Policymakers must rethink the role of single-family zoning in driving up housing costs and housing costs in its markets.
That view was exemplified by the announcement this month by the Ontario government that it will revise its own recently announced Action Plan to Address Inequalities. Among other things, the provincial government is proposing to abolish single-family zoning requirements and replacement of entitlement around homes with incentives for landlords and purchasers to build apartments and multifamily units.
Ontario is going in the right direction. More than 15 percent of Ontario households are rental, and urbanization has contributed to single-family zoning controls that have led to a residential land squeeze. These control restrictions constrain the number of households capable of owning a single-family home at a time when Canadians are getting older. A strategy that boosts home ownership is critical for the future economic success of Ontario and its people.
However, these changes in Ontario are not a model to follow. The Greater Toronto Area’s new plan is intended to “cut red tape, put more housing on the market, and build more housing across the GTA.”
As Ontario cities themselves have noted, the government’s actions are at odds with many of their priorities. A large-scale pledge to supply 200,000 affordable rental units per year isn’t possible with existing zoning controls.
With Canada slowly aging, Canada’s struggling cities are best served by doing everything possible to make it possible for everyone to age in place. Tragically, the action plan undercuts many of the strategies cities have used to promote their approach to this agenda.
In particular, building up fragmented areas of under-supply of high-quality, well-functioning multi-family housing is crucial. (Imagine that in your own community. Most rental housing is not allowed to include more than one family in the same home.)
One thing is certain: None of these changes in Ontario will get low-income and marginalized residents on the streets or on emergency reserves.
However, all such improvements will fall far short of addressing the root causes of Ontario’s housing woes, nor of Canada’s huge urban population aging. Unfortunately, Canadian governments are not getting it.
In 2015, more than 125 Canadian municipalities agreed to a Liberal-led initiative to create a national housing strategy. All the participants have “recognized that the housing affordability crisis is an important issue across Canada that requires a multi-faceted approach and integrated action.”
But the action plan announced by the Ontario government this year follows the same pattern of talk about problem-driven needs and not action.
Canadian governments don’t seem to recognize the pivotal role that residential land planning plays in increasing the housing supply. Canada’s experience with higher-density, multi-family housing – the hard work of all those cities that have worked to allow such buildings – is second to none.
Why do new apartments, condos, and townhouses attract such a tepid response from Canadian governments? Part of the answer lies in Canadian biases against low-income housing and the mortgage affordability pressures that arise when more rental is built. Those pressures are compounded when Canada continues to marginalize even moderate-income people.
However, the biggest driver of housing costs in Canada is land. For the housing units that do exist, they exist in either denser areas where low-income residents are underrepresented or in large blocks of apartments and villas that cater to middle- and high-income residents. The two groups are experiencing a sizable divergence in their incomes.
These discrepancies create massive problems for individuals and municipalities alike. And if Canada is serious about improving affordability in its major urban markets, it needs to embrace a frank, objective assessment of its housing market and increase the supply of housing it allows for all segments of the population. The federal government should step up and help cities put their own plans in place to meet this challenge.
Victoria Bertrand is an Associate Fellow with The Montreal Economic Institute.