Ontario developers deny they’re feeding housing crisis by sitting on land

Developers are pushing back against claims that they’re slowing the pace of new home construction in Ontario by sitting on land that’s already been approved for housing.

New home construction starts in Ontario have been running well short of the 150,000 per year pace needed to hit Premier Doug Ford’s target of 1.5 million by 2031.

Still, a new report commissioned by two of Ontario’s largest housing industry lobby groups finds residential construction currently at a 33-year high.

“The statistics speak volumes,” said Neil Rodgers, interim CEO of the Ontario Home Builders’ Association, which jointly commissioned the report along with the Building Industry and Land Development Association (BILD).

“We had to dispel a myth that the industry was not operating at capacity, that we were sitting on supply,” said Rodgers in an interview.

The report, published Thursday, shows 164,000 housing units currently under construction in Ontario, more than at any time since 1990.

“The industry is working at maximum capacity or close to maximum capacity at this point,” said Justin Sherwood, BILD’s senior vice-president of communications.

Inadequate supply is considered one of the key factors in the high cost of buying or renting a home, particularly in Ontario’s bigger cities.

Developers, cities trade blame

The development industry and the Ford government have repeatedly heaped much of the blame for the tight supply on municipalities and regional councils for taking too much time to approve developments.

Those cities and regions have in turn pointed to projects that have all the necessary approvals, with the potential for hundreds of thousands of new homes, while developers have yet to put a shovel in the ground.

An inventory produced last year by the Regional Planning Commissioners of Ontario found some 1.25 million housing units were either approved or in the approval pipeline around the province.

The new report commissioned by the industry groups takes issue with how that 2023 inventory has been framed.

Only 331,000 housing units tallied in the inventory have all necessary approvals in place and can be considered “development ready,” says Thursday’s report.

“I think that the narrative that developers and home builders are sitting on lots, while it may be politically expedient, is damaging,” said Sherwood in an interview.

“Quite frankly, discussions about sitting on lots and finger-pointing is really deflecting from the issues that we really need to be tackling in order to be able to get the housing built,” Sherwood said.

There’s strenuous ongoing debate over which factors are most crucial in suppressing the pace of new home construction in Ontario.

What’s slowing housing construction?

Various players blame land supply, high interest rates, too few skilled workers, slow approvals, inadequate water and sewer lines, high development charges, skimpy federal and provincial funding for affordable housing, or NIMBY (not in my backyard) residents opposed to higher density in their neighbourhoods.

Whatever the reasons, only 19 of 50 large municipalities in southern Ontario hit the new home construction start targets the Ford government set for them in 2023.

The new study points to a far sunnier statistic from 2023: housing completions in Ontario reached their highest level since 1990, at nearly 78,000 units.

The study’s author says Ontario’s municipalities haven’t provided evidence that developers are waiting too long after projects have been approved to start construction.

“I don’t think we have the data to really properly assess how big of a problem that is, if the problem exists, or where it exists,” said Daryl Keleher, an urban planner based in Milton.

Some Ontario cities have asked the province for more powers to slap “use it or lose it” penalties on stalled housing projects. While the government has been consulting on the issue, there’s been no commitment it will act on the request.

Keleher’s report points out that cities already have leeway to put expiration timelines on approvals or to rescind allocations for water and sewer infrastructure.

Rather than penalizing developers for being slow to get shovels in the ground, Keleher’s report says the province “should be seeking to first understand why approved supply may not be getting built on the same timelines or pace that municipalities expect.”