Ontario’s housing crisis has reached a critical point, with Premier Doug Ford’s government struggling to meet its bold promise of building 1.5 million new homes by 2031.
The 2025 provincial budget paints a grim picture, forecasting a sluggish pace for housing construction over the next three years.
With only 260,000 housing starts recorded since the target was set, and projections for 2025 and 2026 falling far short of what’s needed, the goal seems increasingly unattainable.
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The 1.5 Million Homes Target: A Lofty Promise
In 2022, Ontario’s Progressive Conservative government, led by Premier Doug Ford, set an ambitious goal to build 1.5 million new homes by 2031 to address the province’s worsening housing affordability crisis.
The plan aimed to tackle skyrocketing home prices and rents, which have made it difficult for many Ontarians—especially young families and first-time buyers—to enter the housing market.
The target was a cornerstone of Ford’s re-election campaign, signaling a commitment to bold action.
However, three years into the timeline, the numbers tell a different story.
Only 260,000 housing starts have been recorded since 2022, leaving the province significantly behind schedule.
To meet the 1.5 million homes goal, Ontario would need to average 218,000 housing starts annually for the remaining five years—a pace more than double the current rate.
The 2025 budget’s projections of 71,800 housing starts in 2025, 74,800 in 2026, and 82,500 in 2027 underscore the growing gap between ambition and reality.
Why Ontario’s Housing Construction Is Stalling
Several factors are contributing to Ontario’s housing construction slowdown, creating a perfect storm of challenges for developers, municipalities, and homebuyers.
Let’s break them down:
1. Economic Pressures and High Interest Rates
One of the biggest barriers to housing construction is the high cost of borrowing.
Interest rates, which have remained elevated in recent years, have increased the cost of financing for developers.
Building new homes requires significant upfront capital, and with higher borrowing costs, many projects are being delayed or canceled.
This economic reality has dampened developer confidence, leading to fewer housing starts than anticipated.
The 2025 budget acknowledges this challenge, projecting a decline of 2,800 housing starts compared to 2024.
Last year’s budget had forecasted 87,900 housing starts for 2024, but the actual number was only 74,600—a shortfall of over 13,000 units.
This gap highlights how economic headwinds are derailing progress.
2. U.S. Tariffs and Supply Chain Disruptions
Ontario’s Finance Minister, Peter Bethlenfalvy, has pointed to U.S. tariffs as a significant factor in the housing slump.
The return of President Donald Trump to the White House in 2025 has brought renewed trade tensions, with tariffs impacting the cost of construction materials like lumber and steel.
These higher costs are passed on to developers, further squeezing their budgets and discouraging new projects.
However, the housing slowdown predates the latest round of tariffs.
Ontario’s construction industry was already grappling with supply chain disruptions and material cost increases stemming from global economic challenges.
While tariffs exacerbate the problem, they are not the sole culprit.
3. Municipal Challenges and Infrastructure Bottlenecks
Building homes isn’t just about constructing houses—it requires supporting infrastructure like water mains, sewers, and roads.
Many Ontario municipalities lack the capacity to support large-scale housing developments, and the province’s infrastructure funding has not kept pace with demand.
The 2025 budget allocates an additional $400 million to existing municipal infrastructure programs, but critics argue this is a drop in the bucket compared to what’s needed.
Municipalities also face bureaucratic hurdles, including lengthy approval processes for zoning and permits.
While the Ford government has introduced measures to streamline approvals, progress has been uneven, and many projects remain stuck in the planning phase.
4. Weak Incentives from the Building Faster Fund
The Building Faster Fund, launched in 2023 with a promise of $1.2 billion over three years, was meant to incentivize municipalities to meet annual housing start targets.
However, the program has underperformed. In 2024, only $280 million was distributed because more than half of Ontario’s municipalities failed to meet their 2023 targets.
As of October 2024, only 11 of 50 municipalities had reached their benchmarks for the year, leaving the program’s effectiveness in question.
The lack of transparency around the fund’s progress is another concern.
The province’s housing start tracker has not been updated since October 2024, leaving stakeholders in the dark about the final 2024 figures.
This lack of accountability has fueled skepticism about the government’s commitment to its housing goals.
5. Shifting Government Priorities
Critics, including Eric Lombardi of More Neighbours Toronto, argue that the Ford government appears to have scaled back its ambition.
Lombardi describes the 2025 budget’s housing measures as “ineffective,” suggesting the government has “given up” on its 1.5 million homes promise.
The budget’s focus on modest investments, like $50 million over five years for modular housing, has been criticized as insufficient to address the scale of the crisis.
Green Party Leader Mike Schreiner has been even more blunt, calling the budget a “failure” to address housing affordability.
He argues that the government’s policies lack the urgency and innovation needed to reverse the construction slump.
The Human Impact: Ontario’s Housing Affordability Crisis
The failure to meet housing targets has real-world consequences for Ontarians.
Home prices in major cities like Toronto and Ottawa remain among the highest in Canada, with the average detached home in the Greater Toronto Area exceeding $1.2 million in 2025.
