Demand for lowrise homes continues to outpace supply
Over the past 10 years, the average price of new ground-related homes in the GTA has more than doubled.
In June, according to data supplied to us from Altus Group, the average price of new lowrise homes — such as detached, semi-detached and townhomes — was a record $887,543. A decade ago, in June 2006, these homes could be pur- chased for on average $393,398.
A constrained supply of new dwellings, especially single-family detached homes, is one of the key drivers of this rapid price growth. That fact was highlighted by the Canadian Housing and Mortgage Corporation in its recent assessment of the housing market.
In the GTA this past June, there were only 2,064 ground-related homes available for purchase in builders’ inventory. That’s a fraction of the 16,560 that were on the market a decade ago.
Single-family, detached houses accounted for just 1,002 of those new homes available in the GTA in June. That compares to 10,823 a decade ago. The average price of those much coveted homes, $1,061,388 this June, versus $442,420 10 years ago.
So why don’t we increase supply and just build more? The answer: provincial policy.
The building and development industry is heavily regulated and government policy determines where and how development oc- curs, and how land is used.
Ten years ago, in June 2006, the provincial government introduced Places to Grow, the growth plan for the Greater Golden Horseshoe. It changed the nature of development in the GTA: the plan mandates intensification and requires increased development densities.
Our industry has adapted to these policies. While ground-related homes dominated the market in the early 2000s, today we build at least as many highrise homes as lowrise homes. The industry has also been incredibly innovative in introducing new housing choices, such as an array of stacked townhomes, to meet government policy and consumer demand.
Yet, in the past decade, the demand for new ground-related homes has not diminished. When new lowrise projects launch, those looking to buy usually face long lineups. Some potential buyers even arrive the night before the launch, and sleep in their cars, to get a place in line. Recently, a new townhome project in Mississauga sold out in seven hours. That’s what happens when demand far outpaces supply.
Plans were announced this past May to change the growth plan and increase intensification and density requirements. The proposed changes will mean much more development within areas that are already built and will require new development to be significantly denser than what is being built today under the existing plan.
Overall, far fewer ground-related homes, especially single-family detached homes, will be built and supply of such homes will be further constrained. Unless demand for these types of homes changes, prices will only escalate.
We believe the province should take a more measured approach. Before it increases intensification requirements, it needs to examine the impact of its existing policies on the availability and price of homes.
The government is consulting on its proposed changes until September 30. Let them know what you think. Contacting your local MPP or use the province’s online feedback form at www.mah.gov.on.ca/ Page10882.aspx. Bryan Tuckey is president and CEO of the Building Industry and Land Development Association (BILD) and is a land-use planner who has worked for municipal, regional and provincial governments. Find him at twitter.com/ bildgta, facebook.com/bildgta and bildblogs.ca.