It is no secret that the housing market within the Niagara Region is booming.
Our region currently ranks the 5th best place in Canada to purchase real estate, with a population that is projected to double by the year 2041.
These statistics may seem encouraging; however as more and more residents continue to call Niagara their home, new challenges arise. These challenges include housing inventory and housing prices which average families can’t afford nor continue to maintain financially.
According to the Niagara Region Planning and Economic Development Committee, investment in building construction grew by 56% from 2015 to 2018.
In the southern part of the region, during the first quarter of 2019, 37 units were under construction, equating to more than $17 Million dollars, outpacing the previous year’s first quarter value which sat at $6.35 Million.
For a region that has suffered years of economic struggles, this current outlook may appear rosy, however with an average home selling for $450,000, many people are losing the dream of home ownership.
The owners of the homebuilding companies constructing these homes may seem like an easy scapegoat, but like the end user, the builders within the Niagara Region are feeling the financial frustration of provincial, regional and municipal roadblocks to building more affordable homes.
Let’s not forget about NIMBYism and those fighting against greater density as well as elected officials bowing to pressure from local special interest groups by denying these projects all of which directly affect pricing and supply.
Provincial legislation over the last decade has severely curtailed developable land supply thereby pushing the cost of the supply that is available to new heights. In addition, due to the massive amount of red tape, on average it takes 10 years for a builder or developer to complete a housing project in Ontario. The carrying costs of land add substantially to the end price of a home.
Adding to this is the fact that 22% of the cost of a new home is made up of government fees, taxes and charges. This amount exceeds the minimum down payment by the banking industry to qualify for a mortgage. These costs are incurred even before you have purchased the lot, dug the hole for the basement or any other materials that go into constructing a home.
When we take a look at these staggering facts and knowing that these charges are expected to escalate even higher, it is certainly no wonder housing affordability is out of reach for so many. These time lags and fees are incorporated into the housing project, which in turn are passed along to the end consumer, or homeowner.
The abundance of land and lower price tags on homes in the south end of the region has driven out-of-town investors, retirees and young families away from the hustle and bustle of big city life and into the rural communities of Niagara. However, with property tax levies in some municipalities 88% HIGHER than Mississauga despite fewer service offerings, some buyers are doing the math and walking away from purchasing a new home and choosing to stay with their status quo.
The Niagara Home Builders Association has been working tirelessly with all levels of government in order to address and work on a solution to the issues being faced by both the builders and homebuyers throughout the Niagara Region and across Ontario.
While we embrace the up-turn our economy has experienced over the past several years, we also need to find ways to allow all of our citizens to thrive and succeed in order for our Region to continue to grow for years to come. Most importantly is the need for all of us to work together in this new decade, to make housing more affordable and restore the dream of home ownership for Niagara residents.
Chuck McShane is the Executive Officer of the Niagara Home Builders Association. He served four terms as the President of that Association and was twice awarded Member of the Year. In 2016 he was awarded Member of the Year for the Ontario Home Builders Association for, among other things, his work to increase the availability of apprenticeships for Ontario’s youth.