Sometimes the Simple Solution Is the Right One

Occam’s Razor is the philosophical principle that suggests, when you are faced with multiple hypotheses or suppositions for the same phenomenon, the simplest explanation is likely the best.

Sometimes, we make problems more difficult by implementing complicated solutions. The housing supply crisis is an example. 

If we learned anything from a housing summit hosted recently by RESCON, it was that the fixes are right in front of us, but we’re making it difficult. Governments are not moving fast enough to remove hurdles, which will only lead to more pain for our industry and the economy.

A plethora of prominent construction industry experts, professionals and stakeholders told the summit that the hurdles standing in the way of new home construction now are the same as years ago – namely, the heavy tax burden, red tape and bureaucracy, and outdated regulatory protocols.

To solve the crisis, we must act now. Remedies are available to address all three issues – we just need to put them in place.

Alberta Has Taken Action

Alberta is a good act to follow. That province is currently producing the same amount of housing as Ontario but has one-third the population.

Why?

The government of Alberta has made housing supply its number one priority. Provincial politicians there realize that housing is critical to the well-being of its citizens and economy. Therefore, the province has taken decisive action to reduce fees on new housing and compel municipalities to implement changes that eliminate overly burdensome regulatory protocols.

And, if municipalities don’t act to ensure homes are built faster and more affordably, the province will step in.

The proof is in the pudding. Alberta leads all provinces in new housing starts, with nearly 28,000 homes underway in the first half of 2025.

The same needs to happen across the country and, especially in Ontario, where the tax burden accounts for 36 per cent of the cost of a new home.

Taxes Need to Be Reduced

The federal government got the ball rolling by announcing a break for first-time buyers who account for roughly 35 per cent of the market. They have agreed to cut the five-per-cent sales tax on new housing up to $1 million for first-time buyers and decrease it on a sliding scale for first-time buyers of homes purchased between $1 and $1.5 million, retroactive to May.

However, the Ontario government has not followed suit. Earlier, the Ford government indicated it would follow the feds and eliminate the eight-per-cent provincial sales tax for first-time new home buyers. But now, the province is now backpedalling on that commitment.

RESCON builders maintain that the sales tax, in fact, should be extended to all buyers of new homes – not just first-timers. Such a move would bring down costs and result in more housing being built, which would lead to an easing of the housing crisis, more construction jobs, an improved economy and more tax revenue.

Everybody wins.

Presently, on a new home worth $1 million, buyers are paying $130,000 in sales taxes alone.

Housing Targets Out of Reach

There appears to be a deep chasm between what governments have promised and what is actually happening in the housing market today.

At our housing summit, Marlon Bray of Clark Construction Management noted that the math on housing just isn’t adding up or, in his exact words, “the math ain’t mathing.” Few starts are expected, and a drought of housing is anticipated, especially across the Greater Toronto Area.

The federal government is promising 500,000 new homes in each of the next 10 years, while the Ontario government is sticking to its figure of building 1.5 million homes between 2023 and 2031.

There is no danger of either government hitting those targets – certainly not at the current rate of building. Today, it takes too long and costs too much to build housing. Buyers can’t afford the price.

The outlook for the homebuilding industry is grim just now. In Toronto, housing starts are near a 30-year low, and sales have ground to a halt. The weakness is expected to continue through 2027.

The silver lining in all of this is that the situation can be corrected – but only if we change course quickly.

When the last major housing crisis hit in the early 1990s, we didn’t have the same level of taxes and red tape. This is a bit of good news because both are under our control and can be fixed.

However, time is of the essence. The industry is suffering, and layoffs are mounting. Our governments need to put the changes in place sooner rather than later.