The Death (and Rebirth?) of the Starter Home in Ontario
What is a Starter Home?
A starter home is a modest, entry-level house designed to be affordable for first-time buyers or young families. Traditionally, it means a smaller single-family home — often 1,000–1,600 square feet, with two or three bedrooms, one or two bathrooms, and a simple layout. The point isn’t luxury or extra space, but accessibility: something priced so that a household with an average income can buy into the market, build equity, and eventually trade up as their family or finances grow. In the 1950s and 60s, starter homes were mass-produced across North America in new subdivisions and small towns. Today, however, the combination of land costs, fees, and development charges in Ontario has made these homes virtually impossible to build profitably, leaving young families with a choice between oversized, expensive houses or undersized condos.
Why can’t we build starter homes anymore?
The short answer is that Ontario’s housing system has been engineered, layer by layer, to make them impossible. What we have now is not the natural outcome of markets but the predictable consequence of government policies and intervention that piled up over decades. Each decision was made with good intentions, but the second- and third-order consequences have been catastrophic.
Demand That Never Stopped Growing
Over the last two decades, Ontario became a magnet for both people and money.
Foreign buyers — especially from China and India — poured capital into our real estate, treating it as a safe place to park wealth, and often a vehicle for laundering money.
Immigration — dramatically expanded, with hundreds of thousands of newcomers added annually, pushing housing demand far past what supply could ever deliver.
Banks and governments looked the other way. While our industrial base hollowed out and entrepreneurship struggling under taxation and regulation, the housing boom made the asset-owning class rich.
And those owners — primarily Boomers — loved it. A $300,000 house bought in the late ’90s became a $1.3 million house twenty years later. Many took out home equity lines of credit (HELOCs) to live well above their means. Others simply basked in the feeling of being wealthier than they actually were.
Locking the Land
At the same time, Ontario governments locked down land.
The Greenbelt and strict zoning froze much of southern Ontario’s towns and cities in place.
The moral pitch was easy: save farmland, stop sprawl, reduce traffic, protect the environment. Call it “green” and invoke the tragedy of the commons, and people will nod along.
But the unintended consequence was to turn the remaining land into gold. Subdivision-ready land in suburban Ontario now fetches around $1 million per acre — nearly 10x comparable land around a Texas metro.
The Property Tax Shell Game
Meanwhile, municipalities found a clever way to fund themselves without angering current homeowners.
A house MPAC-assessed at $400,000 but selling for $1.2 million still pays taxes on the $400K value.
Rather than raising property taxes to reflect actual wealth, cities jacked up development charges (DCs) on new housing instead.
This meant existing homeowners kept their artificially low taxes while new buyers carried the cost of municipal infrastructure. It was a political free lunch: politicians avoided tax hikes, homeowners felt protected, and bureaucracies kept growing.
Development Charges Gone Wild
The numbers are staggering:
In the GTA’s 10 largest municipalities, DCs for single-detached homes rose ~208% from 2011 to 2023 (from ~$35,800 to ~$110,200).
Outside the GTA, the increase was ~157% (from ~$19,200 to ~$49,400).
Bureaucracies rarely spend this money efficiently, but with the housing boom covering their tracks, few people asked questions.
The Brutal Math of a New Home
Try running the numbers on a so-called starter home today:
Land: $200K per home (at 5 homes per acre on $1M land).
Development Charges: $100K+.
HST, studies, peer reviews, fees: $100K+.
Subtotal before construction: ~$400K.
Construction: ~$240/sf → $300K+ for 1,300 sf.
Total before profit: ~$700K.
Now add the reality that developers and investors need at least a 20% return. Suddenly, building small homes make no financial sense. That’s why we end up with 3,000-sf houses selling for $2M, packed five feet apart.
Who Wins, Who Loses
This is the political economy of Ontario housing:
Boomers and incumbents feel richer, live above their means with HELOCs, and pay low property taxes.
Municipalities balance budgets with DCs instead of politically risky tax increases.
Politicians sell environmental virtue while quietly entrenching scarcity.
Developers can only profit by building big, expensive homes.
The losers are obvious: young families, newcomers, and anyone trying to enter the housing market.
What We Need: A New Levittown, Done Right
Starter homes aren’t gone because people don’t want them. They’re gone because the math — shaped by policy — killed them. To bring them back, we need something as bold as the post-WWII Levittown revolution (without the segregation), but smarter. Levittown worked because it freed land, standardized design, and streamlined approvals to mass-produce affordable housing. But it also created problems: segregation, car dependency, soulless subdivisions. We don’t need to repeat those mistakes.
Instead, Ontario should embrace New Urbanism and Traditional Neighbourhood Design (TND):
Walkable communities with mixed-use streets, where schools, shops, and homes are woven together.
A variety of housing types — small single-family homes, townhomes, apartments — so people can afford to live through every stage of life.
Public spaces — parks, squares, trails — that make neighbourhoods human-centred instead of car-centred.
This isn’t theory. It’s already working elsewhere:
Serenbe (Georgia): A master-planned community outside Atlanta that combines walkable design, local agriculture, and traditional architecture. Homes aren’t cheap today (scarcity drove up prices), but the model shows how to build human-scale neighbourhoods.
Carlton Landing (Oklahoma): A lakeside town designed from scratch using New Urbanist principles — walkability, diverse housing, front porches, tight-knit community. It proves you can grow a town without strip malls and cul-de-sacs.
Ontario could build communities like these. We have the land. We have the design know-how. What’s missing is the political will to:
Free up land strategically, instead of freezing towns in time.
Slash DCs and spread municipal costs fairly.
Streamline approvals so developers can build small, efficient homes.
Commit to human-scale design that balances density with livability.
Conclusion
Ontario’s housing crisis isn’t an accident. It’s the inevitable result of policy choices that privileged existing homeowners and short-term political wins over long-term affordability. Starter homes disappeared because government killed them. They’ll only come back if we consciously choose to build places like Serenbe, Carlton Landing, and Seaside — communities that are beautiful, walkable, and affordable, where young families can finally get a foothold again. When was the last time we built a new town? We should start doing that again.
Ontario can do it. But it requires courage to undo decades of bad policy and replace it with a vision for human-centred, affordable living.
