The affordability of housing in the Greater Toronto Area is a serious issue and one that we have been raising for several years now.
We are the industry that builds and develops the new homes and communities that house the growing population of the Greater Toronto Area. We build all kinds of homes for all kinds of people. But we don’t just build what we want. Our industry is one of the most regulated and three levels of government policies, plans and processes determine how land can be used and control where and how development occurs.
A decade ago the provincial government released its Growth Plan which set out to change the nature of development in the GTA and move away from the largely suburban-oriented development pattern that we had been following for many decades. Over the last 10 years, the home building industry has become experts in implementing the Growth Plan. Adapting from building mainly low-rise homes to building at least as many high-rise homes as ground-related homes today. We are not building more homes overall. We are building to government policy and building more high-density developments and fewer low-rise homes, especially fewer detached single-family homes.
Market demand for those new low-rise homes, especially for single-family detached homes, has not diminished, so homes that are in high demand are short in supply.
Data released by Altus Group shows record-low inventory levels of new ground-related housing especially detached homes in the GTA today. In May, we dipped below 2,000 low-rise homes for sale across the GTA with only 1,985 left. A year ago, there were twice as many available at 5,171, and 10 years ago there were more than 16,000.
A basic economic principle is when supply can’t meet demand, prices go up. The disparity is not only driving up prices but its reducing choice for consumers. The average price of a new low-rise home in the GTA climbed to $875,154 in May. Ten years ago in May 2006, the average new ground-related home was under $400,000.
Organizations like TD Economics recognize that there’s an affordability issue in the GTA housing marketplace. A January 2015 report found that the market’s strengths were masking serious problems like deteriorating affordability and a lack of choice. Another report by TD issued just a few weeks ago said that limited supply is causing “buyer gridlock.”
Proposed changes to the Growth Plan announced recently by the provincial government will substantially increase the level of intensification in the GTA. There will be more development in established areas and all new development will have to use even less land to accommodate more people and jobs. This will mean that even fewer ground-related homes, especially fewer single detached homes, will be built.
We believe the province should take a more measured approach before significantly increasing intensification requirements that will further limit housing choice and increase home prices in the GTA.
Now’s the time to use your voice. The government is seeking public input into its proposed changes until September 30. Tell your local MPP or use the province’s online feedback form here if you’re also concerned about housing choice and prices.