It may not look like it but there are signs of improvement

By Richard Lyall

March 9, 2026

There are very good reasons to feel optimistic about the housing crisis despite overwhelming evidence to the contrary.  

The mounting awareness of the greatness of Canada is now matched with the recognition that housing is critical to that story. The fact that housing sank to 1981 levels in January also means there is no longer doubt that radical surgery is needed. 

By the same token, unlike the last massive housing correction in the early 90s, this correction was a self-inflicted wound - a “dislocation” between buyers and sellers.

In just over 30 years, governments systemically exponentially increased the cost of housing with bloated development charges, sales taxes, land transfer taxes and red tape.

The Ontario government’s 2022 housing task force report noted this four years ago. Yet these costs have yet to be seriously reduced, if at all.  

And just to remind you, a report prepared by the Canadian Centre for Economic Analysis for RESCON in 2024 found the tax burden now accounts for 36 per cent of the cost of a new home.

Those taxes, fees and levies did not exist in the 90s.

During the same period, government charges exploded while real incomes didn't move. On what planet does that make any sense?

The problem stemmed from the fact that no one was in charge overall. And they forgot to look at trends in the ratio of production costs to incomes. It was FUBAR on a grand scale. 

However, there is good news.

RESCON and the RCCAO produced a report a few months ago demonstrating that an across-the-board sales tax holiday for buyers of new homes would boost sales and preserve construction activity and jobs - and not cost governments a dime. The research suggests that the policy would be revenue-neutral for governments, as increased economic activity and preserved employment would offset forgone tax revenue.  

However, if the situation is left unremedied, things are going to get even worse than they are now.

If no action is taken, the province stands to average 21,500 fewer housing starts every year over the next decade compared to the recent 10-year average. The shortfall would account for about 390,000 fewer Ontarians being housed by 2035.

Knowledge and necessity now dictate the following will happen.

1. The stalled first-time buyer rebate announced a year ago will soon be in effect.

2. The sales tax rebates will be extended to move up and move down buyers and renters.  

3. Development charges will be reduced in municipalities - especially those that raised them beyond any rational explanation.  

4. Land transfer taxes.

5. A variety of project-stalling red tape and procedural measures will be rectified.

These are all things within our systemic control in Ontario and Canada. 

We will look back at this as a time when we hit bottom and new housing production started to recover. That, combined with the fact that foreign direct investment into Canada jumped in the fourth quarter, pushing yearly inflows to the highest level in 18 years, bodes well for change.

So, even though it doesn't look like it, there are signs of improvement. Remember, stars shine brightest in the darkest hour of the night.