Why is hous­ing so ex­pen­sive th­ese days?

The Hamilton Spectator - - BUSI­NESS - HH­HBA SPON­SORED CON­TENT

We’ve all seen the head­lines for months. The price of hous­ing in On­tario just keeps go­ing up. Peo­ple have been talk­ing for years about a hous­ing bub­ble. Peo­ple have started ask­ing: when is enough enough? At what point does the price stop go­ing up? I can’t af­ford to buy a house now. My kids can’t af­ford a house. What is go­ing on?

The re­al­ity is that the prob­lem isn’t just a Toronto prob­lem, or a Van­cou­ver prob­lem. It is here, right at home, in Hamil­ton and in Burlington.

Of course our two cities are very dif­fer­ent, and what is af­fect­ing price in both cities dif­fers slightly as well. Let’s take Burlington for ex­am­ple. Here the de­vel­op­ment of ground re­lated hous­ing (sin­gle de­tached homes, semis and town­houses) is pretty much com­plete. Only small in­fill parcels and one larger tract cur­rently un­der con­struc­tion in North Burlington re­main. The City is built out. But the prob­lem is, peo­ple still want to move here. As peo­ple spread west from Toronto, Mis­sis­sauga, etc. Burlington is at­trac­tive, and in many cases, es­pe­cially for sin­gle fam­ily homes, it is still a more af­ford­able op­tion. High­rise and midrise condo de­vel­op­ments are be­ing con­structed at a va­ri­ety of price points (yet for some, all op­tions seem too ex­pen­sive), and while this form of hous­ing is de­sired by some (or the only af­ford­ably choice for oth­ers), there is still a large seg­ment of the pop­u­la­tion look­ing for ground re­lated hous­ing. But with sup­ply es­sen­tially stag­nant, and de­mand in­creas­ing, ba­sic eco­nom­ics says that the price will go up. This isn’t just the price of new homes, this is all real es­tate. So, there’s the choice to be made: a young fam­ily wants to stay in Burlington, where both par­ents grew up. But the price tag is as­tro­nom­i­cal for them, so ei­ther mom and dad help con­trib­ute, they buy a smaller con­do­minium to get into the hous­ing mar­ket, or con­sider mov­ing down the road ... to Hamil­ton. Now what’s hap­pen­ing here? There are more houses be­ing built in Hamil­ton than in Burlington. There is in­fill and down­town de­vel­op­ment as well. But even the City’s num­bers ac­knowl­edge that we aren’t keep­ing pace with the pop­u­la­tion growth ex­pected. Builders don’t need to ad­ver­tise like they used to for sin­gle fam­ily dwellings. They are eaten up by new­com­ers look­ing for a home at a price they can more read­ily af­ford than our neigh­bours to the east. Projects aren’t ap­proved fast enough to keep up with the pace of de­mand.

The City is cur­rently work­ing through var­i­ous re­zon­ing and in­ten­si­fi­ca­tion pol­icy changes. LRT is highly dis­cussed but as yet still “on the books.” The in­ten­si­fi­ca­tion it is pur­ported to bring re­mains to be seen. Smaller de­vel­op­ment slowly chip away at much needed units. The City has done re­search that iden­ti­fies that they still need fi­nan­cial pro­grams to keep the cur­rent pace of down­town de­vel­op­ment go­ing. Down­town is chang­ing, but slowly.

Now what about the is­sue of gen­tri­fi­ca­tion? This is a hot topic as the is­sue of price in ex­ist­ing neigh­bour­hoods sky­rock­ets. In Burlington, it is as sim­ple as this. If a new in­fill de­vel­op­ment is

pro­posed, the price of the houses around typ­i­cally goes up. But, if the new de­vel­op­ment isn’t there, sup­ply is low­ered and de­mand re­mains the same, so the price would go up re­gard­less.

So change in our neigh­bour­hoods is com­ing. Both in terms of what it looks like, and the price to buy in it.

In Hamil­ton, you can pur­chase a lovely older home. Peo­ple come from out of town for just such an hous­ing choice. Be­cause a sim­i­lar choice in Toronto is far out of their reach. But they can come here, in­vest into it, and still save money. New home­buy­ers to the mar­ket elect this more af­ford­able choice, and ren­o­vate to in­clude to­day’s lat­est and great­est fea­tures, be­cause for them it is a bet­ter op­tion. But, the area prices goes up.

So what is the is­sue at the core of this? It is sim­ply sup­ply. Our cities are ex­pected to grow, but hous­ing op­tions aren’t grow­ing at the same pace. We have to ac­knowl­edge that there are con­straints to the sup­ply of homes in On­tario. And con­straints to sup­ply as a whole, whether they be phys­i­cal bar­ri­ers like build­out, or pol­icy bar­ri­ers like red tape that in­crease the time it takes to get new hous­ing built, all af­fect price.

And there’s only one set of peo­ple who con­trol con­straints – gov­ern­ment. Mu­nic­i­pal­i­ties are RE­QUIRED to plan for this growth. They are do­ing their best to ac­com­mo­date peo­ple who come. But as it be­comes more ex­pen­sive to build, peo­ple will go to those ar­eas that re­main more af­ford­able than the GTA. And that is here. So the next time you talk to some­one who can’t af­ford to live here any­more, they should be ask­ing: what is the gov­ern­ment do­ing to help, as op­posed to pay­ing lip ser­vice to the real is­sues we have?

For more in­for­ma­tion on this ar­ti­cle, or to con­tact Suzanne Mam­mel, 905-575-3344, info@hh­hba.ca; www.hh­hba.ca, @HHHBAOf­fi­cial

Suzanne Mam­mel Ex­ec­u­tive Of­fi­cer HH­HBA

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