Housing affordability more complicated than just advocating for more supply
Ottawa is building more homes than you might think
It's one of the biggest concerns of the moment — a central theme of the last provincial election and for our current municipal campaign. It shows up in most candidate platforms and they report it's the most-mentioned issue at the door.
Among the many realms of life that have become more expensive, the cost of housing worries many the most — for good reason.
Home prices in Ottawa hit record levels during the pandemic and rents skyrocketed. While prices are beginning to abate with higher interest rates — the average resale price of a house has dropped more than $100,000 in recent months — homes are still selling for more than a year ago.
So what to do?
The Ontario government has pitched two key solutions: build more homes and cut the "red tape" at city hall. Some mayoral campaigns have also boarded the supply train.
Mark Sutcliffe, for example, is promising to pave the way to build 100,000 homes in a decade, or 10,000 per year. And everyone seems to promise a more efficient planning process.
This might sound good, but what does it actually mean?
Home supply stats
Let's start with building homes. When proponents argue for increasing the supply of homes, it's important to know what's actually happening on the ground in Ottawa right now.
In each of the last two years, the city issued more than 11,000 building permits for new homes. While not all the projects are necessarily finished in the year their building permits are issued, it's safe to say Ottawa has been building about 10,000 homes in each of the last two years.
According to the Canada Mortgage and Housing Corporation (CMHC), the capital is on track to start construction on more than 10,000 this year, too.
It's worth mentioning the new home activity in the last two years was a big jump — around 30 per cent — over 2019. There's no guarantee home building will continue at the current pace, but it's important to know that Ottawa can, and is currently, building the number of homes pitched in Sutcliffe's platform.
There's also significant home-building capacity in Ottawa. In the past decade, the planning committee has approved rezoning applications for more than 48,000 housing units. Only 7,000 have been actually built.
Put another way, there are 41,000 potential intensification-area homes that are already pre-zoned, homes that can be built whenever a developer thinks the time is right.
That's to say nothing of the capacity for building more than 75,000 homes in Ottawa's vacant lands, including in the rural land outside of Ottawa's built area.
And that doesn't include the extra 1,200 hectares being added to the city's boundary of developable land as part of the official plan — an important growth blueprint the province has yet to approve.
The 'reduce city fees' argument
The status quo on home-building won't be enough, though, because estimates for the city's population growth span between 40 and 50 per cent over the next few decades. We need to keep up the current pace of building.
That sounds simple but doing so in a sustainable way, while ensuring affordability, is more complex.
Some candidates want to reduce or eliminate development charges on multi-home projects that include a certain percentage of affordable units.
(For the purposes of this argument, we're putting aside the fact the term "affordable housing" is confusingly used to indicate everything from publicly subsidized housing to rental discounts in private developments.)
Development charges are costs imposed by the city on new homes to pay for growth — think pipes, transit, community centres — and they add to the cost of a new home.
The ones coming into force next month can add $30,000 to the cost of a new home in a subdivision, or more than $17,000 to the price of a highrise condo.
Waiving these fees should indeed spur more home-building, as it did when Ottawa tried it in the 1990s to encourage intensification in the downtown, but it robs the city coffers of many millions of dollars.
That money has to come from somewhere — increased taxes, other fees — or spending has to be altered. This inconvenient part of the equation isn't talked about much on the hustings.
- Sutcliffe promises 100K new homes in a decade as part of housing platform
- McKenney promises to end chronic homelessness in next term
- Bob Chiarelli wants the province to throw Tewin lands out of the official plan
Consider the "parkland cash-in-lieu" policy recently approved by council, including by mayoral candidate Catherine McKenney.
The city collects money from new development to pay for parks, but it realized the amount it had been charging wasn't going to cut it.
The way the revamped policy works, the park charge is 10 per cent of the value of land in subdivisions, but 25 per cent for a 20-storey highrise. That means, according to one industry example, that the condo buyer could pay $18,000 under these new park charges, while a homeowner in a subdivision could pay only $7,700.
You won't find many people who are against parks, but we're also supposed to be encouraging intensification. When it comes to the parks cash-in-lieu policy, the city is making it more expensive to build those units.
McKenney argues the charges are needed because parkland inside the Greenbelt "is not cheap." Still, they said there will be a review of development charges in the next term with a look to "shift" costs "to incentivize smart development."
New council's biggest political challenge
As for the "red tape" argument, well, what process can't be improved?
For example, the city has a poor record on approving site plans — the last big part of a project before building can go ahead — anywhere near the council-approved deadlines.
So sure, improvements could be made, but that would likely require more staff. It doesn't help that the city's well-respected general manager of planning left unexpectedly in August.
The next term of council faces a dilemma on the future of housing in this city, what it looks like, and where it goes.
Pre-zoning properties to accelerate building semis and triplexes and other types of apartment buildings? The city's already starting the process to develop a brand-new comprehensive zoning bylaw. It's a dry-sounding technical undertaking and it will be among the new council's most politically difficult ones to achieve.
Many people will push back against sprawl, support intensification and want action against climate change, but almost no one believes their own neighbourhood needs more housing.
We'll tell the younger generation their home may not have a porch or backyard deck, while at the same time asking older communities to accept the look of their neighbourhoods will change over time.
We'll ask wards that have seen intensification to accept more, where residents will surely demand that outlying areas also take on their share of mid-sized apartments and even highrises.
All of this to say that housing affordability is complicated, which is something to remember as slogans and promises flow freely as the election campaigns hurtle toward voting day on Oct. 24.