Josef Filipowicz and Steve Lafleur are housing policy analysts at the Fraser Institute.
For years, governments in Canada’s least affordable cities and provinces opted for politically easy but relatively ineffective measures to tame rising rents and home prices. Foreign buyers, speculators and money launderers were all targeted by policy interventions, yet the cost of housing remained prohibitively high for countless Canadians. Apparently, it took until this year to exhaust all the easy answers, because 2022 was the year policy-makers finally started making (or at least hinting at) the difficult decisions that must be made.
Once you’ve moved past the scapegoats for Canada’s affordability woes (speculators, foreign owners, private equity companies), what remains is the rising chorus of research showing a clear chronic shortage of homes nationwide, especially in larger regions such as Metro Vancouver and the Greater Toronto and Hamilton Area.
This shortage didn’t appear overnight. It resulted from decisions across hundreds of local and provincial governments over decades. An additional step in the development approval process here, another prohibition on building there and so on, until we ended up with a housing system that builds fewer homes than it did in the 1970s when our population was roughly one-third smaller. Recent factors that affect housing demand, including a decade of low interest rates and fast-growing population, also played a role. But markets could have met red hot demand for housing, if governments had let them.
Enter the provincial governments of Ontario, British Columbia and Nova Scotia, and the City of Toronto.
Starting this fall, the Ford government in Ontario found not just another gear but an entire gearbox for housing policy, passing “strong mayor” reforms (which allow mayors in Toronto and Ottawa to more easily push through housing reforms), reducing red tape province-wide with Bill 23, and opening up some Greenbelt lands to home building. It’s not clear that giving mayors more power will help much on the housing front, but the sweeping changes proposed in Bill 23, such as allowing more homes on single-family lots by default and streamlining or removing steps in the approval process, mark the first serious attempt at reversing decades-long regulatory trends.
As if on cue, Toronto City Council followed Queen’s Park’s lead by approving Mayor John Tory’s plan to overhaul zoning and housing approvals by early next year. The devil will be in the details, but if Toronto can radically increase the number of homes, not just along major corridors but also within established neighbourhoods, Canada’s largest city will become an exemplar on how to rapidly increase housing production where it’s most needed. Council also legalized rooming houses citywide, a move long supported by housing advocates and research. This may seem like a small step, but it’s another example of the sort of tough decisions that have been punted for years.
Meanwhile, the newly minted Premier of Canada’s least affordable province also appeared to hit the ground running on housing policy. Only days after swearing in, B.C. Premier David Eby announced a series of measures aimed at boosting housing supply, to be implemented during his first 100 days in office. Most importantly, his government committed to “working with municipalities with the greatest housing needs to set targets to deliver more homes faster” – very possibly a veiled threat to bring down the hammer in upcoming housing legislation. If you ignore the good cop, you’ll get the bad cop.
Which brings us to Nova Scotia, where the earliest and likely most profound housing actions were taken this year. Like Ontario and B.C., Nova Scotia struck a task force to investigate its affordability problem and make recommendations. Unlike the other two provinces, however, it acted almost immediately. The Municipal Affairs and Housing Minister was given authority to directly review and approve housing developments in select areas, which is exactly what he did. If all goes as planned, more home building will be under way in Halifax alone over the next two years than in all of Nova Scotia over the last five. Essentially, Nova Scotia went straight to bad cop, which is good for Nova Scotians wanting to rent or buy a home.
In sum, this year appears to have marked a sea change in housing policy, so we can look back at 2022 with cautious optimism. But we should also look toward 2023 with renewed conviction, as governments may be tempted to call it a job done. They’ve finally made some of the tough feather-ruffling decisions that were always needed, but having made these decisions, the test of success will be whether they keep their foot on the gas and whether we see the dramatic increase in homes Canada needs to restore some semblance of affordability.