Toronto’s ongoing residential real-estate boom went gangbusters again in 2015. The Toronto Real Estate Board (TREB) has announced that the 43,000 realtors it represents concluded 101,299 home sales – a 9.2-per-cent hike over the year before. House prices rose nearly 10 per cent during the year, which meant that the ticket for a place to live in the Greater Toronto Area in 2015 was, on average, $622,217. Some $63-billion changed hands, and, according to the TREB, a good time was had by (nearly) all.
Such, anyway, are some of the findings in the TREB’s recently-published Market Year in Review and Outlook Report. It’s the non-profit group’s first annual round-up of statistical and anecdotal information about the retail-housing industry in Toronto, the GTA and the large, densely populated zone of south-central Ontario known as the Greater Golden Horseshoe. To fill out the picture, board CEO John DiMichele and his team commissioned surveys of homeowners, used new and recent studies of economic and consumer trends by other agencies, and solicited commentaries (several included in the appendix) from government leaders, bank executives, workers in charitable trusts, pollsters and others.
Looking at the prospects for the year that’s just begun, the report’s authors see a few sombre clouds gathering on the horizon. Borrowing costs could become steeper. The supply of listings for single-family, low-rise houses is not keeping up with demand. But not to worry: The desire of Torontonians to own a home will surely make 2016 a bumper-crop year for both sellers and real-estate agents, and perhaps another record-breaking one.
If, of course, this desire is backed by the cash needed for a down payment. A whopping 70 per cent of people living in the GTA, according to a study cited here, are concerned that home ownership may be slipping beyond the grasp of many. While affordability comes up at various points in the report, my impression is that the issue is hardly top-of-mind at the TREB. After all, Toronto’s real-estate market has been doing fine, as those billions of dollars in sales definitely testify.
You have to go to the back of the book, where the solicited remarks are shelved, to get more than a hint that the high cost of housing may be worth worrying about. And all the complaints to be found there aren’t coming just from persons or organizations in the business of helping the needy and ill-housed.
Derek Burleton, for example – he is a vice president and deputy chief economist of the TD Bank Group – names “deteriorating affordability” as one of “the most pressing long-term issues facing the region.”
“This challenge used to be concentrated among low-income residents in the rental market,” he writes, “but has since spread to those households of moderate and higher incomes within the home-ownership segment. Higher land costs and restrictive government regulations have made it increasingly difficult to supply housing at an affordable cost.”
But what about condos? The report’s authors correctly observe that high-rise digs are decidedly cheaper than single-family homes, and that plenty of units are available. Not so fast, Mr. Burleton advises. “The region’s focus on densification has been a laudable goal, but it can reasonably be argued that the pendulum has swung too far in favour of small condo units that are typically tailored for investors and short-term living. It raises the question of how the [Greater Golden Horseshoe] will accommodate the future changing housing needs of both the echo generation as well as the growing population of seniors.”
With increased density comes increased stress on the basic systems and services that have made life in the GTA attractive. Infrastructure is aging; streets and subways and buses are crowded. “These longer-term risks to the quality of life in the [Greater Golden Horseshoe] have been over-shadowed by the decade-long boom in housing sales and prices,” this writer says. “These cracks will become increasingly visible once housing activity embarks on a cyclical cool-down and tailwinds of the boom begin to subside.”
Toronto and region have not yet reached a point to no return from the abyss. But, several contributors to the appendix believe, action by politicians – the very mayors and councillors and policy wonks whose boosterism pervades the TREB’s document – is urgently needed to avoid the worst. According to Mr. Burleton, “housing policies that bring down the cost of construction, speed up delivery and improve the economics of investing in a broader array of housing types, including rehabilitation, would translate into lower costs for residents over the longer term. … Addressing these challenges through a more collaborative approach will be critical to securing economic, social and environmental prosperity in the future.”Report Typo/Error
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