Rent prices have also surged, with one-bedroom apartments in Toronto averaging over $2,500 per month.
For young families, first-time buyers, and low-income households, the dream of homeownership is slipping further out of reach.
The lack of affordable housing options is also exacerbating homelessness and overcrowding in urban centers.
Without a significant increase in housing supply, these challenges will only worsen.
The Government’s Response: Doubling Down or Falling Short?
Despite the grim projections, Finance Minister Bethlenfalvy insists the government remains committed to the 1.5 million homes target.
“We’re not going to relent on trying to achieve that goal,” he said during a budget day news conference.
The government points to several initiatives aimed at boosting housing supply:
Streamlining Approvals: The province has introduced legislation to speed up zoning and permitting processes, reducing red tape for developers.
A new bill tabled in May 2025 aims to lower costs and accelerate home construction.
Infrastructure Funding: The $400 million boost to municipal infrastructure programs is intended to support new housing developments by ensuring adequate water, sewer, and transit systems.
Modular Housing Investment: The $50 million commitment to modular housing aims to promote faster, more cost-effective construction methods.
Building Faster Fund: The government continues to rely on this fund to incentivize municipalities, though its limited success raises questions about its effectiveness.
Bethlenfalvy also expressed optimism about increased federal support under Prime Minister Mark Carney, suggesting that fewer conditions on federal housing funds could help Ontario accelerate construction.
Expert Opinions: What’s Holding Ontario Back?
Housing advocates and industry experts have weighed in on the challenges facing Ontario’s housing market:
Eric Lombardi, More Neighbours Toronto: Lombardi argues that the government’s policies lack ambition and fail to address systemic barriers like zoning restrictions and infrastructure deficits.
He believes the 1.5 million homes target is now unattainable without a major policy shift.
Alex Beheshti, Missing Middle Initiative: Beheshti highlights the need for “missing middle” housing—medium-density options like townhouses and low-rise apartments—that could bridge the gap between single-family homes and high-rise condos.
He argues that Ontario’s zoning laws often discourage these types of developments.
Cathy Polan, Ontario Real Estate Association: Polan praises the government’s “pro-housing measures” but urges policymakers to “keep their foot on the gas” to restore affordability.
Mike Schreiner, Green Party Leader: Schreiner calls for bolder action, including increased investment in affordable housing and stronger incentives for municipalities to approve new projects.
Modular Housing: A Potential Game-Changer?
One of the budget’s few new initiatives is a $50 million investment over five years to expand modular housing construction.
Modular homes, which are built off-site and assembled on location, offer a faster and potentially cheaper alternative to traditional construction.
They could help address Ontario’s housing shortage by reducing construction timelines and costs.
However, the scale of the investment—$10 million per year—has been criticized as inadequate.
Experts argue that modular housing will only make a dent in the crisis if paired with broader reforms, such as zoning changes and increased infrastructure funding.
The Role of Federal and Municipal Governments
Ontario’s housing crisis is not solely a provincial issue.
The federal government plays a key role through funding programs and immigration policies that drive housing demand.
Bethlenfalvy’s optimism about federal support under Mark Carney reflects hope for a more collaborative approach.
However, federal funds often come with conditions, such as requirements for affordable housing, which can complicate their use.
Municipalities also bear significant responsibility.
Many local governments face pressure from residents to limit development, leading to “NIMBY” (Not In My Backyard) resistance to new housing projects.
Streamlining municipal approvals and incentivizing pro-housing policies will be critical to meeting Ontario’s targets.
What Needs to Change? A Path Forward
To get back on track, Ontario must address the root causes of its housing construction slump.
Here are some potential solutions:
Increase Infrastructure Investment: Significantly boost funding for water, sewer, and transit infrastructure to support large-scale housing developments.
Reform Zoning Laws: Encourage “missing middle” housing by relaxing zoning restrictions that prioritize single-family homes in urban areas.
Enhance Incentives: Revamp the Building Faster Fund to make it more effective, with clearer targets and greater transparency.
Promote Modular Housing: Scale up investment in modular construction and create pilot projects to demonstrate its viability.
Collaborate with Federal and Municipal Partners: Work closely with the federal government and municipalities to align policies and funding.
Address Economic Barriers: Advocate for policies to stabilize material costs and provide financial incentives for developers, such as tax breaks or low-interest loans.
Can Ontario Turn the Tide?
Ontario’s 1.5 million homes target was a bold promise to address one of the province’s most pressing challenges: housing affordability.
However, with only a quarter of the target achieved halfway through the timeline, and a persistent construction slump, the goal is slipping out of reach.
Economic pressures, inadequate infrastructure, and policy missteps have created significant hurdles, leaving Ontarians grappling with soaring home prices and rents.
While the Ford government remains committed in rhetoric, its actions—modest budget measures and an underperforming Building Faster Fund—suggest a lack of urgency.
For Ontario to restore affordability and meet its housing goals, bold reforms and increased investment are needed.
Without swift action, the dream of 1.5 million new homes by 2031 will remain just that—a dream.
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