It’s no news that Toronto real estate is hot and has been for some time. Hot for some, of course, translates to seriously unaffordable for others. Shelter is considered affordable when tenants allot less than 30% of their gross household income toward payments. It’s worth noting that the average Canadian household has never been able to acquire a house at a cost less than 30% of their income. Toward the end of 2017, the median family was using up 47.17% of their income to pay their mortgage. And in Toronto, the reality is even more drastic: it would currently take 71.76% of the median Toronto family income to service your average Toronto home mortgage. National Bank of Canada (NBC) economists are saying that the Canadian real estate market is at its least affordable since the real estate bubble of the early 1990s.
Supply overshadowed by demand
The fact that Toronto is a highly desirable city—steadily entering the same league as London, New York, or Hong Kong—means that naturally, supply is being overwhelmed by demand, resulting in a dramatic rise in the price of homes, resale homes, and rentals. The population of the GTA has grown and continues to grow significantly, yet the housing supply has not been able to keep up. With 13 million inhabitants and counting, over 142,000 homes were built in 2014, making it possible to buy a detached single-family home close to the city center for $300,000. Indeed, the answer to the crisis in supply may just lie in building more homes until affordable housing becomes more abundant and accessible. Thus far, the housing options for those living in the GTA have consisted either of large and costly low-rise homes or else smaller high-rise condos. What’s missing are townhouses, triplexes, and mid-rise buildings.
It’s becoming more and more imperative that the Toronto housing supply crisis be addressed so new and future home buyers are not struggling to find affordable homes. Some are calling for the government to take action on the housing supply problem throughout the GTA. For example, the planning approval process needs to be streamlined to be made more efficient and less bureaucratic, land needs to be pre-designated and pre-zoned, and outstanding environmental assessments associated with critical infrastructure needs to be approved. Zoning bylaws and public education also need to be shaped in support of much-needed intensification policies.