The Ford government in Ontario released definitions of affordable housing in June, setting the prices at which developers would need to sell to qualify for rebates. These prices were determined based on housing type and location across the province. However, developers are pushing back, claiming it is impossible to avoid losses if they sell homes at the government’s affordable rates. This has led to concerns about the feasibility of the affordable housing plan and whether it will actually address the province’s housing crisis.
A case study of costs for a home in Vaughan shared by the Building Industry and Land Development Association (BILD) revealed that developers could potentially lose hundreds of thousands of dollars if they sell a detached house at the government’s affordable rate. To qualify for fee rebates, developers would need to sell a detached house for $531,000 in Vaughan. However, the average costs for building a home in the city total over $1.3 million, making it financially challenging for developers to adhere to the government’s affordable housing prices.
Ontario NDP housing critic Jessica Bell has expressed doubts about the affordable housing definitions set by the government, stating that they may not yield the desired results to address the housing crisis. Developers have also voiced concerns about the definitions, indicating that they need to make a profit and the current prices may result in losses for them. Bell suggests following British Columbia’s approach by building affordable housing on government land and offering grants and cheap financing for deeply affordable projects to reduce costs and make housing more accessible.
Industry experts, including the Residential Construction Council of Ontario and BILD, agree that taking the cost of land out of the equation could make the affordable housing plan more feasible. The Ford government has plans to offer surplus public lands for affordable housing projects, but there are still challenges for developers to make money at Ontario’s affordable housing prices due to increasing construction, labor, and material costs. Increasing density, particularly with midrise and highrise homes, could help spread costs across more units and potentially make the affordable housing plan more realistic.
Overall, there are concerns about the feasibility and effectiveness of Ontario’s affordable housing plan amid rising costs and challenges for developers to make a profit. Developers are apprehensive about the government’s affordable prices, fearing losses if they participate in the program. Industry experts suggest alternatives such as utilizing government land and increasing density to make affordable housing more viable. The government plans to monitor the implementation of exemptions and discounts for affordable residential units and intends to publish updates annually.
