An Ontario city smashed its new housing targets by 250%. But are prices going down?
On paper, Kingston, Ont., is doing everything the provincial government has asked it to do on housing — and more.
The city was told to get building work underway on 587 new homes in 2023 as part of the province’s push to build 1.5 million new homes. By the end of the year, Kingston had achieved 250 per cent of its target, with 1,465 housing starts.
The benchmark price for a home in Kingston in February 2024 was $543,800, down 0.3 per cent from the same time last year. Nationally, the Canadian Real Estate Association had the average price at $685,809, up 3.5 per cent year over year.
So, is the provincial government’s plan to build 1.5 million homes working? Are stable prices year over year in Kingston a sign that the Ford government’s housing plan will work, or are other factors at play?
Ahead of the 2022 election, the Progressive Conservatives embraced a new promise on the housing file. They pledged to boost the number of new homes in Ontario by 1.5 million in the decade leading up to 2031.
Ontario Premier Doug Ford promised his government would do everything in its power to reduce red tape and allow for more homes to be built. The province’s plan ranges from opening up new land on the edge of cities — and briefly in the Greenbelt — to offering financial incentives to cities that exceed their housing goals.
Kingston is something of a laboratory to test if the province’s housing policies are working: it exceeded its 2023 housing start targets, reaching 250 per cent of the goal it was set; it also has an ever-fluctuating population of students; and the town attracts a growing number of retirees, along with people moving to Kingston from Toronto and further afield.
Two large educational institutions — Queen’s University and St. Lawrence College — attract thousands of young students every year, putting constant pressure on the rental market. Meanwhile, a series of jail facilities, along with academic jobs, a major hospital and a large military presence, provide stable employment and the town’s historic nature makes it a natural place for many to retire.
In short, despite a population of fewer than 150,000 people, Kingston is defined by many of the characteristics that drive the cost of homes across the province.
“We are a very transient market, to be honest,” said Erin Finn, president of the Kingston and Area Real Estate Association, in an interview with Global News.
“We are getting people that are coming in for one to two years. The student population has always spurred us a little bit … but what really fuels our spring market is the military moves.”
Military postings in the spring and veterans choosing to retire in the town where they may have received their education are part of that push, she said.
Current average listing prices in Kingston are not as high as they have been in the past but they’re not cheap, either.
Average listing prices in the city peaked at just under $750,000 in early 2022. While that number has dropped to $543,800 in 2024, it still sits far above historical rates. Through much of 2015 to 2018, listing prices in Kingston sat between $250,000 and $350,000.
The city’s spring market is picking up compared with last year, Finn said, and shows signs of growth. Active listings are up 21 per cent, with more homes on the market overall.
Most of the listings, however, are resales, with new homes not coming in at the lower end of the market.
Finn said she has found new builds are “not moving as quickly” in Kingston as older properties being resold, with many in the higher price brackets.
“As far as new builds go, there’s still quite a bit of inventory for those right now,” she said.
“They’re kind of in the higher end and the people we’re seeing trying to get into the market right now are those first-time buyers, trying to get out of the rental market.”
Finn said first-time buyers in Kingston are looking at homes around or under $450,000. She said homes above $800,000 are “not moving very quickly.”
Kingston Coun. Vincent Cinanni said he had seen developers move away from single and semi-detached family homes and even the buying and selling market altogether. He said the city’s red-hot rental market — driven by students and graduates who can’t afford to buy — has made rental properties particularly appealing to builders.
“It’s more affordable than ownership in a lot of cases too because the mortgage rates are pretty high. I think there’s more of a demand for renting in Kingston at the moment,” Cinanni said.
“We’re seeing a lot more higher density rental units coming in.”
The high demand for rental properties in Kingston, particularly among students, is driving a push to build more short-term let units. That means Kingston’s high number of housing starts could ultimately end up on the rental market passing hands between student generations, instead of offering more choices to first-time homebuyers.
Asked if the burst of new units coming online had helped to reduce prices in the city, Finn suggested it had not.
