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On that note, I've got a friend who's looking actively for a condo and there's virtually nothing available that's worthwhile in his price range (+/- $550K) and neighbourhoods of choice (west end). Wherever something decent does come up, there's an insane bidding war and the price is driven into the stratosphere.

Despite the tsunami of construction over the past quarter century, there still isn't enough product.
Blame the speculative demand fuelled by low interest rates.
 
Blame the speculative demand fuelled by low interest rates.
I mean, sure, yes.

But the population growth rate alone is enough to fuel these prices. We aren't building enough supply, quite simply.

I'd be more worried if interest rates changed as that would eliminate some investors who are supplying the necessary capital to launch many of these projects, slowing construction starts, and further constraining supply while population growth and housing demand continues to grow.
 
^I have my doubts that population growth alone is enough to drive prices this hard this fast. Canada's population has been growing 200-300k every year since forever without the price growth of the last 10 years.
 
^I have my doubts that population growth alone is enough to drive prices this hard this fast. Canada's population has been growing 200-300k every year since forever without the price growth of the last 10 years.
Perhaps because there used to be more space to grow and none of the major cities had filled up yet?

What do you think is fueling the high prices then besides population growth and lack of supply?

Population growth in Canada:
From https://www150.statcan.gc.ca/n1/pub/11-630-x/11-630-x2014001-eng.htm
Screenshot_20210412-151419.png

First time posting in UT tho, been lurking for a couple of months but decided why not join in so hello everyone :)
 
Perhaps because there used to be more space to grow and none of the major cities had filled up yet?

What do you think is fueling the high prices then besides population growth and lack of supply?

Population growth in Canada:
From https://www150.statcan.gc.ca/n1/pub/11-630-x/11-630-x2014001-eng.htm
View attachment 312215

First time posting in UT tho, been lurking for a couple of months but decided why not join in so hello everyone :)

First, welcome to UT.

Second, the discussion about what drives prices is extensively discussed in this thread: https://urbantoronto.ca/forum/threads/baby-we-got-a-bubble.10523/post-1673563

Where I recently took a look at Housing Starts, and Completions, Household Size, and Population Growth; amongst other things.

 
^^^ That said, there's a very large cohort of people--Millennials and younger, transit-dependent, cyclists, urban aficionados, etc.--my friend included, who wouldn't leave the city in their worst nightmare or even the core of the city. For them, suburbia = death lol
This is 100% true. Living in Suburbia ... no thank you!
 
This is 100% true. Living in Suburbia ... no thank you!
I wonder how those people expect to buy property if they feel they must live in the city. Unless of course they've given up on that. Sorry for the off topic posts.
edit: that's a sad perspective from those people btw lol
 
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Thanks for the great posts @Northern Light. We actually align almost perfectly on this issue, for once!

The supply issue is even more stark in certain housing typologies, which have been more supply constrained than others.

I like to believe that condos have a relatively unrestricted supply ability and are a sort of a "baseline" that account for changes in monetary policies, etc., that are other influencers of house prices.

Condos in the GTA have increased in value by 102% in the last decade, compared to inflation of ~18% over the same period. Significant! Much of this has to do with lower borrowing rates than in 2011 however, as well as higher average wages, etc. Only a small part of this is likely due to actual supply shortages, as the development industry generally has the ability to build as much of this product as it wants (though regulations and physical space issues increasingly arguably raise the minimum price floor higher than it could be, restricting supply at least a small amount, but that's another discussion).

The holy grail property though, the single detached home, increased a whopping 150% in the GTA over that same period.

That difference is a result of essentially 0 supply in the city while it is experiencing extreme growth pressures - the asset type moves up in income tiers as it becomes a more exclusive good.

Detached homes will continue this trajectory as society has decided that the environmental cost of providing those unit types in mass numbers enough to make them affordable is too great. That's fine.

Greater efforts need to be made to determine what an adequate replacement for them is though. The way we are doing things right now, isn't it. apartments are simply too expensive to construct on a per square foot basis to be able to affordably supply a large enough space to support families.

I would love, love, love to see far more stacked townhouse developments personally. They are relatively affordable to construct, continue to provide a neighbourhood type feel, and offer much lower costs per square foot to end buyers. They are simply too challenging to permit right now though, both from a zoning and OBC perspective.
 
Thanks for the great posts @Northern Light. We actually align almost perfectly on this issue, for once!

You're welcome. LOL

Greater efforts need to be made to determine what an adequate replacement for them is though. The way we are doing things right now, isn't it. apartments are simply too expensive to construct on a per square foot basis to be able to affordably supply a large enough space to support families.

I would love, love, love to see far more stacked townhouse developments personally. They are relatively affordable to construct, continue to provide a neighbourhood type feel, and offer much lower costs per square foot to end buyers. They are simply too challenging to permit right now though, both from a zoning and OBC perspective.

With my tongue somewhat in my cheek............what if I noted that we could target redevelopment of only the most inefficiently laid out yellow-belt lands for new single-family homes to help meet that particular need......

This particular parcel, outlined in white is home to ~60 homes on 46 hectares of land.

Assuming we rebuilt it at close to current, urban, dense subdivisions, like the one on the former racetrack site on Queen St. East....

We could have 1,350 homes in their place. Of course, that particular development does have near non-existent back yards, so maybe we could be less demanding.....

How about 3/4 that dense for about 1,000 homes, replacing the current 60.

For a net gain of 940.

1618260381066.png


If we pursued such a strategy in only 5-10 neighbourhoods (most with a materially smaller net gain of housing)....

I'm sure we could swing a net up tick of 5,000SFH in the City proper.

Do the same in the outer burbs, and we get 15,000 no problem.

;)
 
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At a more serious level; there are a variety of housing typologies that could take some strain out of the SFH demand.

Terraced mid-rise with larger unit profiles, and functional outdoor spaces that are 4x the largest balconies could do some of that.

So could simply dividing large'ish home lot in the burbs into two, (60ft frontage to 30ft or 50ft to 25ft).

Of course, that doesn't fully address well above inflation price rises in the condo market space.

Supply shortage is a piece of that; but that is entirely about built stock, its also about unoccupied stock.

Then there are non-supply related cost drivers ranging from parking to development charges, to the sheer amount of time capital is tied up on new builds here.

I'm not going to suggest that we could or should have as casual or simplified a process as one might see in some more rural U.S. States.

But there are communities there that for from developer acquisition to construction in 12 months and occupancy in 24 months or less.

That just doesn't happen here; and parked capital isn't free.

****

But demand inflation is also a factor, household size, low interest rates and yes, population growth.

They all come together to foist increases in price that are large than they need to be; and problematic.

There's nothing new under the sun; the problems here are all addressable. Governments choose not to, for a variety of reasons.
 
I wonder how those people expect to buy property if they feel they must live in the city. Unless of course they've given up on that. Sorry for the off topic posts.

Apologies for adding to the off topic posts but as someone who falls into the categories that Condovo & Miss J mentioned, I just wanted to highlight that some of us do own property in the city! Suburbia does not necessarily equate to home ownership, just like city living doesn't either.

Interestingly enough, in February, CIBC released a high-level economic report with the final paragraph working well as a TLDR:

The bottom line is that Covid seems to have accelerated some trends that were occurring prior to the pandemic. But the pendulum might have now swung too far. The discount for moving away from cities has narrowed, some of it under false pretenses regarding expectations about the future. Should Covid fade into the background, as is expected, the vibrancy of cities will return and so will the demand for housing within them.

https://economics.cibccm.com/economicsweb/cds?TYPE=EC_PDF&ID=12108
 

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