Toronto's Affordable Housing Program Stalling Before It Starts

In 2019, Toronto unveiled an ambitious affordable housing program called Housing Now that envisioned building thousands of affordable rental apartments units in the city.

The city agency tasked with developing the affordable rental portfolio, CreateTO—which has been mired in delays for nearly three years—recently issued a report identifying 11 projects it says will be the first phase of 21 multifamily developments the agency says it has in its pipeline.

CreateTO said it expects to break ground by Q2 2023 on three projects which will encompass 3,024 units, 1,510 of which to be offered at rates below the city’s average market rents, according to a report in the Toronto Star. The projects were originally scheduled to be built in 2020.

However, timelines have not been set for the eight other projects in phase one, and city officials now are concerned that rising rates and the resulting slowdown in new housing development may produce another year of delays in 2023 for what has been called Toronto’s “signature” affordable housing program, the newspaper said.

CreateTO CEO Vic Gupta warned in the agency’s report, released last week, that rising interest rates and a “rapid escalation” of construction costs threaten to “significantly impact” the agency’s ability to move ahead with the initiative as planned.

For the Housing Now program, which is to be developed in three phases, Toronto is prepared to allocate about $1.3B in land, staff resources and financial incentives including relief from development charges and building permits, with the incentives worth an estimated $434M. The mixed-use projects, which will rely on development partners, also are expecting an infusion of federal funds.

CreateTO has cited numerous reasons for its delays in getting the program off the ground, including disruptions caused by the pandemic to the completion of transit line. More recently, the agency said it has been unable to obtain “acceptable” financing from the Canada Mortgage and Housing Corp.

If Housing Now stalls again before it really gets started, more than Toronto’s can-do image will be impacted: the city’s waiting list for affordable housing surged to more than 81,000 households as of the end of September.

With rents still at record levels, the demand for even moderately affordable housing in Toronto is overwhelming: a newly built apartment campus that recently opened up applications for 100 affordable units immediately received more than 1,200 bids, the Star reported.

In the third quarter, the demand for rental units in Toronto soared due to reaccelerating population growth and increased barriers to home ownership, Colliers said in a Q3 multifamily market report.

At the end of September, the average rent in Toronto was up 17.1% year-over-year for a one-bedroom unit and up 24.3% for a two-bedroom unit, Colliers said.

At the same time, construction of new purpose-built rentals has nearly come to a halt with only two rental projects, encompassing 314 units, starting construction over the last two quarters.