Why are residential development taxes so much higher in Ontario than in other provinces (and so much higher than 20 years ago?)

We get asked this a lot. And the short answer is that there isn't good research on this. Yet. So here are some possible explanations. I want to stress that these are conjectures that need to be tested. So here goes:

1. Ontario municipalities have 10 billion+ dollars in unspent dev charge money, whereas other provinces (and the Ontario of 2005) does not. That's an obvious one.

Thread time. The Housing Accelerator Fund and Canada Housing Infrastructure Fund are in the news, as the Conservatives are promising to abolish them.

That would be a mistake.

But we should also recognize that the programs have some big problems and need to be overhauled. The core ideas behind the HAF and CHIF are outstanding. Municipalities lack funding but have also created regulatory barriers to housing construction. A "cash for reforms" program can make everyone better off and get more housing built. Win-win.

Quick thread about development charges. In most midsized Ontario cities, DCs go to exactly two things: Roads and Water/Wastewater. And soccer facilities if you're Kitchener.

The City of #ldnont provides a helpful breakdown. DCs on single-detached homes were 5K just 20 years ago We should not simply shift these road and water/wastewater costs onto property tax, income tax, etc. That doesn't solve the core problem and could accelerate sprawl.

Rather, we should be finding better and cheaper ways to pay for all of this.

Thread time. The #1 question I got asked at the Cabinet retreat was, "so... what are you working on next?", often with a nervous laugh.

We'll be launching something new and fun in the next 6 months. But I won't spoil that. But here's what I'm thinking about these days... #1: Development charges and the price of land.

A back-of-the-envelope calculation suggests that we'll never get middle-class housing affordability if per-unit development charges and the cost of land total over 100K. That's for units of any type, both ownership and rental.

At the end of 2024, we'll only be through four years of this decade. Despite that, we'll have added more people to our population than we did in any of the four previous decades. Needless to say, despite our total population growth being equivalent to past decades, our housing starts have not been.

(I'd use completions instead of starts, but CMHC killed that data series at the end of 2023).

We're about 1-1.5M housing starts short in the past 4 years.

I got a lot of feedback and comments on this. Some great, some… not. But a few of you pushed back on the idea that this was a deliberate decision to suppress wage growth.

Of course it was. Thread time…

https://twitter.com/mikepmoffatt/status/1822268966384845062

The response I got was “they weren’t trying to drive down wages, they were trying to get companies workers where there weren’t any”. But, remember, one of the big deregulations to this program was to expand it to regions with higher unemployment!

https://twitter.com/mikepmoffatt/status/1822271691449323932

Short thread time: How on earth did the number of low-wage temporary foreign workers nearly triple in 2022?

TL;DR - The federal government made some massive changes a mere 13 days after the Liberals and NDP signed the Supply and Confidence Agreement. The low-wage stream allows Canadian employers to hire temporary foreign workers for jobs that pay less than the provincial median wage. Note that this doesn't include agricultural workers; that's a separate program. In Manitoba, that's $25/hr.

Source: canada.ca/en/employment-…

This is unbelievably cool - a new website that maps out who got approved to hire temporary foreign workers, and where. Here's the data for City of Toronto.

I'm surprised "Dairy Freeze Inc." couldn't find a worker locally. Here is the tool that maps out Temporary Foreign Workers - Labour Market Impact Assessments. Thanks to the Missing Middle viewer who sent it our way.

lmiamap.ca

Thread time. I've seen a few tweets on here asking, "What the hell happened to Moffatt? He turned into such a doomer!"

It's not an unfair question (though it can be asked unfairly).

What happened: I genuinely believe things are getting much worse for adults under 30. Look at rents, home prices, happiness indices, homelessness, opioid deaths, employment rates, polling data on questions like "are you better off than your parents were at your age, etc. etc." and they're all moving in the wrong direction.

Short thread time. TL;DR version: We underestimate how affordable housing was in the 70s and 80s and overestimate how affordable it was post-2000 because traditional analyses ignore saving for a downpayment. Let's start with income. Here's how much nominal (that is, not adjusted for inflation) incomes have risen over time, for both single earners (that is, persons not in an economic family), and "economic families" (2 or more related persons, though not necessarily 2 earners).

Thread time. And it's a bit of an angry one.

We'll never solve our housing crisis so long as our system is dependent on planning, but the federal and provincial governments refuse to give municipalities the information needed to make those plans.

