Many municipalities fail to achieve their housing objectives | Canadian real estate magazine

When it comes to meeting housing goals, most municipalities in the Greater Toronto and Greater Golden Horseshoe region received a failing grade in a recent report commissioned by RESCON.

The findings are disturbing and should set off alarm bells for policymakers at all three levels of government.

The assessment was conducted by the University of Ottawa’s Missing Middle Initiative and was based on data obtained from CMHC and Altus Group.

It is worrying that of the 34 municipalities that were assessed, 22 received an F, another five received a D and the remaining seven municipalities received a C or higher. Brantford had an A-plus and Milton an A.

Researchers conducted an in-depth study of housing starts, sales and industry employment in the municipalities and assessed the state of housing sales and construction in the first six months of this year, compared to the same period in the previous four years. The analysis concluded that home sales and starts have virtually come to a standstill.

In the first six months of 2025, housing supply in the 34 municipalities fell by an average of 40 percent. Apartment starts were down 54 percent in the first six months compared to 2021-2024, while purpose-built apartment rental starts increased by eight percent. Starts for everything but apartments fell 42 percent.

In Toronto, starts in the first six months of 2025 fell 58 per cent and sales fell 91 per cent compared to the same period between 2021 and 2024, while industry employment fell by 10,209 jobs.

It is clear that our sector has hit a wall and the future prospects are bleak. We are currently going in the wrong direction. Pre-construction sales, considered a key indicator of market health, are down 89 percent for condos and 70 percent for land-based homes. Fewer than 5,000 homes are expected to be sold in the GTA this year.

Employment in the industry is struggling. The contraction in housing construction that starts in municipalities in the first six months of 2025, compared to the 2021-2024 averages, translates into 24,195 fewer person-years of employment.

The federal government has pledged to build 500,000 homes in each of the next ten years, and the Ontario government has promised 1.5 million homes between 2023 and 2031. Although the targets seem impossible at the moment, governments can stimulate production by lowering the tax burden.

I fear that the situation could become even worse if governments fail to reduce the tax burden. Currently, taxes, fees and charges represent 36 percent of the price of a new home. Reducing federal and state sales taxes on a $1 million new home would reduce costs by $130,000. The federal government has agreed to reduce the five percent sales tax for first-time buyers retroactively to May 27 and is currently working on regulations to make this possible.

According to Tarion, Ontario’s new home warranty program, first-time buyers represent 39 percent of the market.

Ontario Premier Doug Ford initially indicated he would follow suit with an eight percent sales tax cut on first-time buyers, but unfortunately he appears to be reversing that commitment.

The province must immediately commit to a tax credit for starters. Both the feds and the county must also pledge to provide such assistance to all new home buyers.

Think about it for a moment. With starts and sales declining, the federal government and the province aren’t getting much tax revenue for new homes anyway, but waiving the sales tax would mean more homes would be built, creating more construction jobs and boosting demand for Ontario-made steel and lumber. All this, of course, means more jobs and a healthier economy – and more tax revenue.

The relationship between housing costs and incomes has become seriously out of balance. People need housing, but currently we tax it like cigarettes and alcohol – so-called sin taxes designed to discourage their use.

Current sales taxes and exorbitant development costs are crippling new industry housing. They are brutally regressive and only punish buyers of new homes – mostly young families.

The difference between the cost of new homes and what people can afford has increased. Without some form of tax relief, the gap will persist and residents will seek housing outside the county. It’s already happening and many individuals and families are moving to Alberta. Housing is crucial to the well-being and prosperity of our society. You can’t build a strong economy without affordable and attainable housing. Without that you cannot attract investments.

Governments must work together on a strategy to reduce sales taxes on new homes. There’s no time to lose.