Why is housing so expensive these days?
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, firstname.lastname@example.org; www.hhhba.ca, @HHHBAOfficial
Suzanne Mammel Executive Officer HHHBA