How much housing failure can Ontario's economy endure?

So many Ontario economic indicators are pointing down, and the failure to build housing could be the key to understanding why

Month after month the Ontario PC ‘s approach has absolutely failed to spur housing construction, and October was no different, according to data released by the Canada Mortgage and Housing Corporation this morning.

There were under 5,500 Ontario housing starts last month. That’s only 44 per cent of the 12,500 per month pace needed to meet to hit the target of 1.5 million units by 2031 set by the Housing Affordability Task Force and accepted by the Ford PC government.

Housing data can bounce around month to month. But this isn’t statistical noise. Mark up a big F for fail because in four of the last five months Ontario housing starts have been less than 50 per cent of target. This government hasn’t hit a single target since they adopted them in June, 2022.

Twenty-nine months later, 211,980 new units have been started, 150,520 homes less than needed. The shortage that has been added by this government is enough to housing perhaps 300,000 to 500,000 people — a significant-sized city.

Broader economic impacts going unexamined

Housing scarcity increases renting and buying prices. It costs jobs in the residential construction industry. In May, Data Shows research showed BC’s big housing push was paying off with jobs and paycheques while Ontario slumped.

But there seems to be almost zero media attention on how this self-inflicted housing crisis hurts Ontario’s broader economy.

There is occasional acknowledgement that while Ford’s policies aren’t building much housing, they are spurring the growth of tent cities. Workers who can’t pay for a home become homeless. And for those unable to work because of disability, living on under $16,500 a year on Ontario Disability Support Program, the housing crisis is a complete catastrophe.

But with the asking price of a Toronto one bedroom apartment now at almost $2,400 a month or nearly $30,000 a year, it’s not just those relying on social assistance who can’t make ends meet. A worker earning $25 an hour and working 40 hours a week takes home just over $40,000 a year after source deductions.

Rising costs means an increasing number of people have nothing left after paying for food and rent. The rising housing crisis has combined with food inflation to become a general affordability crisis for many. And when fewer people have money to spend, it’s a problem for everyone, not just a few.

Consumer spending drives the economy, particularly the services sector. In most developed economies, consumer spending generates about two-thirds of GDP.

Ontario’s affordability crisis goes a long way to explaining why August retail sales in Ontario were lower than May 2022 though, outside Ontario, they are at a new peak.

Low consumer spending drags down everything else. Ontario’s unemployment rate is worse than the national rate. Ontario’s average wage is falling while rising elsewhere. Unionization is in decline.

There’s only so much housing failure an economy can survive. There’s only so much economic failure a good society can survive.

Fixing Ontario’s economic challenges not the priority

Added to the retail sales problem, the province’s manufacturing is declining, affecting jobs and reducing income from export sales (Data Shows will take a closer look at sales data tomorrow).

But despite these overlapping challenges, the top priority of a premier elected to “get it done” on housing and jobs is ripping up bicycles lanes in downtown Toronto.