Written by: Alex Gray, President Sightline Building Solutions
Ontario’s housing crisis has reached an inflection point, with the cost of owning and renting escalating at rates that far outpace income growth. In 2023, the average rent for a one-bedroom unit in Ontario’s cities ranged between $1,605 and $2,500, while the affordable rent for many households was just $1,139. Addressing this gap is critical, especially for attainable housing options designed for middle-income households. Unlike affordable housing, which generally involves subsidies for low-income families, attainable housing provides accessible options for those earning median incomes.
Why Attainable Housing Matters
Attainable housing is fundamental for sustaining Ontario’s communities. As home prices have risen by 180% over the past decade, incomes have increased only 38% – many essential workers, including teachers, nurses, and first responders, are priced out. Without access to local, affordable housing, these individuals, who form the backbone of community infrastructure, may be forced to relocate, impacting the province’s social and economic stability.
Barriers to Attainable Housing
High Development Costs and Lengthy Approval Processes:
Costly fees and long approval times make building attainable housing financially challenging. Delays from zoning, permits, and public consultations increase costs, slowing the construction rate needed to meet housing demand, especially in cities like Hamilton.
Tax Burdens on Development Projects:
Government taxes on land, development, and materials add significant costs, making attainable housing projects financially less viable. These burdens discourage construction, especially during economic downturns, resulting in developers postponing projects until economic conditions improve.
Lack of Incentives for Developers:
Developers favor market housing due to higher returns, limiting attainable housing construction. Without sufficient financial incentives or regulatory support, developers will continue to prioritize market housing over attainable housing, creating an imbalance and worsening the attainable housing shortage for middle-income earners.
NIMBYism:
Affordable housing projects often face community resistance, where locals oppose new developments in their neighborhoods. This NIMBYism delays projects, complicates approval processes, and ultimately limits accessible housing options for those who need it most.
Municipal Skepticism of New Building Methods:
Municipalities hesitate to approve modular homes due to concerns over uninspected construction quality, despite manufacturers adhering to CSA A277 standards. Prefabricated panels are more accepted as inspectors can assess quality before walls are enclosed, but modular methods remain underutilized.
Solving the Barriers to Attainable Housing: A Multi-Faceted Approach
Addressing High Development Costs and Lengthy Approval Processes
Solution 1: Streamline the Approval Process for Attainable Housing
Creating a fast-track approval system specifically for attainable housing projects can dramatically reduce costs associated with delays. This streamlined process would involve setting expedited review times for projects with fewer than ten units, potentially shortening development times by months. Other strategies include reducing bureaucratic redundancies, which delay site plan approvals, zoning amendments, and minor variances.
Solution 2: Reduce or Waive Development Fees for Attainable Housing
Municipalities could offer reduced or waived development fees for projects dedicated to attainable housing. By easing the financial burden for developers, this would lower overall costs and make these projects more financially viable. Ontario has already seen success with similar incentives for affordable housing, and a focused expansion of these incentives would benefit middle-income earners seeking attainable housing.
Solution 3: Flexible Land-Use Policies
Municipalities can support attainable housing by amending land-use policies to allow higher-density developments in residential areas. This would mean updating zoning bylaws to encourage the development of multi-unit and mixed-use buildings, especially in areas with underutilized land or near transit hubs.
Reducing Tax Burdens on Development Projects
Solution 1: Implement Tax Credits for Attainable Housing
Government-imposed tax credits or abatements for attainable housing projects can offset costs and encourage developers to prioritize these projects. By offering property tax reductions, reduced HST rates, or rebates on materials used in construction, the government can make attainable housing financially attractive, even in economic downturns.
Solution 2: Defer or Waive Development Charges During Economic Downturns
During periods of economic difficulty, municipalities could temporarily waive or defer development charges for attainable housing projects. This would enable developers to proceed with construction without the upfront cost barrier. Repayment schedules could be adjusted to be favorable to developers, making it easier for projects to proceed even in challenging economic times.
