Toronto Housing Crisis Caused By 'Government-Induced Land Shortage': Study

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As Ontario’s provincial government brings in new rules aimed at cooling the province’s overheated housing markets, a report argues the government is to blame for the crisis in the first place.

The report from Ryerson University’s Centre for Urban Research and Land Development says the 2006 Places To Grow plan for the Greater Golden Horseshoe Area left too little space around the region to build single-family homes, and mandated too much land to build condos.

"There has been a marked mismatch between the types of units brought to the market and the types demanded," authors Frank Clayton and David Amborski wrote.

"A large proportion of the new completions have been high-rise condominium apartments whereas a large proportion of the demand has been for owner-occupied ground-related housing."

toronto condo towers
Condo towers along Toronto's waterfront. A new report says government legislation has caused too many condos to be built, and too few single-family homes.

The report suggests that the measures taken to cool down the current "frenzied" market won’t solve the fundamental problems that started driving up Toronto house prices years ago.

"While there is a need to take action to remove speculative-type purchasers from the [Greater Toronto Area] housing market, this is not a solution to improving housing affordability ... over the longer-term," the report states.

The study cited research from 2005 which predicted that, in order to meet demand, the GTA’s housing mix should be 70 per cent single-family homes and 30 per cent apartments/condos between 2001 and 2011.

But thanks to strict density requirements put in place under the 2006 plan, only 46 per cent of residences built during that time were single-family homes.

"The blame falls largely on the provincial government and municipalities for failing to respond effectively to the expected demand," the report said.

The growth plan also slowed down the expansion of municipal services like water and sewers, the report says, reducing the supply of developable land, the report said.

housing starts toronto
Toronto used to see more single-family home construction than condo construction, but that changed after the provincial Liberals introduced the Places To Grow plan in 2006, as this chart from Bank of Montreal shows.

Greater Toronto housing is the least affordable it has been since the late 1980s, according to estimates from various housing affordability indices. At that time, mortgage rates were in the double digits.

The average house price in Greater Toronto jumped 33 per cent in the past year, averaging $916,567 in March, including condos. The average price of a single-family home in the city of Toronto is now $1.57 million.

New data from TREB released Tuesday shows that rapid price growth has spread to the condo market as well. The average Greater Toronto condo sold for $489,551 in the first quarter of this year, up 24.3 per cent from the same period a year earlier.

"Market conditions became much tighter in the condominium apartment segment over the past year, with sales accounting for a greater share of listings," said TREB’s director of market analysis, Jason Mercer.

The report squares with the arguments made by some developers, who argue long approval times and lack of serviced land is slowing down home construction.

Some of them also argue that the Greenbelt around Greater Toronto is driving up prices by limiting land.

houses construction toronto
Construction of new homes in Vaughan, Ont., north of Toronto, Oct. 14, 2016. (Photo: Getty Images)

The Ryerson report doesn’t take a stance on that debate. Regardless of the quantity of land, "much of the designated land is years away from obtaining servicing allocations and obtaining subdivision approvals," the report states.

"What is required is a shift in the direction of the provincial government’s land-use planning policy to one of aggressively supporting a major initiative to bring more serviced sites for ground-related housing to the marketplace as soon as is practically possible."

But Premier Kathleen Wynne's government is moving in the opposite direction.

The Liberals are currently preparing an update to the 2006 Places To Grow plan, which will intensify density targets for municipalities around Greater Toronto.

Many developers argue that will result in even fewer single-family homes being built, and even higher home prices.

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