Canada's Condominium Magazine
The gap between the average cost of newly built low-rise and high-rise homes in the GTA got wider again in January. A new single-detached home now costs twice as much as a stacked townhouse or condominium: $1,026,395 to $507,551. The single-detached price is up 25 per cent compared to a year ago; the condo price is higher by 13 per cent.
Not only prices but numbers of sales are diverging. New low-rise home sales were down in January, with just 741 new homes sold, a drop of 29 per cent from a year ago. In Toronto, thirty-three new low-rise homes were sold in January. New condo sales went the other way, rising 11 per cent, according to data provided by Altus Group for the Building Industry and Land Development Association (BILD).
Inventory of homes available for sale in both categories was also down, in the case of low-rise homes to a record low, with just 1,524 ground-related homes for sale. The number of new condominiums for sale, though still relatively high with 11,529 units available, was nonetheless at its lowest in ten years.
Condominiums now make up 88 per cent of available inventory, noted BILD CEO Bryan Tuckey, who added that the GTA faces a “severe” shortage of housing supply, with less than half the available inventory today than existed ten years ago. Tuckey has frequently said that the acute shortage of housing, which is driving prices ever higher, is due to the lack of “serviced, developable land, excessive red tape and frequent delays in the development approval process.”
Our industry is implementing provincial policy by building more condominium apartments and less ground-oriented housing. A decade ago condominiums represented just 42 per cent of available inventory compared to 88 per cent in 2017.
Many agree with this analysis, including the Canadian Real Estate Association (CREA). That organisation’s CEO, Tim Hudak, listed five steps the Ontario government could take to alleviate the housing supply problem in the GTA. One of these would be to give municipalities more flexibility so that builders can build the kind of housing that people want, rather than sticking to “one-size-fits-all” growth plan.
Another positive step, Hudak argues in a piece in the Toronto Star, would be to address the “missing middle” of housing supply. Rather than allow the polarisation of housing choice to continue—high-rise condo or single-family home—allow for such options as laneway housing, stacked flats and mid-rise buildings in areas that now restrict these types of housing. And it almost goes without saying that Hudak wants to see approvals processes speeded up, unnecessary delays eliminated.
Economists agree that the government’s growth plan, which emphasises intensification rather than outward growth, has had an impact on the supply of available low-rise homes in the GTA, particularly as some older homes on detached lots are being torn down and redeveloped as condominiums. However, Robert Kavcic, senior economist at BMO, believes that the area is not running out of land, citing Neptis Foundation estimates that there is enough land available to support fifteen more years of outward, land-related growth.
Greenbelt and smart growth advocate Erin Shapiro argued in a blog for Environmental Defence that the “real factors” responsible for rising home prices are low interest rates, demand for central locations, lack of housing options and rental properties. Shapiro insists there is no shortage of available land available for development, and poses the question, if developers are so concerned about affordability, “why is the majority of suburban development in the form of huge homes selling at high prices?”