Press Releases
The Impact of Zoning Laws on Toronto's Housing Market
Inclusionary Zoning and Its Constraints
Toronto's housing market has faced challenges with affordability, influenced by zoning laws. A critical measure introduced in January 2022, known as inclusionary zoning, mandates that new developments in specified areas include a portion of affordable units. This policy aimed to address the housing affordability crisis in the context of rapid population growth and a predominance of condominium developments over purpose-built rental units. The effectiveness of inclusionary zoning, however, has been limited. Reliance on private developers and neoliberal market principles has not adequately tackled the systemic issues of housing inequity. The focus on market-driven solutions has resulted in a limited increase in affordable housing availability.
In addition to inclusionary zoning, the removal of minimum car parking requirements for new developments well-served by transit has influenced the market. Implemented in December 2021, this policy aimed to reduce development costs and promote more housing proposals. The immediate impact included a surge in development applications before the new rules took effect, followed by a lull. These adjustments aimed at reshaping the housing supply, yet the expected long-term effects on affordability remain uncertain.
Provincial Policies and Housing Dynamics
Provincial policies such as Bill 23, the More Homes Built Faster Act, have further shaped the housing landscape. This legislation replaced Toronto's inclusive zoning bylaw with a narrower regulation that applies only within 800 meters of major transit station areas. Simplified rules led to an increase in large applications around these areas despite maintaining affordable housing requirements within those zones. The localized focus around transit stations aimed to create higher-density living spaces, improving access to transportation while attempting to address some affordability issues.
The implementation of zoning laws also directly influences who can find a home in Toronto. The regulations impact the types of residences available and the resident demographics. This influence extends beyond traditional family structures to singles, roommates, and friends seeking cohabitation. Unconventional living arrangements, such as communal living groups or multi-generational homes, are gaining traction as individuals search for stability and affordability. Zoning laws that either support or restrict these arrangements deeply affect overall housing market dynamics.
Efforts to mitigate housing shortages included adopting broad upzoning measures. Converting single-family zoning into multiplex zoning now allows for up to four units on lots previously zoned for single-family homes. This theoretically increases housing supply. However, real estate valuation principles suggest these measures might raise home prices by increasing land value based on potential maximum utility rather than current use. Observations in Vancouver reflected similar upzoning outcomes, where higher property prices emerged without an adequate increase in new housing construction.
Public Opinion and Municipal Initiatives
Public opinion in Toronto has generally endorsed the push for more multi-family homes. A poll indicated that 69% of Torontonians favor constructing more such units, even at the expense of fewer parking spots or detached homes. This preference reflects the mounting demand for affordable housing amidst rising mortgage rates and a tight housing market. The city's Expanding Housing Options in Neighbourhoods (EHON) initiative, which encompasses the legalization of multiplexes, aims to provide various housing options to meet the needs of a growing population. The initiative presents a way to address the housing shortage by allowing more low-rise housing in residential areas, potentially reducing emissions and better utilizing urban land.
Despite these efforts, experts argue that zoning changes alone are insufficient to solve Toronto's housing crisis. The "yellowbelt," comprising 31.3% of Toronto's total area and predominantly zoned for single-family homes, remains a considerable barrier to higher-density development. Recent approvals for two, three, and four-unit multiplexes aim to tackle this issue. However, financial constraints and rising construction costs continue to impede progress. The average income in the Greater Toronto Area has remained stagnant while home prices have soared. This highlights the mismatch between housing supply and affordability, illustrating the challenges in aligning policy goals with market realities.
Constraints and Comparisons
The broader context of Canada's housing crisis includes geographical constraints, high inflation, and restrictive zoning laws. Collectively, these factors limit the ability to build new housing. Lengthy approval processes further exacerbate supply bottlenecks, making it challenging for developers to meet demand. In contrast, cities with more relaxed zoning laws and streamlined approval processes, such as Edmonton, have better managed to keep housing prices in check. This comparison underscores the impact of regulatory environments on housing supply and affordability, illustrating the complexities of implementing effective zoning reforms.
Toronto's housing market dynamics illustrate the intricate interplay between zoning regulations, market forces, and demographic shifts. Municipal and provincial policies aimed at addressing housing shortages have shown mixed results. Inclusionary zoning mandates, the removal of parking requirements, and broad upzoning measures have all contributed to shaping the current housing landscape. However, the reliance on market-driven solutions, financial constraints, and restrictive zoning areas such as the "yellowbelt" present ongoing challenges. As efforts to find a home in Toronto continue, a multifaceted approach that considers economic, demographic, and regulatory factors remains essential to addressing the city's housing crisis effectively.
