For decades, the real estate industry has faced serious challenges in the pursuit of providing Canadians with abundant and affordable housing. The widening gap between Canadian supply and demand has fueled one of the less affordable residential housing markets in the world. That’s why housing affordability was the focus of our recent BMO Real Estate Forum in Toronto. 

Our featured speakers offered insights from an economic perspective as well as the view from the builder developer housing market and policy thought leaders. We covered what’s driving an affordability crisis and how the public, private and nonprofit sectors can work together to devise creative solutions. 

Following are some key takeaways. 

Mike Moffatt, Executive in Residence at the Smart Prosperity Institute (soon to be the Missing Middle Initiative)—a research network and policy think tank based at the University of Ottawa—explained the economic factors that have led the Canadian housing market to this point, and what needs to be done to address the challenges.  

Moffatt noted that while the rental market is growing, the freehold market has been in secular decline for decades and the condominium market is struggling in major metropolitan areas. “When two of the three [markets] are moving in the wrong direction, that’s going to be a problem,” he said. 

Moffatt said that while affordability metrics have been moving in the right direction recently, we still have a long way to go to return to the levels of the early 2000’s. “The prices are just too high, and we don’t have enough supply,” he said.  

Kate Low, BMO’s Regional Vice President, Real Estate Quebec, moderated a panel discussion that provided diverse perspectives on the affordability crisis: 

• 

  Heela Omarkhail, Vice President of Social Impact at The Daniels Corporation (Daniels), a Toronto-based developer/builder specializing in building inclusive and sustainable communities 

• 

  Michael Owen, Senior Partner at Mondev, a leading Montreal purpose-built rental apartment builder 

• 

  Dave Wilkes, President and CEO of the Toronto Building Industry and Land Development Association (BILD), Canada’s largest home builders’ association. 

 Listen to a podcast based on this conversation: 

Owen noted that costs—particularly labor and materials—are not likely to fall. That’s why he focuses on changes to financing terms. 

“People want to buy, they have a down payment, but they don’t get approved, and it’s often because of the calculations that are made that determine they can’t afford it,” Owen said. “What can we do to make them afford it? Why don’t we talk about tying age to amortization? If I’m 20 years old ... I should at least get an extra couple of years if not 10 or 20. If you start giving buying power to younger people to help them afford what they can’t afford, we’re going to have a much bigger impact.”  

Wilkes from BILD sees progress at the provincial and municipal levels in efforts to drive costs down. “Here in Ontario, we’ve seen a major initiative to lower the cost of builds, to making changes in development charges and speeding up approvals,” he said. “We haven’t seen enough change, but we’ve seen a recognition that change needs to happen because we certainly can’t sustain the current situation.” 

Omarkhail from Daniels focused on the importance of creative collaboration between the public and private sectors and community stakeholders. As an example, she pointed to Daniels’ instrumental role in the revitalization of Toronto’s Regent Park neighbourhood over the last 20 years. 

“What makes the Regent Park example relevant today is it demonstrates a strong role for the public sector,” Omarkhail said. “Not the public sector as the builder, but the public sector as the mobilizer making the land and opportunity available, so that the private sector, which has the expertise, can bring our creativity to the table.” 

Wilkes echoed that, saying all stakeholders need to be part of the solution for solving the current affordability crisis and for ensuring future generations have opportunities to thrive.  

Even if an increase in supply helps drive home prices down, that won’t fix the main culprit—the “cost of delivery crisis.” 

“We have a real issue of having the costs aligned with affordability,” Moffatt said. “If you don’t address the cost of delivery crisis, nothing gets built, and we’re seeing that right now in the condo market.” 

Brad Jones, Chief Development Officer at Wesgroup, a Vancouver-based developer, said that while the cost of delivery continues to rise, there is some reason for optimism that policies could be moving in a more favourable direction. Last year, Wesgroup launched an advocacy campaign with the video Housing Crisis 101: Why Homes Don’t Just Happen.  

“In metro Vancouver, development cost charges between 2015 and 2027 will have gone up nearly 2,000%,” Jones said. “There’s a conversation taking place federally where they’ve at least acknowledged the link between DCs [development charges] and affordability. Ontario’s proposed legislation looks fantastic. Harmonizing code requirements is an incredible first step.” 

Our speakers expanded the discussion beyond subsidized housing vs market-priced housing. For the industry to better serve all Canadians, it means shifting the entire supply curve toward improved affordability at all levels. That is ambitious, but our speakers suggested that it can be done with the right mix and alignment of supply strategy, policies, partnerships and a will to fix our broken housing market.