A forthcoming report from the Toronto-based advocacy group CivicAction makes for grim reading: households earning $52,000 to $104,000 per year are functionally being price-segregated out of the GTHA due to high housing costs. Worse still, the cost of new construction is so high — due to a combination of direct and indirect taxes, land costs, and labyrinthine planning processes — that it’s impossible for the market to deliver new homes at costs that would bend rents and home prices back down. According to the report, at every stage of the homebuilding process, from land assembly to planning to construction, the math simply no longer works to deliver affordable homes.
“The housing system is not broken, the housing system has worked over the last several years exactly as planned. The problem is the system is an accumulation, over decades, of decisions that were made in silos,” says report co-author Jeanhy Shim, who along with CivicAction CEO Leslie Woo spoke with TVO Today last week. “The outcome is that homes are unaffordable for people on middle incomes.”
The report, written by Shim and Mukhtar Latif, is the second in a series focused on the need for “workforce housing,” that is homes that are affordable to the workers that the region’s economy depends on. The previous report showed that people earning between 60 and 120 per cent of the region’s median income — that $52,000 to $104,000 figure — represent a kind of “missing middle” in the region’s politics. They’re both too poor to afford homes in Toronto while also being too wealthy to get substantial relief from government programs.
Squeezed by costs and unable to find affordable housing, many of them are simply leaving the region outright for more affordable places. And those who stay struggle while they work many of the jobs that the economy depends on.
The good news, such as it is, is that municipal, provincial and federal policymakers have real levers they can pull that could reduce the costs of new homes.
“Is the situation dire? Yes. Should we still be hopeful? Absolutely,” says Woo. “All the tools that we need, all the mechanisms required, exist. It’s not like we need to overhaul an entire system; we just need to recalibrate it.”
Some of the cost drivers that the report identifies are well-known. The delays caused by lengthy planning processes and the costs imposed by large development charges are now largely accepted by policymakers as contributing to the rising costs of new homes. But the CivicAction report also looks at other aspects of the problem, and argues that affordability is the result of a combination of factors, including housing supply (broadly defined), finance, incomes, and delays in the system. The authors argue that housing needs a more systemic approach — and not a series of piecemeal interventions like we’ve seen in recent years.
“To build affordable housing, you must first build affordably,” says Shim, who has worked in the real estate industry for decades, for both large for-profit developers such as Mattamy Homes and not-for-profit developers. “There’s untapped opportunities in every layer of the process. Cutting development charges alone won’t solve the problem, even having free land won’t solve the problem. This paper is trying to tie it all together.”
The report compares the current costs of building a new 200-unit building — which would command rents of $3,425 a month just to break even, more than double what a median worker could afford — to what’s possible if governments can intervene at every stage of the process to reduce costs. That includes not just reducing fees and planning delays (which are still vital parts of the plan) but encouraging public and private pensions to make cheaper, more patient capital available to residential developers so that new homes don’t need to offer the highest possible financial returns.
If Canadian pensions increased their current residential investments from just three to five per cent that would amount to an increase of $46 billion, and critically that “patient capital” can accept a lower return on investment than private banks currently demand. Cheaper, more patient capital, combined with lighter regulatory burdens, relief from taxes and fees, and the use of publicly-owned lands could bring that rent down from $3,425 to $2,221, a sum affordable for someone making $89,000 a year. That’s still not enough to reach the lower ranks of middle-income earners, and the report notes that “deeper intervention” will be needed to guarantee affordability, such as income supports or different ownership and tenure models. But saving households nearly $15,000 a year is a good start.
The CivicAction report comes at a time when the GTA’s housing starts are falling off a cliff — economist Mike Moffatt calculates they’ve fallen 90 per cent since the 2021 peak of the market — while the chaos caused by U.S. president Donald Trump’s tariff threats have otherwise occupied the attention of federal and provincial policymakers. Woo and Shim argue that while Canadian leaders are focused on strengthening the domestic economy, it would be a mistake to let the housing crisis fall down the list of priorities. In short, homes are where jobs go to sleep at night.
“Housing needs to be part of that discussion — we need people to work these jobs, and where are those people going to live? Housing is not just a nice to have, it’s a critical part of growth,” says Shim.
“Housing is such a foundational thing to a successful society, a thriving economy. If you’re not able to see that as something you need to solve for, I think it’s short-sighted,” says Woo. “Whatever solution you land on, it will not secure success.”
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