A recent report by the Canada Mortgage and Housing Corporation (CMHC) has ignited a debate about development charges in the GTA, particularly in Toronto and Markham. The CMHC suggests that these charges, which are among the highest in Canada, significantly impact housing affordability by being passed on to homebuyers and renters. While the City of Toronto disputes the CMHC’s figures, the core issue remains: how do development charges influence the cost of housing in our region? The report highlights the potential for alternative funding models, like property taxes, to create a more equitable system. Read on to explore the nuances of this complex issue and its potential impact on the GTA real estate market.
CMHC’s data, gathered using AI and validated by analysts, reveals that Ontario municipalities lead the country in development charges. According to CMHC chief economist Mathieu Laberge, these charges are “inhibiting housing accessibility, housing affordability.” The agency’s report found that development charges for a 700-750 sq ft apartment range from approximately $40,000 in Ottawa to around $120,000 in Markham, representing 8.2% and 15.7% of the average new condo price, respectively. For a single-detached home, charges vary from about $125,000 in Pickering to roughly $180,000 in Toronto, accounting for 9.4% and 8.5% of the average single-detached home price in 2024.
The City of Toronto contends that CMHC’s figures are inflated due to assumptions about other growth-related charges. They state that the current development charge for a two-bedroom apartment in Toronto ranges from $48,299 to $80,690, depending on whether it is rental or non-rental, lower than the $130,200 cited by CMHC. Similarly, they claim a single detached unit’s development charges are $137,846, less than CMHC’s $180,600.
Despite the disagreement on exact figures, experts generally agree on the need for a more transparent and equitable system. While some believe reduced development charges won’t necessarily translate to lower prices, others argue it would stimulate supply and eventually lower costs. A common suggestion is a shift towards increased property taxes to fund municipal services, although this is acknowledged as a potentially unpopular solution.
The CMHC emphasizes its role in providing unbiased information and fostering informed decision-making. The debate surrounding development charges underscores the complexities of housing affordability in the GTA and the need for innovative solutions.
Read the original story here: https://www.thestar.com/real-estate/torontos-housing-development-charges-are-among-the-highest-in-canada-cmhc-says-the-city-disputes/article_2dd63d21-7226-4533-817a-7eb36d4d3602.html
