Better forecasting would alleviate housing crisis: Expert
Martin Slofstra
The Vancouver Sun
Past population growth forecasts underestimated GTA population growth from international sources by roughly 120,000 persons from 2016 to 2021. SUPPLIED
Forecast ‘failures’ include an underestimation of population growth in Ontario and numbers of families who moved out of Toronto
As senior director, policy and innovation, for Smart Prosperity Institute, Dr. Mike Moffat only knows too well the perils of involved in population forecasting and how much is at stake for Ontario new home buyers.
In general, the forecasts have been “too optimistic” — underestimating population growth and overestimated housing completions — which means municipalities planning for growth have used inaccurate and outdated information, and in turn, contributed to the lack of affordable housing in the province.
Moffat was speaking at the release of a new report called Forecast for Failure: How a Broken Forecasting System is at the Root of the GTAH’s Housing Shortage and How It Can Be Fixed at a recent webcast organized by industry associations BILD and WEHBA.
“Forecasts of population growth and housing completions are the foundation on which municipalities base their projections of future housing requirements,” said Dave Wilkes, BILD President and CEO.
“The Growth Plan seeks to manage growth by determining how much housing gets built, where it gets built and how dense it is. If the forecasts that inform the plan are inaccurate or not up to date, then the housing supply that comes to market in the future may not match demand.”
Moffat says the forecasting problem has been a long time in the making. For example, past population growth forecasts underestimated GTA population growth from international sources by roughly 120,000 persons from 2016-21 while overestimating the size of the housing stock by approximately 26,000 units. “We should have seen this coming and we did not plan for this (excess demand in housing),” he adds.
Another forecast failure cited by the report was related to how many people moved away from Toronto and to the rest of Ontario.
A previous forecasted number of 24,600 in 2005 and revised upward to 31,500 in 2012 missed the mark completely as the actual number was 47,136 in 2018, as growth from international sources (students and immigration) had been underestimated.
“If actual events and policy changes were factored into the growth plan, we could have bulit more housing, and some of the current problem could have been avoided,” says Moffat.
Further, policy changes such as in 2014 when international students were allowed to work off-campus without a work permit, or in January 2015 when the federal government implemented an Express Entry program “can have a substantial impact over time,” he adds.
Lack of good forecasting can also have significant fall-out as witnessed by the huge exodus of young families leaving the GTA and Hamilton areas and who must “drive until they qualify” for home ownership.
“The entire area is facing unprecedented housing supply challenges and achieving balance with the present demand will require roughly 30% more new housing units per year,” said Mike Collins-Williams, Chief Executive Officer of WEHBA which represents builders in the Hamilton and Burlington area. “In the absence of that, more people, and in particular young families looking for room to grow, will continue leaving more expensive cities to look further afield to find housing they can afford.”
In an interview, Moffat says he is “cautiously optimistic” that things will improve, saying if the reports recommendations are followed and forecasts are updated more often, and policy changes were monitored more closely, it will help the housing industry move in the right direction.
Also important he says is having one set of numbers to work from as existing forecasts such as Ministry of Finance population projections may differ from industry numbers.
And while there are other factors that limit the supply of housing — lack of skilled trades and the slow development approval process are often cited —better population forecasting could only help improve the current situation.
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