Toronto is a pleasant and attractive place to live, work and play — if you can afford it. It is becoming the land of the rich and privileged, rigidly zoned at sufficiently low densities to protect the interests of those who can buy into an exclusive club called home ownership.

Membership rules are simple: oppose urban intensification, embrace the status quo, and promote the sanctity of the single family house in its historic neighbourhood form. Urban infill is a “reasonable” growth solution as long as these are large expensive homes that drive up neighbourhood prices.

And yet we are a city where immigrants seek out a better future, recent graduates seek new careers, a younger generation seeks a culturally rich lifestyle, and low-paid service workers seek homes that are close to work.

Our economic future depends on our ability to house more than the urban elite. We must house, side by side, those upon whom we rely for our many services. Cities must serve everyone, at all ends of the spectrum.

However, Toronto’s rigid adherence to zoning designations that date back before the Second World War have institutionalized socio-economic discrimination and promoted forms of elitism in many parts of the city. Ridiculously low densities, perpetuated by outdated zoning bylaws, are squeezing out the middle class, whose housing options are increasingly limited to the distant suburbs, and segregating the urban elite.

Adherence by the city to this rigid zoning stance in the face of increasing demand for other than highrise condominiums has driven up average home prices to absurd, if not precarious, levels and is now spilling over into rental accommodation.

These price surges have resulted in a huge transfer of wealth to current homeowners. As long as supply remains constrained by restrictive zoning, this transfer of wealth will only increase and will exacerbate the social inequity that it is helping to cause. Rising house prices are creating windfall profits for homeowners and so there is every incentive for the “haves” to resist change and to pressure local political leaders to oppose intensification.

Prof. Tom Davidoff, a noted economist at the University of British Columbia, refers to this phenomenon as “socialism for the rich.” He believes that any government hoping to deal with escalating home prices needs to address two issues: zoning and taxation.

In the case of Vancouver (and the same applies to parts of Toronto), Davidoff claims that single-family zoning throughout the city “is a gift to affluent buyers from overseas with a taste for luxury real estate.” However, these price trends are simply not sustainable; the underlying fundamentals are just not there.

Taxation to cool parts of the housing market is being contemplated, but zoning has been largely overlooked in this debate. When Ontario Finance Minister Charles Sousa introduces the upcoming spring budget, the government has promised to address the issues of housing affordability and soaring home prices in the GTA.

It is time to recognize that Toronto’s restrictive zoning practices are a primary driver of these double-digit house price increases. This is not a matter of threatening existing neighbourhoods with the insertion of highrise towers; it is a matter of releasing much needed land for new housing in areas that can support modest intensification based on sound planning principles and established urban development policies and guidelines.

An example would be rezoning to permit low- to medium-rise buildings along major streets and avenues, or adjacent to transit stops, such as selected stations along the new Eglinton Crosstown line.

The province must tackle the necessary changes to restrictive land use controls to ease buying and rental pressures for domestic households, better align demand and supply, and mitigate what many economists now see as a speculative housing bubble. Zoning must be brought into line with existing and proposed infrastructure and address the destructive consequences of speculation in a supply constrained market.

Toronto will continue to be an expensive city in which to live, but this only underscores the importance of the province taking the necessary actions to remove barriers to building residences and workplaces for all income groups if the region is to prosper.

This means taking action on the supply side to address low-income and middle-class housing needs for both ownership and rental accommodation.

If the province chooses not to deal with Toronto’s highly restrictive zoning practices as part of its plan to address rising house prices, it will be next-to-impossible to ensure a housing market that is efficient, more equitable, and sustainable in the long-run.

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Prof. James McKellar is director of the Brookfield Centre in Real Estate and Infrastructure at the Schulich School of Business at York University.