You can't build enough affordable housing to outpace erosion of existing units, housing expert says

Increasing supply alone will not address excess home prices, a national housing expert told the York Region housing affordability task force.

The proposal in a new provincial report that building 1.5 million new homes over the next decade will address the housing crisis is a "spurious" one, said Steve Pomeroy, housing research consultant and senior research fellow in the Centre for Urban Research and Education (CURE) at Carleton University, in a Feb. 17 presentation.

Using Ottawa as an example, Pomeroy described how building more doesn't necessarily lead to more affordability.

Developers purchase 1950s, post-war bungalows situated on large lots for up to $700, 000, he said. The homes are torn down and semi-detached homes, selling for $1.4 million each, are built in their place — doubling supply but also more than doubling the price.

Much of Pomeroy's presentation centred on renters — who make up 31 per cent of the population — and how the dramatic increase in rent levels are having a significant negative impact on low-income individuals.

Every time vacancy rate goes down, rents go up because we have a system of vacancy decontrol, said Pomeroy.

Pomeroy's comments echo those of Newmarket Mayor John Taylor, who told NewmarketToday the province's report is "conceptually flawed" in proposing that the housing crisis can be solved by increasing supply alone.

According to Taylor, Newmarket is already dealing with low vacancy rates for renters, particularly due to an influx of new residents.

"I keep saying I don't know if we can build enough rentals to meet demand."

The median income of renters is half the median income of owners, said Pomeroy, "because poor people rent. Not all renters are poor but poor people all happen to rent."

A critical issue in affordable housing, he said, is the erosion of existing, affordable lower-rent units — something not referenced in the province's report.

"While we're so preoccupied with supply, we're forgetting to look over our shoulder."

Each year in Canada, 64,000 existing units are lost — 20,000 in Ontario alone.  The national housing strategy is planning to build 16,000 new affordable units per year, Pomeroy said.

If 16,000 are built while 64,000 are lost, that means for every one built, four are lost, he added.

"A lot of the diagnosis of price increase has been centred on the rhetoric of we just have insufficient supply; if we fix it, everything will be OK. I would argue that if you don't diagnose the problem correctly you won't come up with the right prescription." 

As of December 2021, the region has a housing supply of an estimated 47,607 units. Within this supply, there are 7,670 registered unbuilt units, and an additional 28,988 draft approved units, according to a memorandum by staff.

There are 255 registered apartment units in Newmarket and an additional 1,382 are proposed under application, bringing the total supply to 1,607. Currently, none of the applications have been draft approved.