Event Recap: Building in Uncertain Times, Keeping Housing Moving

The housing market is near its floor, but the construction pipeline is thin

Deglobalization, tighter labour markets, heavy government borrowing, and tariffs are all pushing inflation up, which means long-term interest rates will stay higher than Canadians have grown used to. Even so, the view was that housing is adjusting rather than correcting. Low-rise is holding up better than condos, which CIBC’s Benjamin Tal expects to stay in recession for another 12 to 18 months.

The bigger worry is supply. Rental construction is running at levels not seen in decades, but those projects were approved years ago, while rental starts are now slowing. Research by Urbanation projects a shortfall of about 121,000 rental homes in Ontario by 2036 at the current pace. With so few homes being started across the market, the turn could be sharp once demand returns. Stability is needed above all, from predictable development charges and bylaws to a long-term immigration plan.

Relief helps, but certainty matters more

Federal and provincial measures are starting to reach the market. Ottawa has removed the sales tax on new homes, and Ontario has matched it. For a first-time buyer, that can mean savings of up to $130,000. Both governments are also helping municipalities cut development charges for at least three years. Early results are encouraging, with sales up sharply in some places. Speakers welcomed the boost but warned it may be short-lived. Much of the new activity is in low-rise and single-family homes rather than condos, and builders are mostly clearing existing inventory rather than launching new communities. Panelists also asked what happens when the three-year development charge break ends. 

The way homes get built has to change

Factory-built housing is the biggest untapped efficiency, and Canada trails. About five per cent of Canadian housing is built off-site, compared with more than 50 per cent in Sweden, while productivity in home building has dropped an estimated 30 to 35 per cent over 25 years, according to figures cited at the event. Large builders are starting to invest in modular and panelized plants, but most firms are too small and too local to make that leap.

One conversation showed how the barriers play out building by building. Mass timber is cost-competitive but costs 4 to 10 times as much to insure during construction, a gap that a planned full-scale test building on Six Nations territory aims to close. Ontario’s Building Code still requires two stairwells in buildings over two storeys, which makes well-designed six-unit buildings hard to get approved.

65%

The fall in housing starts, which are still declining. The drop comes as the province’s target of 1.5 million new homes by 2030 grows harder to reach.

100+

The number of zoning regulations in the Toronto region, compared with eight standardized residential classifications for all of Japan. The Board’s Blueprint for Growth identifies this patchwork, along with inconsistent building codes, as a major driver of cost and delay.

121,000

The rental home shortfall Ontario faces by 2036 at the current pace of construction, according to research with Urbanation. The province is projected to add roughly 1.4 million people over that period.

5%

The share of Canadian housing built off-site. In Sweden, the figure is above 50 per cent.

4 in 10

Toronto residents who told Ipsos, in polling commissioned by the Board this summer, that they are likely to leave the city within five years because they cannot afford to stay.

“Every municipality has its own rulebook for what can be built and where, as do the provinces and the federal government. This tyranny of small differences turns what should be a single market into a patchwork that drives up costs, slows delivery, and builds far less than it should.”
— Giles Gherson, President and CEO, Toronto Region Board of Trade

“If someone tells you the Canadian housing market is correcting, correct them. It’s adjusting. If you look at the trend and assume COVID was a bad dream, we’re about where we should be. … The next six months are a transition between something bad and something better. The fundamentals of your industry are extremely strong. We just need some patience.”
— Benjamin Tal, Managing Director and Deputy Chief Economist, CIBC Capital Markets 

“We tax the things we don’t want. Cigarettes, alcohol, gas, and housing. With development charges and the rest, you then qualify for programs to work your way back, which small developers can’t figure out, and even for us it’s super difficult. We have eight people who spend all their time on this. Why not step back and say, if we want to encourage housing, why are we taxing it?”
— Jon Love, Executive Chair and Founder, KingSett Capital 