“I wouldn’t go that far,” she said.
“We definitely are still seeing a push from outside the Kingston area — buyers coming in from the Toronto area, even further west, and they’re looking to settle here. Our prices are still cheaper than most of the rest of the province.”
She said the market in the eastern Ontario town is “kind of in a plateau.”
Asked if it was monitoring whether increasing the housing supply was adequately addressing house prices, the Ford government pointed to its housing affordability task force.
“We are not building enough to meet the needs of our growing population,” the task force wrote in early 2022.
“If this problem is not fixed — by creating more housing to meet the growing demand — housing prices will continue to rise. We need to build more housing in Ontario.”
Ontario Green Party Leader Mike Schreiner said the province’s approach encouraged “sprawl” and is making housing unaffordable.
“The homes are unaffordable for people, the long commutes are unaffordable for people, and it’s unaffordable for municipalities because they then have to build additional infrastructure rather than building homes,” he told Global News.
Schreiner said Guelph, Ont., and Kitchener, Ont., had been able to get to their housing targets by building more affordable, denser homes. In particular, he said the cities had allowed four-unit homes to be built as-of-right, lowering costs.
“If you can put four homes on one piece of land, that is far cheaper than having to buy additional parcels of land to house people,” he said.
Marcus Plowright, a London, Ont., real estate agent, said there were not enough new supportive or deeply affordable homes coming online in the province.
“We need that significantly more than we need a single-family home — we need starter homes,” he said.
“Anything above a starter home or a townhome or a supportive housing or affordable housing we don’t need.”
The demand from outside Kingston is mirrored in cities across the province and country.
The Greater Toronto Area, in particular, sees demand from across the world with many new Canadians landing at Toronto Pearson International Airport and settling nearby.
That high demand on Ontario’s housing market means that pumping out more than one million new homes does not necessarily mean prices will go down, one expert said.
“I think there is something to be said for what the government is trying to do in holding out a bit of a carrot and trying to set targets for different municipalities,” John Lusink, president of RealServus Holding Corp., told Global News.
“Unfortunately, … there’s still an overwhelming demand that isn’t going to be met. And a big chunk of that is of course thanks to the policies around immigration and new Canadians.”
The federal government is currently targeting 485,000 new permanent residents in 2024 and 500,000 in both 2025 and 2026.
Michael Trendota, a lecturer at Queen’s University in real estate management and development, said the goal of 1.5 million homes has the “potential to work” and reduce house prices but it isn’t clear if it has worked yet.
“The housing shortage is deeply rooted in decades of developers and development being treated as ‘the enemy,’ and something that should be prevented,” he told Global News.
“The reality is that without private sector developers, homes will not get built.”
Coun. Cinanni pointed out that developers in his city are waiting for lower interest rates, something neither the municipal nor provincial governments can control.
Other developers are ready to build and ready to borrow but can’t find workers to complete their projects, he said.
Speeding up the municipal development process and getting more home projects underway essentially triggers a new bottleneck: labour.
“One of the challenges that developers see on the horizon is a sudden glut of construction,” Trendota said.
“Projects that have been in the works for years are finally getting approved by municipalities — so many projects can start building at once. The issue then becomes the shortage of skilled trades — the men and women who build the homes.”
At its most basic, economy theory means a shortage of something raises its price as people compete for it. As more developers get ready to build, that can mean they compete for the same workers and force up the price of labour.
“It is very much a damned if you do, damned if you don’t,” Lusink said.
He said the government needs to introduce “consistent” housing legislation and not make more changes to the rules. “Remove as much tax as possible, red tape,” he added.
Even in Kingston, where the local council has smashed through its homebuilding targets, the lack of available workers is being felt.
Finn said in Kingston there was “a gap” for some time, with no new homes coming online.
“There was nothing available new build for us for quite some time — late 2022, early 2023,” she said.
“So now we’ve seen a bit of a shift because we have these available properties that are new builds. The problem being, they’re not being built as quickly as necessary because of the lack of skilled trades.”
Categories
Recent Posts
