The housing crisis is no longer an abstract concept. It is very real – and measurable – across the country.

The affordability of housing, measured by the ratio of homes prices to median household income, has declined dramatically over the past two decades.

Toronto and Vancouver are now poster children for the worst housing affordability. The cities rank first and second worst, respectively, among the 25 largest metropolitan areas in the US and Canada.

The home price-to-income ratio in Toronto is 9:6, up from 5:5 in 2005 while Vancouver is at 12:5, up from 7:4. Proof of the problem is in the large number of stalled projects and empty sales centres.

Interest rates, material costs and economic headwinds all have a role to play in the decline, but an equally powerful – and more controllable – force is at work, namely an increasingly complex web of municipal green development regulations that are layered on top of provincial rules.

Regulatory Mazes Hike Costs

The province has tried to assert clarity and consistency through the Protect Ontario by Building Faster and Smarter Act and the proposed Fighting Delays, Building Faster Act, two pieces of legislation aimed at streamlining approvals and curbing the ability of municipalities to impose green building standards that go well beyond the Ontario Building Code.

However, as RESCON noted in a recent letter to the Ministry of Municipal Affairs and Housing, this has not translated into practice.

Municipalities across the GTA and beyond continue to apply green development standards through planning approvals, even if they can not technically amend construction standards directly. The result is a regulatory maze that adds substantially to construction costs, and results in delays.

In Durham Region alone, the Town of Ajax, City of Pickering, Town of Whitby and Municipality of Clarington each maintain their own green development standards, while the City of Oshawa does not. Now, the Region of Durham is developing a regional overlay. Even within a single upper-tier government, neighbouring municipalities have adopted divergent frameworks.

The City of Toronto, and towns of Halton Hills, Whitby and Ajax rely on tiered mandatory systems while Brampton, Markham and Vaughan use points-based approaches requiring minimum thresholds.

For builders operating in multiple jurisdictions, each application becomes a new exercise in interpretation.

Consumers aren’t Asking for Measures

Green building standards alone can add between three and 12 per cent to construction costs, depending on the municipality and housing type.

At the lot level, additional measures carry discrete price tags: soak-away pits at roughly $6,000 per lot; bioswales at $4,000; permeable paver driveways at $20,000; and rain barrels at $800.

In some jurisdictions, compliance with new green development standards has been costed at $30,000 to $50,000 per unit.

Worse, many homeowners later remove or alter these features, suggesting they were not a priority.

The real question is not whether sustainability matters. It is who decides, how consistently and at what cost.

Home buying consumers are not asking for nor demanding the measures that municipalities are mandating in their green development standards. They merely slow down the approval and construction of new housing while inflating costs.

Delays Can Be Devastating

Fifteen years ago, development approvals were measured in months. Today, they are measured in years. Every study, soil specification, glazing analysis or electrical capacity review requires consultants, revisions and municipal review cycles. Even where costs appear modest in isolation, cumulative delay can be devastating in a high-interest-rate environment.

If municipalities continue to impose their own individual standards, it only perpetuates a system that prices out buyers and suppresses supply. Ontario cannot afford this type of paralysis.

We are facing the most pressing housing affordability crisis in generations. Municipalities need to be reined in with respect to what they can and can’t include in the scope of an application. Otherwise, we will have no hope of delivering new housing that Ontarians can afford.

Too Much Regulation is Making New Homes Unaffordable by Richard Lyall | Canadian Real Estate Wealth