Housing Bubble or Supply Crisis

Dated: September 30 2020

Views: 85

So I hear people talk about it all the time, “The real estate bubble”. It must be just about ready to burst, right? Well why don't we take a quick look at the facts. 1st of all let’s not forget that Canada has an aging population. Currently we have a 4:1 ratio (as of 2018) of workers to retirees, however in about 15 years we are going to see that ratio drop dramatically to 2:1. In the next 20 years or so we will see 12 million students leave school and join the workforce, however 13.8 million workers are going to be hanging it up and leaving to kick back and enjoy a well deserved retirement, so I'm sure you can do the math. We are going to be 1.8 million workers short to fill those spots with those gaps widening as time goes on, so what are we going to do? Well... we will do what we always have… Immigration. Immigation is responsible for 80% of Canada’s population growth, and with over 130 000 people immigrating to Ontario each year we are in desperate need of more homes. In the Waterloo region alone we are at about 13 000 individuals moving to the area.


The real estate market is driven like any other… Supply and demand. When demand is high and supply is low we see a rise in prices, and since we haven’t been able to keep up with demand for almost half a decade housing prices have shot up at an exponential rate. The dream of owning a home is slowly slipping away for a lot of Canadians, and its for one simple reason, we can’t build enough of them. Let's look at it this way… if 13 000 new residents move to the region every year, and let's say each family is a 5 person household we still need to build 2600 units to keep up with the new demand. Let's not forget the people already in the region currently renting trying to make ends meet while saving to own themselves. The fact of the matter is, since there isn’t enough to go around who gets the supply that's available. Well if you had a home to sell who would you give your highly sought after product to, probably the person who is willing to give you the most money for it. Our rental market is a clear indicator of these 1st time home buyers in a difficult situation, and if you have looked for a rental in the past couple of years I think you felt that pain. Vacancy rates are extremely low so when it comes down to it we need to pick up our socks and build more affordable housing to put our growing population, but there are some hurdles to jump if you are a developer looking to help our community grow. 


Government has recognized this is a challenge for Canadians and has taken some steps to make it a little easier for homeownership, but there is still a lot of work to be done. OREA has a 10 point action plan to keep the dream of home ownership alive and build thousands of affordable homes right across Ontario.

  1. Implement as-of-right zoning along Ontario’s transit hubs to encourage transit-oriented communities and support the development of thousands of new homes.

  2. Reduce taxes for new neighbours by finding solutions to reduce development charges.

  3. Protect Ontario home buyers against new taxes. Municipal Land Transfer Tax (MLTT) powers should not be granted to other municipalities, as the tax is proven to reduce housing supply and makes it more difficult for middle-class families to purchase a home.

  4. Standardize existing legislation and municipal standards to bring uniformity to municipal by-laws on secondary suites and require that municipalities provide clear reasons for refusal to streamline the reapplication process.

  5. Give young families a tax break on their first home by removing the Provincial Land Transfer Tax for first-time home buyers.

  6. Eliminate the one-size-fits-all Growth Plan to provide municipalities across Ontario with the ability to accommodate more missing-middle housing.

  7. Create a more streamlined and transparent approval process by implementing clear guidelines and requirements for development applications.

  8. Stand with middle-class families and call on the Federal Government to fix and rebalance the OFSI stress test.

  9. Call on the Federal Government to rebalance Canada’s strict mortgage rules and extend the amortization period from 25 years to 30 years.

  10. Identify surplus public lands that have development potential and create partnerships with the private sector to build more housing on underutilized public lands

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