Ontario's housing crisis continues to worsen despite significant government investment. Premier Doug Ford's administration has allocated $5.2 billion to two major initiatives aimed at accelerating housing construction and increasing supply. However, recent data indicates that the province's housing situation is deteriorating.

A new study from RBC reveals that Ontario's six-month housing start average has dropped to its lowest level in a decade. The Canada Mortgage and Housing Corporation reported a 25% decline in housing starts in July compared to the same month last year. In contrast, most other provinces, except British Columbia, have seen double-digit increases in housing starts. In the Toronto area, new home sales have reached their lowest levels since the 1990s, leading to a surplus of unsold homes. Currently, selling a completed home can take up to 20 months, which is nearly double the time expected in a healthy market.

Housing Minister Rob Flack acknowledged the severity of the issue, stating, "Potential new home buyers have hit the pause button. We’ve seen the housing market come to a standstill." Despite this, the Ford government has increased funding for the Municipal Housing Infrastructure Program by $1.6 billion, bringing the total to $4 billion. This program is designed to assist municipalities in building essential infrastructure, such as roads and bridges, to support future housing development. However, it does not directly address the immediate need for faster or more affordable housing.

Municipalities are eager to receive provincial funds but are not required to reduce development charges, which typically cover infrastructure costs related to growth. The province's other initiative, the $1.2 billion Building Faster Fund, aims to incentivize municipalities to meet housing start targets. Yet, only 23 out of 50 municipalities have met these targets, and the program does not effectively link funding to the issuance of building permits.

Critics argue that both programs focus on increasing housing supply, which is beneficial in the long run, but do not tackle the pressing issue of housing affordability, particularly in the Greater Toronto Area. The high prices of new homes are a significant barrier for potential buyers. For instance, a new home priced at $1 million includes approximately $130,000 in federal and provincial sales taxes, which are not visible to buyers as they are embedded in the overall price.

Despite the willingness of both provincial and federal governments to invest billions in housing solutions, they have not addressed the taxation of housing. Experts suggest that reducing or eliminating these taxes could significantly improve affordability. For a brief period, it appeared that Ford might consider removing the sales tax on new homes, contingent on a similar move from Prime Minister Mark Carney. However, Carney did not agree, and Ford later indicated that the provincial finance minister deemed it "a lot of money."

Calculations from the Missing Middle Initiative and the Building Industry Land Development Association estimate that eliminating the federal sales tax could save Ontario home buyers $714 million annually, with a national cost of $2 billion. Additionally, the provincial sales tax elimination would cost around $895 million per year. If both governments implemented these changes for two years, it could help clear the backlog of unsold homes and stimulate new development, ultimately making housing more accessible.