Toronto Eastern Avenue Transit-Oriented Community | 44.4m | 11s | Infrastructure ON | SvN

[innsertnamehere]

Friendly reminder that excessive demand is the real issue

In before "muh supply": https://toronto.citynews.ca/2024/02...lion-ontario-government-building-faster-fund/

"The announcement comes after Toronto broke ground on about 31,000 new housing units in 2023." Was there ever a time when we were building this much?

The City of Toronto is building more than it has in decades - but it's very far from historic highs for completions on the metro level, particularly when you break it down by unit type completions and look at average occupancy levels.

In 2023, the Toronto CMA saw 47,428 unit starts. Compared to 2005, when 41,596 units where started, this is a 14% increase - amazing!

But dig a bit deeper. In 2005, 46% of units were single or semi-detached dwellings, which had an average occupancy of 3.75 people / unit at the time. In 2023, that had dropped to just 10% of starts, mostly replaced with apartment starts. Apartments house an average of only 1.7 people per unit in 2023.

The result: despite unit starts increasing by 14% since 2005, the number of people accommodated in new starts has actually declined 21% from 121,292 to 96,645.

Then you look at census data estimates for population growth.. and it gets worse, so much worse. Unfortunately Toronto CMA Population estimates are not yet available for 2023, so we have to use provincial-level estimates, but it gives you an idea. Ontario grew by 463,000 people between July 1 2022 and July 1 2023. Between July 1 2004 and July 1 2005, Ontario grew by 138,000.

So in 2005, the Toronto CMA built almost enough housing to house every single person who moved to the entire Province of Ontario. The CMA itself grew by 79,000 people, and we built enough housing for 121,000, or 153% of what was needed to accommodate growth.

In 2023, We built enough housing for 96,000 people in the Toronto CMA. At the same proportion of provincial growth as in 2005, the Toronto CMA would have grown by about 265,000 people in 2023. So we built enough housing for about 36% of the population growth the city experienced.

So basically, in 2005, we built housing for 153% of the growth we were experiencing. In 2023, we build just 36%. That is why we are in a housing crisis, despite housing starts technically being at "record highs".

And the crazy part? Q4 2023 had Ontario growing at an annualized pace of over 800,000 people. If that is sustained for any significant amount of time, the Toronto CMA may see housing starts decline to the single digit percentiles of the population growth it is experiencing.

I could also go on about how housing starts for apartments are more of false indicators of actual "housing getting built" due to the exceedingly long construction times versus low rise housing, etc.. if you want to paint an even worse picture of the status of housing in the GTA.. but I won't bother. (as a hint: One Bloor West would be 416 unit "starts" in, what, 2018? how are those units doing today on accommodating people?)

 

[Northern Light]

The City of Toronto is building more than it has in decades - but it's very far from historic highs for completions on the metro level, particularly when you break it down by unit type completions and look at average occupancy levels.

In 2023, the Toronto CMA saw 47,428 unit starts. Compared to 2005, when 41,596 units where started, this is a 14% increase - amazing!

But dig a bit deeper. In 2005, 46% of units were single or semi-detached dwellings, which had an average occupancy of 3.75 people / unit at the time. In 2023, that had dropped to just 10% of starts, mostly replaced with apartment starts. Apartments house an average of only 1.7 people per unit in 2023.

The result: despite unit starts increasing by 14% since 2005, the number of people accommodated in new starts has actually declined 21% from 121,292 to 96,645.

Then you look at census data estimates for population growth.. and it gets worse, so much worse. Unfortunately Toronto CMA Population estimates are not yet available for 2023, so we have to use provincial-level estimates, but it gives you an idea. Ontario grew by 463,000 people between July 1 2022 and July 1 2023. Between July 1 2004 and July 1 2005, Ontario grew by 138,000.

So in 2005, the Toronto CMA built almost enough housing to house every single person who moved to the entire Province of Ontario. The CMA itself grew by 79,000 people, and we built enough housing for 121,000, or 153% of what was needed to accommodate growth.

In 2023, We built enough housing for 96,000 people in the Toronto CMA. At the same proportion of provincial growth as in 2005, the Toronto CMA would have grown by about 265,000 people in 2023. So we built enough housing for about 36% of the population growth the city experienced.

So basically, in 2005, we built housing for 153% of the growth we were experiencing. In 2023, we build just 36%. That is why we are in a housing crisis, despite housing starts technically being at "record highs".

The above is an excellent example of the need to dig deeper on statistical claims. Its entirely possible for a stat to be 'accurate' while also being misleading.

That said, @Undead 's essential point remains. When you look at what changes in those two snap shots, the more jarring is change in population growth; with Toronto, Ontario and Canada taking on growth it was incapable of sustaining. Put another way, had growth been maintained at the the 2004/05 absolute number, the housing situation would have deteriorated at a marginal level.

But with growth having tripled, it deteriorated substantially.

 

[innsertnamehere]

Yup. The last two years in particular of immigration increases have lead to shocking declines in affordability as the country is simply not capable of ramping up construction to accommodate 3-4% annual population growth.

