A new report for the Greater Toronto and Hamilton Area commissioned by the Building Industry and Land Development Association (BILD) found that over the past seven years, provincial forecasts have “underestimated” population growth and ” overestimated” the number of homes that will be completed within that time frame, contributing to a severe supply shortage and affordability issues.
However, the company in charge of provincial forecasts disputed the report’s findings, saying the population estimates were consistent with data available at the time.
The report, titled “Forecasting Fail: How a Faulty Forecasting System Is Causing Housing Shortages in the GTAH and How to Fix It” it was conducted for BILD by the University of Ottawa think tank and the national research network Smart Prosperity Institute, indicates that municipalities, including outer-belt communities such as Waterloo and the Niagara region, have planned their growth based on “inaccurate or outdated assumptions”.
The report disputes growth forecasts provided by a private company the province uses called Hemson Consulting Ltd. These projections, which focus on population, employment and housing, underpin Ontario’s Growth Plan for the Greater Golden Horseshoe.
Russell Mathew, a partner at 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 right.’ But there is always uncertainty,” says Mathew.
The authors of the new report say the province’s population growth plan is based on “substantially underestimated” growth forecasts since 2016, relative to the number of people coming from international destinations — immigrants and international students.
“In just five years, Ontario’s adult population has grown by several hundred thousand more than expected, and every one of them needs a place to call home,” the report says.
Meanwhile, in 2021, housing stock in most areas of the Greater Toronto and Hamilton Area was lower than forecast in 2012, the report notes.
The report says this “imbalance” between housing demand and supply has driven up house prices, forcing young families to leave the area in search of more affordable housing.
According to the report, between 2016 and 2021, forecasts underestimated the region’s population growth from international origins by around 120,000 people.
At the same time, forecasts overestimated the size of the actually built housing stock by around 26,000 units. This has contributed to excess demand for housing, according to the report.
The problem will persist unless more housing is built – 100,000 new housing units over the next decade in the GTA and Hamilton, according to the new report.
The report goes on to make several recommendations on how to solve the problem, including creating a single set of “common and agreed data”, as well as regularly reviewing this data and revising forecasts when there are “major policies”. changes, particularly around immigration goals.
Study co-author Mike Moffatt, senior director of the Smart Prosperity Institute, used Statistics Canada demographic data for the report.
In a phone interview, Moffatt said Hemson’s growth forecast for 2017 was based on data from 2012 – before the introduction of federal government immigration reforms that impacted growth, especially among young people coming to Canada.
“These changes have allowed international students to work on campus while studying. Indian students came to Ontario and could stay and work there for three years and then apply for permanent residency,” says Moffatt. This has created an increased demand for housing, the report notes.
“So instead of immigrating here at 27 or 28, they came here at 18 to get their degrees,” says Moffatt.
“If the (population) update had been 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 influx of international students, which he says was not expected by anyone, only became visible in 2016. Statistics Canada data on this increase would not have been available before 2017 or 2018.
“(The provincial growth plan) was modified in 2020 with the current forecast,” says Mathew.
So it’s not really a delay in the scheme of things,” says Mathew.
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 in recent years.
“The fact that (Ontario) hasn’t built as much housing is a real problem here,” he added.
But that has to do with the housing market response and little to do with immigration surges, Mathew says.
Moffatt added that provincial growth plans should be based on population estimates higher than forecast, to allow for “inevitable errors” in forecasting.
“We’ll never get a completely correct forecast, but we’d better have a few more houses. It’s not the worst thing in the world. If there are too few houses, it becomes a problem,” Moffatt said.
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