happening in Brantford. It’s happening in Woodstock. By about 2018, Tillsonburg is seeing price increases, and not much had happened in the Tillsonburg market in about 20 years or so. So we’re seeing this sort of propagation, this sort of what I call musical-chairs effect of people bouncing from one city to another to another. And now we’re getting places like London, like Sarnia, like St. Thomas, going back to 2017-18 or so, getting big population increases and big home-price increases. Looking east from Toronto, we’re seeing it all the way to Kingston. The Ottawa market’s a little bit different — it’s more sort of made-in-Ottawa factors — but then even going north or northwest of Toronto into the Owen Sound and Bruce Peninsula area, you’re seeing home prices increase there, and that was all happening before the pandemic. 

But when it’s 8 per cent to 10 per cent a year, you can kind of somewhat ignore it. It’s a slow boil. Whereas, since a pandemic started, we’re up about 40 per cent, and things have just exploded, and it’s all anyone wants to talk about — and rightfully so.

Gurney: I’m on record from years ago as not being worried about Toronto itself — it’s not unusual or even bad for a national-level economy to have a market or two that’s priced way above the rest. Historically, that’s been what’s led to a ton of economic internal migration, and that’s not a bad thing. But what I was wrong about, and didn’t see coming, was how this was going to spread out across the entire province. Let’s get caught up to the start of the pandemic, though. When it began, right in those first few weeks, I said to my wife, I wonder if this is finally it — the Toronto housing-market correction. This could be the first-ever year since we moved here that the house didn’t appreciate. But, a few months in, someone nearby decided to sell their house and move to their cottage, and I thought they’d take a big haircut. But they ended up selling for about $500,000 more than I’d have guessed even before the pandemic! It didn’t crash; it surged.

Moffatt: Absolutely. But you weren’t wrong — that actually did happen, the panic and the move downward, but it only lasted six weeks. If you look at the middle of March till about the end of April 2020, we did see a reduction in home prices. Basically, everyone stopped buying, there were few people selling, and you did start to see prices decline right across North America. Then prices started to creep back up. 

And it’s funny, a lot of housing analysts … you know, I’ve been listening to podcasts and things like that, from that time, and a lot of people thought it was a bit of a dead-cat bounce. But I think what happened was a lot of situations like your neighbour’s, where you get people who are like, “You know, I don’t want to, and I don’t need to, be in downtown Toronto or Ottawa. Nothing’s open, and I want more space. So I’m going to move out to the country.” A lot of the places are still sort of close by, in an exurb. Torontonians are going to Innisfil or someplace like that. But often they wouldn’t sell their primary home, because they thought, “Okay, well, we might be going back at some point.” So you had this situation where you had a lot of people buying but not selling. 

Usually in the housing market, you’re buying and selling a house at the same time, so the market supply nets out, right? Whereas here, you had a lot of people buying a second home. My sister did that. She lives in Woodstock but bought a place in cottage country and kept the place in Woodstock. So that was happening. 

And then couple that with just incredibly low interest rates, which allow you to make these much, much bigger bids. I would say the roughly top 30 per cent of the population, income-wise, did well financially during the pandemic. Think of all the things that you couldn’t spend money on. You can’t go on vacation, you’re not commuting to work, so that’s $60 to $80 a week that’s not going into the gas tank. That starts to add up. Savings rates shot up. 

Because of this, we saw that 30 per cent of the population put their money in all kinds of things. So real estate was a big one, but Bitcoin went up. All these “meme stocks” from GameStop to AMC went up. Old hockey cards absolutely escalated in value. Because you have all these people with essentially too much money and too much free time on their hands, and they’re kind of bored, they need to park that money somewhere. And a whole bunch of them decided, “Hey, you know what, I’m gonna buy a place in cottage country” or “I’m gonna buy this second house; I’m gonna get into the real-estate market.” So that drove a lot of this — there were more people buying and selling. And they could make much bigger offers because of savings rates and low interest rates.

Agenda segment, May 11, 2021: Can government control the housing market?

Gurney: We’ve talked about this a lot before, but the fundamental problem in Ontario’s housing sector is not enough housing. It’s a complicated issue, but this part is simple: we need more houses, the end. What did the pandemic do to construction? Are we now even further behind because we couldn’t build stuff that would otherwise now be housing families? And, also, like, a plank of wood now costs a quadrillion dollars. That can’t have helped.

Moffatt: Yeah. So summer 2020, spring and summer 2020, was bad for construction. It seems to have picked up since then. But our shortage of housing in Ontario, which is so acute, as you know, means one month or even a quarter of building a lot of housing or less than normal, it’s kind of a rounding error. But it certainly did happen. And, as far as new builds go, you’re absolutely right: the cost went up. Unless the contract was already signed, those costs were passed along to the end consumer — everything from lumber to bathtubs went up. Certain kinds of acrylic, you couldn’t buy, because of all these supply-chain disruptions from China. So that was happening as well. 

