OTTAWA — A new report reveals a significant backlog in home construction in the Greater Toronto and Hamilton Area (GTHA), where for every house being built, there are 12 that have received all necessary approvals but remain unstarted. This backlog amounts to approximately 1.2 million homes, contributing to Canada’s ongoing housing crisis. The report, set to be released Tuesday by CivicAction, emphasizes that this issue is not only local but a nationwide concern.

CivicAction attributes the gap between planned and actual home construction to several structural challenges. These include outdated municipal planning processes, financing models that favor high-end developments over affordable housing, and a shortage of skilled labor in the construction sector. Leslie Woo, CivicAction’s CEO, stated, "The housing crisis in the 26 municipalities that make up the Toronto-Hamilton area and other cities across the country won’t show much of a reprieve until these structural problems are resolved."

Woo highlighted the need for innovative financial models aimed at affordable housing, increased mobilization of pension capital, and enhanced collaboration among governments, developers, lenders, and non-profits. She remarked, "There is a solution but we’re just not getting our act together. We’re just nibbling at the edges."

The report underscores that Canada’s housing crisis stems from a complex mix of factors, including rising home prices, lost job opportunities, and increased homelessness. The average price of a new home in Canada has reached $1.07 million, exacerbating the affordability issue for many potential buyers. Economists argue that the crisis is primarily due to insufficient housing supply, which they believe could be alleviated by increasing the number of homes available for both buyers and renters.

The Canada Mortgage and Housing Corporation (CMHC) has indicated that the country needs to double its housing output to about 500,000 units annually by the mid-2030s. However, CMHC forecasts show little progress, with an expected 237,800 housing starts this year, a decrease from 245,367 in 2024. Projections suggest further declines in subsequent years, highlighting ongoing challenges such as land access, skilled labor shortages, and rising construction costs.

Taxation remains a significant factor in the cost of new homes, with a recent study indicating that taxes and fees account for an average of 35.6% of the total price, a notable increase from previous years. Development charges for essential services like sewer and water, along with land-transfer taxes, contribute heavily to this burden. Additionally, the costs of land, materials, and labor have also risen, further complicating the housing landscape.

All levels of government acknowledge the urgent need for more housing and are exploring solutions. The federal government recently introduced the Build Canada Homes program, a $13 billion initiative aimed at accelerating the construction of affordable homes. Prime Minister Mark Carney stated that the program will help reduce upfront building costs and attract private investment.

Provincial and territorial governments are also taking action, focusing on optimizing underused land and reducing bureaucratic hurdles. Municipalities play a crucial role in housing development, controlling zoning and land use, and are responsible for essential services that can delay construction. Some municipalities in the Toronto area have recently reduced or eliminated development charges to encourage more housing projects.

The demand for housing continues to rise, driven by population growth from immigration and urban migration. This demand places additional pressure on housing prices. The CivicAction report, funded by TD Bank Group, also highlights the economic implications of the housing shortage, noting that 68% of businesses in the GTHA struggle to attract talent due to high housing costs. The ongoing housing crisis poses significant social and economic challenges for the region and the country as a whole.