That said - even if the province had grown by 138,000 in 2023 as it did in 2005, we would have been in a structural housing deficit. Not only that, but we have been in a structural housing deficit in the GTA for going on 15-20 years now.

I picked 2005 as the comparison year for a reason - after that point, housing starts compared to population growth began their long decline to where we are today.

 

[Undead]

Thanks for demonstrating my point so well!

edit to add: I don't think it's particularly relevant that more units used to be low rise rather than high rise. Average occupancy has trended downward across the board, no? Certainly, we know many yellow belt areas have been declining in population for many years.

 

[innsertnamehere]

Thanks for demonstrating my point so well!

edit to add: I don't think it's particularly relevant that more units used to be low rise rather than high rise. Average occupancy has trended downward across the board, no? Certainly, we know many yellow belt areas have been declining in population for many years.

My point was that you are right that growth is too high - but even with growth being at a "normal" level we have a problem.

Unit type absolutely matters as there is such a huge difference in number of people accommodated in an apartment over a single detached house. Average occupancy has been declining yes, detached homes have gone from 3.75 people in 2006 to 3.65 in 2016 and apartments from 1.8 to 1.7 people in the same time frame.

The problem is that the GTA has seen a substantial decline in housing construction in the last 20 years through the transition to apartment dominated construction methods due to the shift from housing types which accommodate almost 4 people per unit to housing types which accommodate less than 2. It's a very important distinction in analyzing housing supply. You need two apartment units for every single detached home to house the same number of people.

 

[Northern Light]

My point was that you are right that growth is too high - but even with growth being at a "normal" level we have a problem.

Unit type absolutely matters as there is such a huge difference in number of people accommodated in an apartment over a single detached house. Average occupancy has been declining yes, detached homes have gone from 3.75 people in 2006 to 3.65 in 2016 and apartments from 1.8 to 1.7 people in the same time frame.

The problem is that the GTA has seen a substantial decline in housing construction in the last 20 years through the transition to apartment dominated construction methods due to the shift from housing types which accommodate almost 4 people per unit to housing types which accommodate less than 2. It's a very important distinction in analyzing housing supply. You need two apartment units for every single detached home to house the same number of people.

I think its important to say though that industry, even with more permissive zoning, would not have turned out substantially greater supply. Certainly there is policy room to address the shortage of trades, to a point, but they on the supply side, for the industry to turn out more units and more units of size would require households to have greater income.

You can impose (and I would support) larger minimum unit sizes.

That said, that will increase the end-point rent/sale price, if all other things are equal.

To bolster income, you either use the heavy hand of public policy (minimum wage laws, overtime laws, shift premium laws; you provide direct public subsidy to renters/purchasers, or you force a contraction in labour supply in order to drive wages up within the free market.

The middle option is problematic, because market prices will tend to rise in sync with any additional government largesse. The former option has a place, and is particularly helpful for lower-income renters. But its the last one that best moves middle-class affordable ownership. This, however, wouldn't simply require steady-state growth from the levels of 20 years ago, but an actual reduction. It can be achieved w/o actually freezing immigration, but requires more generous parental leave so more people take the full entitlement, more mandated paid vacation; and possible the 'sabbatical' or extended leave common in Australia ( employees can opt to take 90% of their pay routinely then take take six months off every 5 years at 90% pay, or a full year off every 10. )

One can also incent more people to live together.........but aside from larger unit sizes, this means promoting marriage/settling down at a younger age. To do that involves a great deal of shifting in social organization.

*****

May I suggest that this sub-thread is rather off-topic, and perhaps we could get the MODS to relocate it somewhere else; or elsewise just cut it short here, as we're definitely very OT.

 

[UtakataNoAnnex]

Respectfully, there is no evidence of this in the current crisis because we don't have enough supply of older buildings to stabilize/reduce rents (you can't have evidence on a market with oversupply at a time when you don't have enough supply to meet demand). Competition is not supposed to create altruism, it's supposed to create necessity, where rents stop going up (or go down) because landlords need to compete for renters that have choice (when landlords aren't competing because tenants don't have other options then prices won't come down). If you introduce rent control you'll never get that competition because supply will never catch up (look at the amount of actual rental apartments built in Toronto while we had rent control on new builds vs what is happening post rent control with players like Fitzrovia, Tricon, Bentall Green, etc). If you want evidence of what happens with oversupply then look at what happened during COVID. International students/AirBnb's were taken out of the equation and rents fell, UNTIL those students and immigrants started coming back in (check Toronto rent levels at the start of 2021 to see how low they got - go to a site like Condos.ca and compare the advertised rents at the start of 2021, when rental units were sitting on the market a lot longer than they are now, to what they were at the end of 2019, and to what they are today). If you want to understand current rents better than look at the prices of used cars during COVID, when manufacturers couldn't get their chips, and would-be buyers of new cars started bidding up the prices on used cars (which is what is happening with the rental market right now, there's not enough supply on the top end so everyone is bidding up what should be more affordable units in older buildings). You can also look at what happened to US rents in some cities when they overbuilt in 2008 (all the landlords were trying to rent out their condos).

Without human lives involved I suppose this makes sense...

...so let's start with this: Adequate housing is human right. Then let's see how those Atlas Shrugged economics add up.