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Discrepancy debunks notion that construction industry is 'sitting on supply,' say developers

Ontario’s regional planning authorities are overstating the number of lots that are ready for construction by nearly a million housing units, according to a new study commissioned by groups representing the province’s building and land development industry, a discrepancy the industry says debunks any notion it is “sitting on supply.”

The study, conducted by urban development consultancy firm Keleher Planning & Economic Consulting Inc. (KPEC), concluded that there are only 331,600 “shovel-ready” lots available in the province, well below the 1.25 million figure cited by the Regional Planning Commissioners of Ontario (RPCO).

According to KPEC, many of the units counted by the RPCO are not ready for construction due to a lack of approvals, permits, or servicing allocations, with others previously rejected by municipal councils or under appeal to the Ontario Land Tribunal.

Furthermore, the study observed that the construction industry is operating at a multi-decade peak.

“With over 160,000 new homes under construction, you would have to go back to the late 1980s and early 1990s to find a similar level of residential construction in the province,” Justin Sherwood, senior vice-president of communications at the Building Industry and Land Development Association (BILD), one of the groups that commissioned the study, said in a press release. “Housing completions are also at a 33-year high, underscoring that claims of ‘sitting of supply’ do not match the reality on the ground.”

The number of shovel-ready units is significant because the province has a target of building 1.5 million new homes by 2031. The 331,600-unit figure would mean there is just a 2.2 year backlog of approved units.

Neil Rodgers, interim CEO of the Ontario Home Builders’ Association (OHBA), which co-sponsored the study, said the inconsistencies were a sign that municipalities should employ more uniform data collection themselves, rather than relying on the RCPO.

“Municipalities already have ‘use it or lose it’ powers under Ontario’s Planning Act and Building Code Act,” Rodgers said. “In addition to this legislative authority, a number of Ontario municipalities currently have ‘use it or lose it’ policies in place as it applies to servicing allocation.”

He said that measures beyond ‘use it or lose it’ aren’t needed and could harm future housing supply if not properly focused.

Sherwood also warned that overestimating approved units distracts from tackling real challenges such as land availability, approval processes, and infrastructure limitations, including water and sanitary services.

The Regional Planning Commissioners of Ontario (RPCO) did not immediately respond to requests for comment on the report.

Source: Financial Post