Representatives from the Building Industry and Land Development Association (BILD) and the Toronto Real Estate Board (TREB) held their first ever joint briefing today on the state of the GTA housing market. Using data from RealNet Canada Inc., the findings show that low-rise home ownership remains in high demand while prices increase and land restrictions continue to impact housing supply.
The update was provided by several real estate players: Stephen Deveaux, BILD Chair and Vice President of Land Development at Tribute Communities; Mark McLean, TREB President and Broker/Manager with Bosley Real Estate Ltd.; George M. Carras, Founder, RealNet Canada Inc. (an Altus Group Company) and President, RealStrategies Inc.; Jason Mercer, TREB Director of Market Analysis and Service Channels; Bryan Tuckey, President and CEO of BILD; and TREB CEO John DiMichele.
The organizations acknowledged that there has been a structural shift in the kinds of housing the market is providing. The first 10 months of 2015 saw a record number of sales—124,123 new and resale homes in the GTA—tracked within TREB’s MLS system. Of the 26,388 new homes coming online, 81% of them are highrise condominiums. Only 4,980 new low-rise homes, which includes single-detached, semi-detached and townhomes, were recorded during the same period. Prices for low-rise homes climbed from $387,369 in 2005 to $802,376 as of October 2015. Similarly—though not to the same magnitude—high-rise condominium units jumped in price over 10 years from $288,587 to $440,382. Though high-rise prices have increased, the size of units have generally decreased as land becomes limited. The average size of a high-rise condominium unit in 2015 was 767 square feet, compared to 908 square feet in 2005.
The BILD and TREB members in attendance stated that while the industry is adapting and finding innovative ways to meet the province's intensification targets, housing affordability is a major concern for many potential homebuyers, especially first-time homebuyers. Detached homes are not being built at the same rate they once were, partly because of provincial initiatives like the Growth Plan for the Greater Golden Horseshoe and the Greenbelt. In an effort to curb urban sprawl, these policies have restricted the land available for development, instead encouraging higher density development in targeted areas.
BILD and TREB argue that other factors, such as development charges, Toronto's Land Transfer Tax (LTT), outdated zoning laws and NIMBYism, has contributed to the average price of detached homes in the GTA jumping to $962,312. Their findings suggest that with a down payment of 20%, the annual family income would have to be $174,854 in order to afford an average detached home.
With the GTA growing by 100,000 people each year, the demand for low-rise housing has remained strong. TREB president Mark McLean argued that government policy continues to put an unfair burden on new homeowners. The province's plan to allow municipalities the ability to charge their own land transfer tax, he says, would contribute to homeownership affordability issues. A BILD-commissioned study in 2013 showed that government fees and taxes amount to one-fifth the cost of a new GTA home, costs which are passed on to the homebuyer. Stephen Deveaux pondered an increase in other taxes as a possible alternative to the LTT and growing development charge rates. Such a move would ensure the tax burden is shared among all GTA residents, rather than the current system, which BILD believes, is unfairly targeting new homebuyers.
With the first 10-year review of the Growth Plan and Greenbelt now underway and federal proposals for a national housing strategy being considered, BILD and TREB emphasized that governments need to educate residents about how public policy changes will impact the GTA housing market.
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