So it was not only on the new builds where you had the sort of labour-market shortages, but everything compounded. One month, it’s lumber. The next, you can’t get nails or bathtubs or toilets. Appliances were a big one because of the microchip shortage. This not only raised costs but also slowed the speed of completion. So you had all these houses that were, like, nine-tenths complete, but nobody could move in, because there was no toilet.

Gurney: Let me tell you something that you might find amusing. I’ve been going to the same cottage for almost 40 years. And there are only a few routes to get there, so, basically, I’ve driven the same few country roads literally thousands of times. I can navigate this in my sleep: “Turn right and drive eight minutes past the red farm. Come to the stop sign at the brown farm, and turn left.” These are rural country roads, just farms as far as the eye can see, and they haven’t changed in decades. If someone paints a barn, I notice that: “Whoa, it’s green now!” But you know what? New houses are popping up. I’m driving along, and it’s red farm, brown farm, and, huh, six houses in the middle of nowhere on what used to be a corn field. Mike, there is no economic reason to put houses in these random places. They’re not additions to new communities. They aren’t housing local workers — there’s no retail or industry! There are no supporting commercial properties — the nearest gas station or convenience store is a 15-minute drive away. But houses are popping up, a few at a time, in totally random places, surrounded by farms, on country highways, hours from Toronto.

Moffatt: Absolutely. And this was happening before the pandemic. We had so much excess demand in the system, and municipalities had some understanding of what was going on. There was this need to build. If you really wanted to expand your community, it was like “build it and they will come.” I’m thinking of the Field of Dreams game last week. [laughs] So that was happening. You’re absolutely right. The fastest-growing places in Ontario are small communities, usually exurbs. 

Think of Lucan, just north of London. It’s really growing quickly. Ingersoll, near Woodstock, is booming. Thorold, which is just a little city in the Niagara Region, by St. Catharines, is growing quickly. And a lot of the reason for that is we’re building wherever it’s fastest to build. And where it’s fast, in the end, the big issue is all zoning and regulatory hurdles. If you’re trying to build in Toronto or Kitchener-Waterloo, any sort of city, you’ve got these big city councils, and they’re debating everything, and you’ve got neighbours who are trying to NIMBY all these things — whereas, if you’re some community of, like, 1,500 people, you might have a local reeve, and that’s about it. If somebody comes in and says, “Hey, I’d like to build 200 homes, and it’s going to triple your tax base,” that’s a really quick decision. And nobody’s protesting that, because nobody lives there in the first place. So it’s kind of created this perverse system where we’re not building homes where it necessarily makes the most sense to build those homes. We’re building homes where the regulatory barriers are the lowest. 

Gurney: I know if this were easy it would be happening already, but let’s be optimists. Let’s say the politicians at all the various levels decide to really make a push here. To build tons of housing. Not just to make up for what we didn’t build during the pandemic but also to get caught up on what we haven’t built for decades. Just last month, I did a series at TVO, and we talked about new hospitals and long-term-care homes, and those are huge multi-year projects. And we don’t want to fix housing in decades; we want to do it now. What has to happen? If we made that kind of effort, what would it look like?

Moffatt: That’s going to be incredibly tough to do. You can build an apartment building faster than a hospital, but not a lot faster. But there are, on the supply side, things that we can do. I think the first thing we need to do is take the Dr. Phil approach: we have to admit that we have a problem. And nothing’s going to get solved until that. We have a growth plan in Ontario. We need to revise that and have new targets for all sorts of municipalities. And those targets are supposed to be lower bounds, but they’re kind of often treated as a maximum. So we need the province to come in and say, okay, Toronto, these are your new targets, and Mississauga and whoever else, here are your new targets. And hopefully that starts to disperse some change, whether it be zoning changes, regulatory changes, you name it. There are smart zoning things that we can do. 

One thing I’d like to note is that we’re building the Ontario Line in Toronto. And it’s getting hard to navigate all the regulatory things that you need to do to build medium-density housing. And I guarantee you what’s going to happen. We’ve seen this in other transit projects before — we’ve seen this in Ottawa where the transit project gets built, and there’s all this construction and disruption, but they don’t put in all the gas lines, the electricity lines, all the utilities. And then, finally, they get around to getting all the zoning approvals for new or denser housing nearby to the stations, and they have to dig all that stuff up again, which annoys all the locals. So having coordinated planning, where we’re planning our transit hubs, planning our medium-density housing, would be something we could do better, and soon.

And an underrated thing I think we could do is this: a lot of our population growth is coming from international students, or just students in general. And we don’t have that much student housing. We’re not building residences that quickly. One thing that we could do really quickly is build more college and university residences, particularly college residences, because that’s where a lot of the growth is happening. 

We could figure out a model — a third federal, a third provincial, a third to the schools — and fund these projects and build them very quickly. And that would take a fair bit of the demand out of there, because what’s happening now is, a lot of times, students are buying, or their parents are buying, single-detached homes, and the kid lives in one bedroom, and they rent out the other two or three bedrooms. That’s taking family supply off the market. 

