We have a shortage of housing supply in the GTA that is approaching crisis levels and it’s time for governments to acknowledge the problem and take action to address it.
Not enough new housing is being built to keep up with consumer demand or the housing needs of this growing region and the lack of supply is impacting not just the price of new homes but also the resale housing market and the rental market.
The population of the GTA has grown significantly in the past decade, but our housing supply has dropped. Today in the GTA there are less than half the overall number of new homes available in builder inventories than there were a decade ago. In December 2006 there were 30,400 new homes available to purchase and in December 2016 there were just 13,670.
The drop is most pronounced in the low-rise market where the number of detached homes, semi-detached homes and townhomes plummeted from 17,529 in December 2006 to just 1,878 at the end of last month.
The home building and land development industry is complying with provincial intensification policy and building and selling far fewer low-rise homes than a decade ago, but demand for those types of homes has not dropped with the supply so prices have increased dramatically.
The average price of a new low-rise home in the GTA has more than doubled in 10 years, and it reached a record $995,116 in December 2016. For single-family detached homes the average price reached an unprecedented $1,264,604 in December, up by more than $273,000 in just 12 months and up by an unbelievable $811,394 since December 2006.
2016 was a record year for the GTA new condo market. It was the biggest year for sales ever with 29,186 units sold and builder inventories of high-rise units fell to their lowest level in 10 years. High-rise average prices set new records. In December 2016 the average price for new condos hit $507,128.
For much of the last decade prices for condos remained stable because units grew smaller while price per square foot steadily increased. That changed in late 2015 as the industry began to introduce greater numbers of larger units to service buyers priced out of the low-rise home market.
So given that there is so much unmet demand why doesn’t the industry just build more product and increase the supply of homes? Unfortunately there are many barriers in the way. Lack of developable land that is serviced with critical infrastructure, excessive red tape, out-of-date zoning, and NIMBYism are the key hindrances limiting our ability to build more housing.
For land to be developable it has to have critical infrastructure such as water, wastewater and hydro in place. Much of the land that is designated for development in the GTA is not currently serviced with water and/or sewers, which means it is not developable. In some cases, the necessary servicing won’t be in place for at least another decade.
Excessive red tape and increasing delays in planning approvals are another huge challenge. Across the GTA it is taking longer and longer to get the go-ahead for projects. A typical new low-rise development can take a decade or more and high-rise projects can take up to seven years.
The approvals process is further delayed due to zoning bylaws in many GTA municipalities that have not been updated for decades. All new development applications must conform to area zoning bylaws to get approved but unfortunately many municipalities are operating with badly outdated bylaws that don’t align with provincial intensification policies.
It is time for government to take action to address our housing supply problem. Across the GTA governments must streamline the planning approval process and remove red tape, pre-designate and pre-zone land, and approve all outstanding environmental assessments that relate to critical infrastructure. As well, they need to update zoning bylaws to support intensification policies and support these policies with public education.
This is not a time for small plans. It’s time to work together and address our housing supply crisis so that today’s new home buyers and future generations have somewhere to live.