The population forecasts underpinning Ontario's Growth Plan for the Greater Golden Horseshoe substantially underestimated population growth since 2016 from international sources, specifically immigration and international students, particularly in the Greater Toronto Area and Hamilton (GTAH) region. In just five years, Ontario's population of adults grew by several hundred thousand more than forecasted, each of whom needs a place to call home.
Despite the population growing more rapidly than forecasted, the housing stock in 2021 in most GTAH communities fell short of the forecasts made in 2012.
These forecasts matter, as they help determine the size of the housing supply. In 2015, a provincial advisory panel, examining the Growth Plan noted that "Forecasts are fundamental to the Growth Plan and essential to its effectiveness because they enable municipalities to plan for and manage the growth that is coming, and to assess whether they have enough land to accommodate forecast growth within existing settlement areas."
The underproduction of new housing supply coupled with population growth exceeding forecasts created excess demand for housing in the GTAH. This imbalance between housing demand and supply contributed to high housing prices and the migration of young families out of the GTAH to other parts of the province that occurred well before the pandemic. In each of the three years before the pandemic, over 40,000 persons, on net, moved out of the GTAH to other parts of the province, over double the pre-2014 average.
Despite Ontario's booming population growth, the GTAH's population grew slower than forecast due to out-migration from a lack of building homes.
There is a genuine (and we would argue quite likely) possibility that the future may look a great deal like the past and that current forecasts are underestimating population growth and overestimating future housing completions. Past forecasts underestimated GTAH population growth from international sources by roughly 120,000 persons from 2016-21 while overestimating the size of the housing stock by approximately 26,000 units, contributing to the excess demand for housing.
While population and housing forecasts that missed the mark are not the sole factors in Southern Ontario’s housing shortage, they played a contributing role and may well do so in the future. Ontario’s housing shortages could have been reduced with a more agile forecasting process and contingency buffers built into the Growth Plan so unanticipated increases in population could be housed. Things may have been different had the Ontario government not used population forecasts from 2012-13, which predated transformative changes to international student and immigration policies in 2014 and 2015, in the 2017 Growth Plan. A lack of policy coherence led Ontario to forecast to failure.
Ten key points from this report
- The Growth Plan for the Greater Golden Horseshoe (GGH) and the municipal plans built on that plan are grounded in housing and population forecasts. These forecasts become stale quickly, as populations grow faster than anticipated, as forecasts do not anticipate policy changes that lead to faster population growth. Municipal plans are not revised to reflect the new reality despite forecasts rapidly becoming outdated.
- Housing shortages occurred in the GTAH (Greater Toronto Area and Hamilton), partly because populations grew faster than forecast and partly because housing completions in municipalities did not hit the (already too low) minimums set out in the Growth Plan.
- Relative to a 2012 forecast, the GTAH's population growth from 2016-21 from international sources was over 120,000 more than forecast, yet it currently has 26,000 fewer housing units than forecasted in 2012.
- The lack of housing causes a significant and unforecasted exodus of young families out of the GTAH who drive until they qualify to other parts of the province. In 2012, it was forecasted that, on net, 36,000 people would move out of the GGH to other parts of the province from 2016-21. The actual number was over 100,000. This exodus caused the housing shortage to spread across Southern Ontario, leading to one of the planet's least affordable real estate markets.
- This lack of housing also acts as a drag on the economy of the GTAH, as workers are priced out of working in the region (since they cannot afford to live there) and are forced to work lower-wage, lower-productivity jobs in other parts of the country.
- These trends will continue unless more housing is built across Ontario. The report Baby Needs a New Home examines Ministry of Finance population projections to estimate the number of new homes needed in each of Ontario's 49 census divisions, taking into account generational 'turnover' of housing. It finds that, on net, the province will need one million net new homes in the next ten years, with over half of those in the GTAH.
- This report builds on Baby Needs a New Home by examining Hemson's housing and population forecasts, which inform the Growth Plan and asks what happens if those forecasts are wrong? By performing a series of sensitivity analyses, we find that if current population growth forecasts from international migration are as off as past ones, the GTAH could require over 100,000 additional housing units over the next decade.
- The distinction between Hemson's population forecasts and the Ministry of Finance's projections is crucial as they have significant differences. Finance projects the GTAH's population to grow by over 700,000 between 2021-26, whereas Hemson's forecast is less than 600,000. Much of this difference can be explained by the continued growth of the international student population, as the Ministry of Finance is projecting much higher growth in international students than Hemson forecasts. That the two come to substantially different conclusions illustrates the importance of sensitivity analyses and building contingency slack into plans.
- The province has a population forecast and a population projection that make substantially different predictions which exemplifies the lack of coordination and data at the core of Ontario's housing shortages. To address how Ontario has forecast for failure, we provide ten recommendations, one of which is that Ontario should prepare a population, employment, and housing stock forecast, released annually, which would adopt the best elements of both the existing forecasts and the Ministry of Finance population projections. This would create a unified set of numbers to replace the existing Ministry of Finance population projections.
- It is vital to continue to attract international talent to the GTAH to support the economic growth, quality of life and cultural diversity of Canada's economic heartland. Ensuring adequate housing supply for existing and future residents should be core to the region's economic and social policy objectives. Cooling demand by slowing population growth is not the solution to the region's housing shortages.