Ontario ‘underestimated’ population growth, ‘overestimated’ housing stock, says BILD report

A new report looking at the Greater Toronto and Hamilton area commissioned by the Building Industry and Land Development Association (BILD) has found that over the last seven years, provincial forecasts have underestimated" population growth and overestimated" the amount of housing that would be completed in that time - contributing to a serious supply shortage and affordability challenges.

However, the company in charge of the provincial forecasts disputed the report's findings, saying that the population estimates were in line with the data that was available at the time.

The report, titled Forecast for Failure: How a broken forecasting system is at the root of the GTAH's housing shortage and how it can be fixed" that was conducted for BILD by University of Ottawa think tank and national research network Smart Prosperity Institute, says municipalities, including outer ring communities such as Waterloo and the Niagara region, have been planning for growth based on inaccurate or outdated assumptions."

The report takes issue with growth forecasts provided by a private firm the province uses called Hemson Consulting Ltd. These forecasts, which look at population, employment and housing, underpin Ontario's Growth Plan for the Greater Golden Horseshoe.

Russell Mathew, a partner with Hemson, defended his firm's numbers.

When it comes to forecasting it's easy to look back and say you should have gotten the numbers exactly right.' But there's always uncertainty," Mathew says.

The authors of the new report say the province's population growth plan is based on substantially underestimated" growth forecasts since 2016, in relation to the number of people coming from international destinations - immigrants and international students.

In just five years, Ontario's population of adults grew by several hundred thousand more than forecast, each of whom needs a place to call home," the report states.

Meanwhile, by 2021, the housing stock in most of Greater Toronto and Hamilton fell short of forecasts made in 2012, the report notes.

The report says this imbalance" between housing demand and supply led to higher prices for homes, thus forcing young families out of the region in search of more affordable housing.

According to the report, between 2016 and 2021, forecasts underestimated population growth in the region stemming from international origins by about 120,000 people.

At the same time, forecasts overestimated the size of the housing stock actually built by approximately 26,000 units. This contributed to an excess demand for dwelling units, the report said.

The problem will continue unless more housing is built - 100,000 new units of housing in the next decade in the GTA and Hamilton, the new report argues.

The report goes on to make several recommendations on how to fix the problem, including the creation of a single set of common and agreed-upon data," as well as regularly revising that data and going over forecasts again when there are major policy changes, especially around immigration targets."

Study co-author Mike Moffatt, senior director with the Smart Prosperity Institute, used Statistics Canada data for population for the report.

In a telephone interview, Moffatt said Hemson's 2017 growth forecast was based on 2012 data - before federal government immigration reforms were introduced that impacted growth, especially among young people coming to Canada.

These changes allowed international students to work on campus while studying. Students from India came to Ontario and could stay here and work for three years and then apply for permanent residency," Moffatt says. This created increased demand for housing, the report notes.

So instead of immigrating here at age 27 or 28, they came here at 18 to get their credentials," Moffatt says.

If the (population) update was done in 2016 the forecast would have been higher," Moffatt said, adding: I think we would have built more housing."

But Mathew, from Hemson says the international student surge, which he says was not anticipated by anyone, only became visible in 2016. Statistics Canada data for that increase wouldn't have been available until 2017 or 2018.

(The provincial growth plan) was amended in 2020 with the now current forecasts," Mathew says.

So, that's not much of a delay in the scheme of things," Mathew says.

He went on to say that his firm's housing forecasts accompanying the population reports did indeed envision more supply than has been built in the province the last few years.

The fact (Ontario) hasn't built that much housing is a real issue here," he added.

But this has to do with the response of the house market and little to do with any surges in immigration, Mathew says.

Moffatt added that provincial growth plans should be set to population estimates that are higher than forecast, to allow for unavoidable errors" in forecasting.

We're never going to get a forecast completely right, but we're better off having a few extra houses. That's not the worst thing in the world. If there are too few houses, that becomes a problem," Moffatt said.

Donovan Vincent is a housing reporter based in Toronto. Follow him on Twitter: @donovanvincent