Solution 3: No tax on new homes under $1,000,000.
Eliminating tax on new homes under $1,000,000 reduces purchase costs, making homeownership more affordable and attainable. It boosts housing supply, encourages developers to build more affordable options, and provides relief to first-time buyers and families alike.
Increasing Incentives for Developers to Prioritize Attainable Housing
Solution 1: Offer Density Bonuses for Attainable Housing Projects
Density bonuses allow developers to build more units than typically permitted by zoning laws in exchange for including attainable housing in their developments. This approach increases the profitability of projects by adding additional units, making it more appealing for developers to commit to building attainable homes.
Solution 2: Create Subsidies or Direct Financial Incentives for Attainable Units
Municipalities could introduce subsidies for developers who dedicate a portion of their units as attainable housing. Direct subsidies per unit or grants for projects with attainable housing components would lower costs and provide developers with a clear financial incentive.
Solution 3: Enforce Inclusionary Zoning Requirements
Through inclusionary zoning, municipalities can require developers to allocate a specific percentage of new units to attainable housing. This zoning policy has been adopted in various North American cities with positive results, and by setting attainable housing quotas, municipalities can ensure that new developments contribute to a balanced housing market.
Overcoming NIMBYism
Solution 1: Community Education Campaigns on the Benefits of Attainable Housing
Public opposition often arises from misconceptions about attainable housing. Municipalities can work to counter NIMBYism by educating communities about the economic and social benefits attainable housing brings to neighborhoods, such as retaining essential workers like teachers, healthcare professionals, and first responders. Highlighting successful attainable housing projects in other communities may help shift public perception.
Solution 2: Promote YIMBYism (Yes In My Backyard)
Engaging community stakeholders to support attainable housing developments can create advocates who work with municipalities to promote local buy-in. Organizing public forums, roundtables, and neighborhood meetings to discuss attainable housing’s importance can foster YIMBYism, or “Yes In My Backyard,” changing the narrative around new developments.
Solution 3: Use Mixed-Income Development Models
Mixed-income housing developments, where attainable units are integrated with market-rate homes, are often more accepted by communities than standalone affordable housing projects. By blending attainable units with market-rate homes, developers can design projects that look cohesive within the neighborhood, reducing resistance.
Addressing Municipal Skepticism of New Building Methods
Solution 1: Educate Municipal Officials on Modular and Prefabricated Housing Standards
One of the primary barriers to municipal approval of modular/prefabricated homes is a lack of familiarity with the quality and standards of modular construction. By providing municipal inspectors and officials with education on CSA (Canadian Standards Association) certification and conducting site tours of modular construction facilities, municipalities can build confidence in these advanced construction methods.
Solution 2: Create Partnerships Between Modular Builders and Municipalities
Modular construction companies could establish partnerships with municipalities to allow pilot projects that demonstrate the quality and efficiency of modular housing. By allowing inspectors to closely monitor these projects, municipalities can see firsthand the benefits and standards of modular construction, increasing comfort with the method.
Solution 3: Encourage the Use of Prefabricated Panels
Since prefabricated panels are more widely accepted due to inspection access, encouraging developers to use prefabricated panels could bridge the gap between traditional and modular construction methods. Prefabricated panels allow for some of the cost and time benefits of modular housing while meeting municipal inspection standards, making them a viable compromise.
Strategic Land Use:
Securing land for attainable housing, through municipally owned land surveys or private landowner incentives like tax credits, can help meet the demand for new builds in high-need areas.
Conclusion
The current crisis demands immediate, unified action from all stakeholders, including government agencies, private developers, and local communities. Establishing a more sustainable, inclusive housing model requires implementing zoning changes, incentivizing attainable housing, and building partnerships across sectors.
Ontario is at a pivotal moment in its approach to housing. By embracing innovative construction methods like modular housing, supporting zoning reform, and incentivizing attainable housing, Ontario can move toward a future where affordable, high-quality housing is within reach for all residents.
November 1, 2024