Maimoona Mehmood and her husband, Syed Ali, have finally bought their first home, and you have to be happy for them and their three children. The Pakistani-born couple moved into their new two-bedroom unit in a Mississauga, Ontario, townhouse development in June, paying $279,000. They worked long and hard to save money, he as a dispatcher for a trucking firm and she earning $12.50 an hour at Pizza Pizza. And for the past six years, they made do with a $900-per-month basement apartment. “I looked at the ceiling a lot,” says Mehmood.
Even so, like countless other Canadians in what seems to be the longest and strongest real estate boom ever, Mehmood and Ali had to stretch to buy. They put down just 5%. That kind of leverage worries federal Finance Minister Jim Flaherty and many analysts. Home prices in Toronto and other major cities are still at or near record highs, and so is average household debt. Is the boom a bubble, and is it about to go bust?
No one knows. In the meantime, people still want and need to buy homes. If they’re going to crack the affordability nut, there are basically just two ways to do it: more housing supply and some form of financial help for buyers and/or developers. But Flaherty has tightened mortgage rules, interest rates have nowhere to go but up, and Ottawa and many provinces have long since retreated from the social housing business. Are there any other solutions?
Ask that of a unique home builder, the one that Mehmood and Ali bought from: Daniels Corp. It’s run not by a central-casting developer but by a onetime social-housing activist and part-time musician, Mitchell Cohen. Daniels markets itself as a developer who looks out for the little guy, the one who embraces public-private partnerships like the revitalization of Toronto’s massive Regent Park public housing project. Yet Daniels is also cashing in on the city’s red-hot condo boom, building some flashy towers with small units that sell for $300,000, $400,000 or even more. Few builders give you a more complete perspective on the entire market.
Herewith, then, five tales of how Daniels and its buyers make the numbers work.
Sureya Ibrahim, in her 30s
Kate Sellar, 35, and Ryan Fritsch, 35
Ibrahim, an Ethiopian-born single mother of three children, lives in a shiny new three-bedroom brick-and-glass townhouse in the first phase of the redevelopment of the infamous Regent Park neighbourhood. Sellar, her husband, Fritsch, and their two-year-old son, Jay, live in a townhouse on the next block. You’d be hard-pressed to see any differences between the two. But Ibrahim’s unit is owned by the city’s social-housing agency, the Toronto Community Housing Corp. (TCHC), and her rent is geared to her income—she pays about $900 a month. Sellar and Fritsch, both lawyers for agencies of the Ontario government, bought their townhouse for $605,000 this past June. Even at a modest 2.9% mortgage rate, their monthly payment is close to $3,000. Does either family think there’s anything wrong with that disparity? Nope. “This is what makes the neighbourhood,” says Ibrahim. Sellar and Fritsch agree. “If this were just a gentrification or a land grab, we wouldn’t have been interested,” he says.
The original Regent Park, built in the late 1940s and 1950s, sprawled across 69 acres downtown: the biggest and most ambitious public housing development in Canada. Daniels is now seven years into a $1-billion, 20-year rebuild that aims to replace all 2,083 subsidized housing units, and add more than 5,000 condo and townhouse units to be sold at market prices. The revitalization is a sweeping attempt to correct the failures of the old Regent Park. That incarnation was based on the “garden city” model of public housing—apartment blocks separated from one another by suburban-like lawns, and closed off to traffic from the rest of the city. But that design was problematic. Emergency vehicles couldn’t easily get in. At night the area was full of dark enclaves, with few pedestrians or people sitting on porches—what Jane Jacobs called a neighbourhood’s “eyes on the street.”
Regent Park was closed off economically, too, since all units were for low-income tenants, and there were no shops. In the 1970s, the place became notorious as a haven for gangs. After Ibrahim moved into a two-bedroom apartment in 1997, she says friends from outside the neighbourhood said, “You have kids. What’s wrong with you?”
When Toronto began consultations on the revitalization in the early 2000s, residents agreed that it wouldn’t work unless there was a mix of incomes, and of social and market housing. Using that strategy, the city had successfully built the St. Lawrence Neighbourhood. The mix was necessary for financial reasons, too. TCHC had committed about $600 million to the new Regent Park, but that wouldn’t cover the whole cost. A builder would have to be able to earn a profit.