So that’s one thing you could do. And I think we’re going to have to look at these solutions where we’re trying to take away the demand that’s soaking up a lot of family housing that’s not actually being lived in by families. It’s being lived in by students or being rented out, or housing that was purchased and sometimes left vacant, because people are owning multiple homes.

Agenda segment, April 8, 2021: What should the government do about housing?

Gurney: I have to ask the big question now. The soul-killer. But I live, like, 150 feet from the Eglinton Crosstown. I’ll be within a 10-minute walk of two stations when they open, probably next year. And if you tried to knock down a house in my neighbourhood today and put in a triplex, there’d be, like, an armed-resistance movement conducting a guerilla campaign within about half an hour. The neighbourhood would fight that to the death.

Moffatt: [laughs] Yeah. I know. And we can criticize politicians for not doing enough, at some level, they’re going have to listen to their constituents. So that’s an issue. 

We need to reform some of the zoning rules, because the people who don’t mind these things are actually the ones who don’t show up to the community events. But the people who do show up complain a lot. An angry 20 per cent can shut a project down, even though it would benefit thousands. The silent majority, to borrow that term, doesn’t show up. 

So, changing how we zone, putting less of the power with council, making more decisions automatic, is going to be a part of the answer. One thing we can do? If you want to turn a single-family home into a duplex or triplex ... that’s allowed. You don’t need to get special approval for that. That’s one easy thing we can do. We have these systems in place to preserve community character. I live in a neighbourhood in Ottawa that’s about 100 years old. I could tear down my house tomorrow and build an absolute monstrosity of a house that doesn’t fit in with the neighbourhood at all, but as long as it’s single and detached, nobody can really stop me. 

On the other hand, if I wanted to build a triplex that looked from the road view exactly the same as all the other houses, the same style, I couldn’t do it, or at least it would take me years to go through the regulatory process. So our rules to preserve character aren’t doing that. We should have a rule that duplexes and triplexes that visually preserve the neighbourhood character are automatically allowed. I think that would go a long way. 

And another thing, especially for the exurbs: plan ahead. We have towns and cities that are growing fast now. They have 15,000 people today. But, in a decade or two, they’re going to have 150,000. Let’s zone for that; let’s plan our infrastructure. With the passing of Bill Davis just recently, we heard about how he was just this quiet guy from rural Peel. Rural Peel! Today, Mississauga and Brampton are some of Canada’s largest cities!

Gurney: I grew up mostly in Richmond Hill, which is a town — well, a city, now — that’s just north of Toronto. It’s basically been swallowed up by Toronto; the sprawl just absorbed it. And I have specific memories of wide-open fields in Richmond Hill. A farm. Undeveloped land. Industrial sites lying fallow for years. And I still have some friends and family there. A few years ago, I’m there, and I look around, and I am shocked. Because the little suburban town I grew up in had a skyline. Huge towers popping up in a mini-downtown core. And it was this real double-take moment because, not even one generation ago, Richmond Hill was basically two-dimensional. Flat. Low-rise, with maybe a few apartment buildings of, like, 10 storeys being the only exception. Not anymore! Let’s talk about that kind of change and that pace of change. Let’s say that’s what we want to do — turn every low-rise town into a high-rise city, and in less than a generation. Do we have enough human beings to do that? Electricians? Carpenters? Drywall guys?

Moffatt: No. We don’t. That’s a short answer, but it’s the answer: no. I think we’re going to have to change our immigration, our skilled-labour systems, and get more training. 

I’ve been very critical of the provincial government, but I think this is one area where the province is getting it right or at least moving in the right direction — an emphasis on the trades, getting more people into the trades. Because we have this dual challenge. Not only do we have a ton of people in the trades, but a lot of the people we do have are getting up in their 60s, and some of them probably aren’t coming back after the pandemic. They’ve decided they’re going to sell their house in Toronto, never work again, and live at the cottage in Bobcaygeon. That sounds better to them than going back to pulling wires for electrical work. So this is absolutely a bottleneck. We need to work this on the international side, too. We recruit a ton of students. Let’s make sure we’re recruiting some for the trades. There are things we can do. There are solutions to this problem. But, yeah. It’s a big problem.

Gurney: Just two months ago, in June, we had a home-repair disaster. Our air-handling pump in our attack didn’t just break — it really broke. aAd we had water coming out of it and getting into the insulation and ceilings. It was a literal mess and an urgent repair. And finding someone available to do the work was hard. Everyone who came to check it out and give a quote was, gosh; I mean, I didn’t check IDs, but they were closer to my dad’s age than my age. They often had some young guys as the hired muscle and strong backs, but the contractors and bosses were, as you say, into their 60s. 

Moffatt: Yeah, same here. We had a drainage issue, and it took 16 months to find someone to do the work. This is a real problem we’re going to have. We have it already.

This interview has been condensed and edited for length and clarity.

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