February 27, 2019 | buyers
Toronto buyers are frustrated. And who can blame them? Yearly gains in home prices have eroded affordability in this city for over a decade now. And yet the buyers still come. The city and region grows. So, why are people coming here if affordability is eroding? Well, there are forces at play in Toronto and many, many other cities in the world that are really transforming some cities. There is a larger cultural phenomenon at play right now where people are moving into cities in large numbers. Not every city. But certainly this one. Toronto does not have the kind of stresses and strains as many cities in developing nations, but still, we can see that the demand to live here has grown, and our city has changed because of it, for better and for worse.
Some of that Toronto growth has to do with the job opportunities available here. Over the past 10 years, for example, tech has grown at more than 2.5 times the pace of the energy sector and three times the overall Canadian economy. It also has to do with a desire to live in an energetic place with many cultural draws other cities don’t have. The desire to live here may be as simple as wanting to lessen your commute time home, even if you don’t take in the culture and sports of Toronto.
Despite that, Toronto could do better. Though I doubt we will ever return to a golden age of affordability, we can certainly do some things to make this city function better. We need to listen to what buyers want and build more of it. With the increase in the demand to live here, there have been many new condos added to the city. Toronto does build more high-rise condos that most other cities in North America, even ones that are significantly larger. So far, many of these condos are overwhelmingly one bedroom condos. On the other end of the spectrum, you have the coveted detached houses which have become out of reach for many buyers.
So far, Toronto has responded to our growing needs by building mostly one bedroom condos and high rises. What is missing is the middle. Toronto has built few properties that are more affordable than a single detached house, but bigger than a one bedroom apartment. This “missing middle”, as it has been dubbed, needs some attention.
The housing types in the “missing middle” include ownership and rental townhouses, duplexes, laneway homes, triplexes and stacked townhomes.
Why is this housing type built so infrequently these days? Some of it has to do with developers. The more storeys a developer can build, the more money they will make. I’m not trying to villainize all developers here. In some cases the land is so expensive that they really only have the option to build high or they won’t break even. They also are limited as to where they can build.
Some of the reason this “missing middle” in Toronto has not built enough has to do with Toronto’s Official Plan. Now, don’t get me wrong. There are a lot of good things about the Official Plan. It is a good idea to have rules and regulations on how to build in a given neighbourhood. You don’t want to give the green light to a 60 storey condo in an area that only has houses. That’s poor planning. The Official Plan does help keep neighbourhoods intact without sprawling development.
Still, the current planning system may need a huge overhaul if we want to improve affordability and livability here. Right now, the current planning system in Toronto favours high density in specific pockets of the city, while discouraging development in most of the remaining areas. The housing affordability challenge in Toronto is a citywide, even region-wide issue. And the tougher affordability becomes in Toronto, the tougher it will become as people migrate out to find housing as the city grows.
It is up to the City of Toronto to loosen supply-side policy so that Toronto can offer people what they want – affordable “missing middle” housing. Many of us in Toronto have witnessed intense development in neighbourhoods like Liberty Village, downtown or Corktown.
The truth is that 75% of Toronto’s land is defined as “stable neighhourhoods”. This means most of Toronto is protected from intensification to prevent change in the character of that neighbourhood. The only types of units that can be built in these neighbourhoods are the prevailing dominant housing type. The result is that, in a neighbourhood predominately made up of single-detached homes, only a single detached home can be built.
This means that the vast majority of Toronto development in the past 20 years has been high-rise condos, even though there is great demand for low rise living across all age groups, including Millennials. Very little of the “missing middle” has been added.
According to this Ryerson study Toronto could create room for over 200,000 units by opening up predominately single and detached neighbourhoods to “missing middle” construction.
Other things to improve things for the “missing middle” include incentivizing residents to build laneway housing. There is a lot of wasted land in long Toronto backyards and laneways. And to be fair, this appears to be the way the City is going.
Toronto’s Official Plan not only protects most of Toronto’s geographic space from development, including low-density residential neighbourhoods in population decline, but it also ignores long-standing industrial/employment districts that are outdated and under utilized.
There is a lot of land zoned industrial that could be freed for development. For instance, right in the city, at the Stockyards at Keele Ave. and St. Clair Ave. West. Already, there are new projects under way here to make this area from Caledonia to Keele a higher density living place where there are large swaths of industrial land near the residential areas. Another area to include is the land south of Eastern Avenue in Leslieville that has been vacant too long.
Toronto has 140 official neighbourhoods. The majority of development has occurred in Toronto’s downtown areas and centres, while many low density neighbourhoods have had no development at all. A new Official Plan should allow neighbourhoods outside of the downtown core to have higher density. More than 800,000 new people over the next 30 years need somewhere to live in the city, and this doesn’t account for the larger number of people outside the city in the GTA. Some planning is definitely needed.
I don’t think the development needs to be reckless, where condos can be built anywhere to cater to the needs of densification. I certainly don’t advocate for the removal of the Green Belt Policy that protects natural habitats around the GTA. We can have smarter development than that. You may be surprised to learn that the Official Plan protects many low-density areas located along subway lines in the city. These are the perfect places to densify since they are along the subway line.
I’m not sure we’ll ever return to a time when prices are much more affordable on our current trajectory in this region. Still, there are things we can do to make things in the future unfold in a better way for buyers, and build the kinds of properties many buyers are looking to find.