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Globe and Mail columnist Margaret Wente.

Globe and Mail columnist Margaret Wente.

Margaret Wente

Why the Ontario housing market is rigged against millennials Add to ...

I live in a vibrant Toronto neighbourhood, just across from a university. It looks diverse, because of all the students, but it’s really not. Middle-class families were pushed out long ago – first to Scarborough and Mississauga, then to Ajax and Pickering and Newmarket and Barrie. But even in the hinterland, housing prices have soared out of sight. A run-of-the-mill three-bedroom house in Ajax (a brutal commute from Toronto) now goes for $500,000 or $600,000.

I’m afraid I’ll never be able to buy a first house – should I jump in now? (The Globe and Mail)

The high cost of housing is a huge issue for young families. Population pressures, foreign investors, land shortages and greedy developers usually get the blame. But there’s another culprit: government. The affordability crisis in the greater Toronto area is a direct result of provincial government policy. To put it bluntly, the Liberals at Queen’s Park – the vast majority of whom already have nice houses – are shafting the millennials.

Related: Our new down payment tool shows just how brutal it is out there for home-buying millennials

Related: Priced out of urban housing markets, millennials are scrambling for alternatives

Read more: Fear of missing out leaves millennials taking on big risk in housing market

Ontario’s provincial growth plan is controlled by urban-dwelling environmentalists who hate the suburbs. They believe that “urban sprawl” is an environmental and aesthetic catastrophe, and that single-family homes are a menace to society. Instead, they’re promoting “smart growth” – a strategy that means dramatic changes in housing and living standards.

The Liberal government has decided what kinds of places people ought to live in – high-density units in dense neighbourhoods that can justify public transit. So it has heavily skewed its land-use rules toward apartments and condos – even far beyond Toronto, where there is no shortage of land. “We aren’t building houses in anywhere near the numbers we did a decade ago,” says Frank Clayton, a senior research fellow with Ryerson University’s Centre for Urban Research and Land Development. Meanwhile, the population is exploding. Around 80,000 people, mostly immigrants, are moving to the GTA every year.

Unfortunately, neither immigrants nor millennials who are starting families want to raise their kids in apartments. They want to live in single-family houses with a yard. But because the government controls the market, the normal rules of supply and demand do not apply. With hardly any new single-family houses on the market, prices have soared. Prices for resale homes have soared, too. Even rents are up, because people who can’t afford to buy houses stay stuck in the rental market (or in their parents’ basement).

In the late eighties, Ontario also faced a housing shortage. The government responded by moving quickly to increase the supply of serviced land. It also stipulated that municipalities must keep an adequate supply of serviced land on hand. Governments of all stripes enforced this regime – until the Liberals came into power in 2003. It had a different priority – the environment. It believes that changing people’s lifestyles is essential to reducing greenhouse gasses. Never mind that its housing plan has sharply reduced affordability, increased inequality and produced gigantic windfalls for everyone lucky enough to own a house.

Ontario already builds plenty of compact housing. But now, the province has decided to move even faster. The planners’ goal is to increase housing density so much that municipalities will be forced to expand bus services, whose existence will persuade people to ditch their cars and switch en masse to public transit.

Anyone with 1.8 kids who lives in the real world, instead of planner-land, knows that this will never happen. The reality is that the roads will be more congested than ever. But don’t try telling the planners that.

As for the idea that housing prices will come down just as soon as all those boomers move into condos, don’t hold your breath. Most boomers don’t want to move to condos, as it turns out. And the flood of newcomers into the region won’t be slowing down any time soon.

The solution to the affordability crisis isn’t high-density housing and mass transit in the burbs. It’s to give people what they want – by getting the ideologues out of the way and restoring a sensible balance between supply and demand. Can we do that and be environmentally responsible too? Central planners who think we can’t should be required to raise their families in an apartment block in Oshawa and take the bus to work. They’d find a better way soon enough.

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