🧵 Our entire planning system, from housing to infrastructure to schools is underpinned by population forecasts. Project out how the population will grow over 20-25 years, perhaps have a high-medium-low case, and use that to make decisions, particularly municipal ones.

There's a fair bit of merit to the idea of shifting our property tax system to an LVT. But this gets the issue wrong.

An LVT makes it harder to build this kind of infill, not easier. Thread time.

https://twitter.com/CommonWealth_ca/status/1796947007707218227

The theory of change here is that greedy landowners are hoarding all the land. They could build, but it's more profitable not to. But if we taxed the land, their incentives would change and they'd build beautiful buildings like this. And that is a great building!

Thread time! Ontario is growing quickly, but different parts of Ontario are growing for different reasons - some through immigration, some through non-permanent residents, some through people moving there from the GTA. Let's take a look. 🧵 First, let's start by looking where kids are born. To control for population size, we'll do births per 1000 residents.

The places having a baby boom tend to be smaller communities in SW Ontario, which are more affordable to raise a kid. Also... Kenora.

Thread time on 2023 housing starts by province in Canada. Who did well, who didn't do so well, and who builds what type of house? 🧵 CMHC breaks data down into type of home (single/semi-detached, row/townhouse, apartment) and intended market (owner, rental, condo, co-op).

That's 12 different types of housing, though only 5 of them saw more than 2,000 units started across Canada in 2023.

Thread time! Budget 2024 is out. The biggest announcement is an increase to the inclusion rate on capital gains realized annually above $250,000 by individuals and on all capital gains realized by corporations and trusts from one-half to two-thirds. On housing… most of what’s in the Budget was already announced last week. But we do have a costing on the non-infrastructure parts – 8.5 billion over 5 years. But we do have a fair bit more detail on the plans, which is helpful.

Thread time. Not surprisingly, reviews are mixed about yesterday's federal housing plan. My question for both the supporters and skeptics is: "What would you like to see a government do... any government... to address the housing crisis?"

Some ideas below. The one I hear a lot is, "cut population growth". The federal government did that. Our population growth levels, which exceeded 1.2M, are going all the way down to 300K a year, a 75% reduction. This was confirmed this week by the Bank of Canada.

Link: bankofcanada.ca/2024/04/mpr-20…

Looks like the new federal housing plan is out! Will be reviewing over the next half hour or so. Follow this thread.

https://twitter.com/SeanFraserMP/status/1778804400359715100

WOW... this one is *huge* (and nerdy). The federal government is bringing back a 10% Accelerated Capital Cost Allowance for purpose-built rentals.

This was one of the key recommendations of both the National Housing Accord and Blueprint for More and Better Housing.

Thread time! Here's the TL;DR version.

Even if we could build homes for next-to-nothing, we're not going to bring back affordability for middle-class Ontario families unless we tackle high development charges and land costs.

Here's why. In the fall of 2004, @StandingHannah and I bought a home just like this one, on a lot this size, in the Stoney Creek neighbourhood in London, ON's northeast. The cost was $168,000, which is roughly $250,000-$260,000 adjusted for inflation.

Last week, I published a piece, saying that Ontario needed to build 1.7M homes in the next 10 years. A bunch of you asked me to come up with figures for all the provinces. So I did! My answer: Canada needs 3.5M homes in 10 years. A 🧵 and a link institute.smartprosperity.ca/Canadas-Need-f… Here's my piece from last week, on Ontario's need for 1.7M homes from 2021-31 (which, you will note, is higher than the 1.5M target).

Due to recent population growth, we revised upwards our estimates for Peel and Toronto, along with higher-ed towns like Waterloo and London.

Thread time, about affordability, density, and older (pre-WWI) suburban neighbourhoods, based on yesterday's picture that went semi-viral.

TL;DR version - affordability in older suburbs in larger cities requires density.

https://twitter.com/MikePMoffatt/status/1772352698743984416

There are 3 listings near that apartment building, two selling for roughly 900K, and one selling for 1M. The final two are on the exact same street as yesterday's new apartments.

New release! The Blueprint for More and Better Housing

It has 10 recommendations across all orders of government, supported by 140 different specific policy actions.

Check it out here:

THREAD TIMEhousingandclimate.ca/blueprint/ A group of 15 of us got together to come up with a blueprint on how Canada can solve our housing crisis.

You'll recognize many of the names below.