Brokers and OREA warn that without municipal action and transparency, the landmark deal may fall short
After years of industry pressure, the federal and Ontario governments have committed $8.8 billion to cut development charges, but brokers say affordability won't truly shift until municipalities act and transparency becomes law.
The deal arrived weeks after the Ontario Real Estate Association (OREA) published a landmark policy paper co-authored with economist Mike Moffatt of the Missing Middle Initiative, outlining seven recommendations for reform.
The first called for an immediate two-year suspension of development charges, a blunt instrument to arrest the cost escalation that has seen levies in some York Region municipalities approach $200,000 per unit.
The federal-provincial announcement did not go quite that far, but it moved conspicuously in the same direction.
"We want to commend Premier Ford, Minister Flack, and the federal government for all of those announcements," said Kim Fairley, president of OREA.
"Is it the exact recommendation? No, but it definitely falls in line with it. We're really looking to how do we help move that needle along in homeownership and affordable homeownership."
Read more: City of Ottawa to waive $250m in development charges, fees and taxes for housing deal
A landmark deal with caveats
The deal does not guarantee lower costs on its own.
Its effectiveness depends entirely on whether individual municipalities choose to absorb the available funding and pass the savings on to builders and, ultimately, buyers. That distinction matters for mortgage brokers whose clients are navigating Ontario's still-strained new construction market.
Toronto-based broker Matthew O'Neil of Connolly Capital, speaking to Canadian Mortgage Professional in late March, was candid about the limits of the current measures.
"The problem with pre-con pricing is that even after this new rebate, it's still priced way higher than resale," O'Neil said.
"If you're a first-time buyer and you want to buy a condo downtown, why would you buy preconstruction? It makes no sense. You're looking at $1,300, $1,400, $1,500 a square foot – but you can go buy a resale condo for under $1,000 a square foot."
That scepticism speaks to a gap between policy intent and on-the-ground pricing dynamics, one that development charge reform alone cannot close.
Still, for detached and ground-oriented housing in suburban and northern markets, the arithmetic looks more promising. Fairley was direct about the scale of change that the combined measures represent for buyers outside Toronto.
"We're talking homes up to $130,000 in a price difference," she said.
"That's a big deal. Even for me up in Sault Ste. Marie — our new homes average between $600,000 and $700,000. Even for that spectrum, that's a big difference for people up in the northern areas to have that swing into their favour when it comes to being able to buy that house."
On the HST side, Fairley said the current measure is promising but incomplete without further expansion.
"Hopefully the government works with us on some of the other recommendations and maybe expands that to the general public, where those folks could really make a difference," she said.
"If they expand it, that really opens it up to resale homes. If I'm a first-time home buyer, I maybe can't afford that million or $800,000 house. Even with the HST rebate, if it's expanded out, it really could open that resale area up for first-time homebuyers, which is really huge. I can see it really swing the market provincially in an upward position."
Canada Mortgage and Housing Corporation (CMHC) data reinforces how uneven the development charge burden has become across the province.
For a two-bedroom apartment, CMHC's pilot data showed per-unit charges of approximately $39,600 in Ottawa and $121,500 in Markham — a gap that can represent between 8.2 and 15.7% of average new condo prices in those markets.
The transparency imperative
Among the most durable elements of OREA's policy agenda is a push for transparency.
The proposal calls for development charges to appear as a separate, clearly itemised line item on every new home purchase agreement, and to be exempt from GST, HST, and land transfer tax.
Today, those charges are absorbed into the asking price, assessed alongside sales taxes, and compounded further by land transfer levies — a tax-on-tax situation that quietly inflates the carrying cost of every mortgage taken out on a newly built home.
Fairley said the public is still catching up to the full picture.
"Honestly, I don't think that the consumers and the public are educated enough about it," she said.
"The reality is you go to look for a house and that cost is clumped into the ask price for that property. If DCs are something that a municipality needs, then we're really just asking them to be transparent about it. Show and educate your consumers, your constituents, what those fees are going towards."
She added that some communities are already doing this well.
"There are definitely communities, especially in the western area, that really rely on the DCs to make that infrastructure. That's fabulous. But just be open and honest. And maybe this is an opportunity with the announcement of the $8.8 billion that those DCs can go down."
Read more: Will GTA municipalities follow Vaughan's lead on slashing development charges?
New polling by Abacus Data for OREA found that 62% of Ontarians say property taxes and government fees have at least a moderate impact on their ability to afford housing in their community.
The same survey found that two in five Ontarians believe it is unfair to pass development charge costs on to homebuyers, while 71% agree development charges make housing less affordable.
Fairley also drew attention to the generational dimension of the affordability crisis.
"We're finding the generation of homebuyers is getting younger, and those younger folks are more concerned," she said.
"I've got an 18 and a 20-year-old sitting at home, and my 20-year-old says, 'Mom, I don't know if I'm ever going to be able to afford a house.' I was 24 when I bought my first house and had no second thought on whether things would be affordable to this degree. It's a whole new spectrum of folks."
Make sure to get all the latest news to your inbox on Canada’s mortgage and housing markets by signing up for our free daily newsletter here.
