2020 must be the year of action on housing in the GTA
“May you live in interesting times,” goes the expression, and we may well live through very interesting times in 2020 when it comes to housing and the economy. The coming year needs to be the year that governments and citizens focus on dealing with the housing supply shortage in the GTA. Fortunately, 2020 may provide several opportunities to start to address this generational challenge.
Let’s first look at some of the challenges we face in the housing market and in the economy. Sales data for the GTA’s new home and resale markets for the last two quarters of 2019 show a return to inflationary pressure on prices, after a moderation in 2018 and persistent housing supply shortages. Simply put, demand is picking up, prices are responding and supply continues to fail to keep up with demand.
The Canadian economy is showing signs of slowing, including the shedding of more than 70,000 jobs in November and the slowing of GDP growth due in part to trade tensions amongst large Canadian trading partners. Interest rates lowered somewhat in 2019, lowering mortgage rates. With the economy slowing, the Bank of Canada is likely to maintain its neutral to negative bias. Shortages of skilled labour and trades are a persistent issue for the building and land development industry in our effort to increase supply.
Still, I am optimistic for 2020, because I believe these challenges will also present opportunities to close the housing supply and affordability gap. First of all, there is now a broad consensus that the building of much-needed new housing supply has been inhibited by layers of time-consuming bureaucracy and slow approvals. These barriers should start to lessen in 2020, as municipalities update their policies to meet new requirements under the Ontario government’s Housing Supply Action Plan and changes to expedite Local Planning Appeal Tribunal (LPAT) hearings, which aim to increase housing supply by cutting red tape and speed up approvals.
Lower interest rates provide prospective homebuyers with lower borrowing costs, easing the barrier to entry. In a slowing economy, government spending on infrastructure and job skills training provides stimulus and a bridge back to growth and job creation. All three levels of government have the perfect opportunity in 2020 to focus on city-building infrastructure such as transit, water main enhancement and waste water capacity and treatment, which in turn supports and enables housing creation.
To help more Canadians find good jobs, governments could give more support to training for the skilled trades. The building industry is one of the few where well-paying jobs are unlikely to be moved offshore. Building houses, townhouses and condo apartments provides jobs, tax revenue and investment opportunities, in addition to providing the housing supply required to ensure the GTA remains an attractive and desirable place to live.
The signals in our economy and the housing market point to interesting times in 2020. Let’s seize all opportunities to make this year the year of housing.
Dave Wilkes is President and CEO of the Building Industry and Land Development Association (BILD).