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Ontario Urged to Ease Land Use Regulations

My RealtyTimes,
Jim Adair,
August 22 2016

The Ontario government is being urged to ease its land use regulations at the same time that it is considering proposals to expand them.

Benjamin Tal and Katherine Judge, economists with CIBC Capital Markets, recently wrote that during the last five years, the average house price in the Greater Toronto Area (GTA) has risen by a cumulative 44 per cent.

“An important factor behind this acceleration is a severe lack of supply of serviced land for ground-oriented houses, which has resulted in the city facing nothing short of an affordability crisis,” say the authors.

Their report says the land value in areas that can be developed for low density has doubled during the last 10 years, while the price of medium-density lots, the prime target for the province’s intensification efforts, has risen by close to 150 per cent. They say in cities such as Markham, Newmarket, Richmond Hill, Vaughan and Brampton, land now accounts for more than half of the total house price.

“If you are an owner of potential development land and you are well aware that (the Places of Grow Act) will result in a shortage of land by even more than currently anticipated, you probably will not be eager to sell. Clearly, time is money for land owners. Holding onto land is already a significant force restricting supply in the GTA,” say Tal and Judge.

The authors say municipalities have also done a poor job measuring existing intensification rates and that the government should think again about its proposal to raise intensification and density targets.

“The Government of Ontario, in common with many environmentalists, dislikes single-detached houses and other types of ground-related homes because of their apparent implications for greenfield land consumption, CO2 emissions, health and commuting times,” says a recent report by Frank Clayton, a long-time housing industry consultant who is now senior research fellow at the Centre for Urban Research and Land Development at Ryerson University in Toronto. “If they have their way, in the future all but the very wealthy in the Greater Toronto Area will be living in stacked townhouses and other types of apartments in higher density, mixed-use communities with accessible rapid transit.”

But Clayton says “the view that many households in the GTA would willingly give up single-detached houses to move into higher density housing in location-efficient communities is wrong. Urban policies which try to force this by constraining the supply of new ground-related housing will lead to even higher house prices, sub-optimal location choices and huge capital gain windfalls for the lucky owners of existing houses and vacant lands on which new ground-related homes could be built.”

Not surprisingly, the Ontario Greenbelt Alliance, a coalition of more than 120 different organizations, takes a different view. “More Ontarians want to live in mixed-use walkable neighbourhoods that are close to amenities like public transit,” says Tim Gray, executive director of Environmental Defence, in a news release. “The stronger intensification targets in the Growth Plan should help slow unnecessary low-density sprawl that is bad for the environment, expensive to provide services to and diminishes quality of life in the Greater Golden Horseshoe.”

Caroline Schultz, executive director at Ontario Nature, says, “Having seen first-hand how unfettered sprawl can devastate wildlife, watersheds and our ability to mitigate climate change — and conscious of the intense development pressures in Southern Ontario — these amendments come not a day too soon.”

Clayton takes aim at previous surveys that said most people in the GTA would choose to live in a location-efficient community instead of in a larger house with a bigger lot in a suburban, car-dependent subdivision. He says these surveys are misleading and that more recent surveys show that most people would prefer to live in a single-detached home. This includes millennials.

Tal and Judge wrote, “Evidently, a condo unit is not for everybody. Many priced-out millennials in search of a single-detached house simply take to the highway and start driving away from Toronto, not stopping until they find something that they can afford — in the suburbs and farther afield.”

They say this is reflected by price increases in communities outside the GTA, “rising on average by close to nine per cent over the past year as cities such as Barrie, Innisfil and Bradford West Gwillimbury are witnessing double-digit price appreciation. While the need to commute to Toronto is a major obstacle, the rising trend of telecommuting will make this alternative more attractive and doable in the coming years, providing an additional pressure relief valve to the GTA’s housing market.”

According to a recent study by property search engine Point2Homes Canada “there seems to be a striking discrepancy between market reality and search preferences in certain cities across Canada,” writes Roxanna Baiceanu, communications strategist with Point2Homes.

She says in Toronto, most potential buyers were searching for homes priced up to $400,000 where the average price is closer to $750,000. Yet they are also looking for three or four bedroom homes.

Nationwide, she says studio and one-bedroom apartments account for just two per cent of home searches.

Baiceanu says 60 per cent of the home searchers are women, in the age groups 25 to 34 and 34 to 44.

“Millennials in the GTA prefer single-detached homes over other housing types,” says Clayton. “While millennials show a slightly higher preference for apartments than do buyers or prospective buyers in the 35-54 age groups, it is by no means pronounced.”