“I hear it all the time. More vacancies, lower rents, problem solved. But the decisions that got these projects financed, approved, and into the ground were made years ago, and rental starts are now slowing significantly. Ontario has seen what happens when the pendulum swings from building at scale to barely building at all. Once the pipeline is lost, it takes years to rebuild… The lesson of the last rental building cycle is that it’s much easier to keep construction moving than to restart it once it stops.”
— Tony Irwin, President and CEO, Federation of Rental-housing Providers of Ontario 

“Your immune system fails you if it doesn’t respond, and it fails you if there’s a spike. It likes consistency in the middle. That’s what we want from policy, especially immigration. No one is going to start building tomorrow because immigration will be higher next year. We want to know what immigration will be over the next ten years.”
— Remo Agostino, Chief Development Officer, The Daniels Corporation

“Hundreds of thousands are putting 40 to 50 per cent or more of their income into housing. Younger Canadians typically can’t afford a home until they’re over 40, which for older generations would have been a signal of failure. This is a crisis no single government, builder, or organization can solve alone.”
— The Hon. Gregor Robertson, Minister of Housing and Infrastructure, Government of Canada 

“The development charge reduction is also coming in and will be extremely important in Ontario. For too long the paradigm has been that growth pays for growth, and it’s not sustainable. There will be $1.5 billion for infrastructure in the Toronto area, with a 40 to 60 per cent reduction, and we’re rolling it out across the province.”
— Jennifer McKelvie, Member of Parliament and Parliamentary Secretary to the Minister of Housing and Infrastructure, Government of Canada 

“Developers typically put up the money for infrastructure years before it’s built, and your opportunity cost of capital is in the range of 12 to 15 per cent. It can be up to seven years before that money comes back, when you finally sell a home. It’s massively inefficient and a hidden cost. I’m not saying it should be financed on the back of the rest of the citizenry, just much more efficiently.”
— Peter Gilgan, Founder and Chairman, Mattamy Homes Canada

“The cost premium has come down and is quite competitive now, but insurance costs for mass timber are typically 4 to 10 times those of concrete and steel during construction, enough to push many projects to concrete and steel… A big fire test in Ottawa showed the wood chars and remains structurally sound, which helped raise code limits to 18 storeys, but it didn’t answer whether the building can be fixed or is worth anything afterward.”
— David Messer, Executive Director, Climate Smart Buildings Alliance

“In small buildings, a single stair unlocks good layouts, efficiency, financial viability, and room for an elevator. But the Ontario Building Code, one of the most conservative in the world, requires two stairwells in buildings over two storeys, so a single stair needs a special approvals process.”
— Pamela Blais, Principal, Metropole Consultants

“Times may be uncertain, but they won’t stop us from building. Ontario’s housing gap won’t be solved one project at a time. It will be solved when industry, government, and communities move forward together. Let’s keep building. Let’s keep housing moving… A dollar of certainty is worth more to our clients than a dollar of relief, because what gets priced first is unquantifiable risk.”
— Nick Gefucia, Senior Vice President, EllisDon Community Builders 

“Meridian published a housing attainability report recently, and 62 per cent of prospective buyers are open to alternative ownership models, co-ownership with friends and family, rent-to-own, secondary suites, even tiny homes. For that to happen, they need to see attainable product hitting the market, and there isn’t enough. Lenders’ adjudication models also have to evolve, which will take regulators’ support, because how we adjudicate and what we’re permitted to do has rules.”
— Kevin VanKampen, Head of Business Banking, Meridian Credit Union

“Before these changes, up to a third of the total cost of delivering a house was government taxes, fees, and charges. It’s right to celebrate the reduction, but it’s still too much… I’d encourage governments to do a value-for-money assessment of the regulations they’re considering. In their minds many have no cost, but they absolutely do. If they asked what it costs, how it translates to the cost of a house, and whether it’s worth it, that would help.”
— Derek Goring, Chief Executive Officer, Northcrest Developments

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