Here we are again! The pandemic is behind us, life is back to normal and while interest rates have gone up 9 times over the past year, this hasn’t deterred many Buyers especially those who have chunky down payments and strong employment. Buyers who have been comfortably sitting on the fence watching and waiting are now back in the market.
This is all good news except that Buyers can’t buy if Sellers aren’t selling. Look around you. Do you see very many FOR SALE signs? We usually see an uptick of signs popping up along with the spring flowers but not this year. It’s pretty much the same in many condo buildings. Once again I reference the supply meets demand equation. The market is leaning towards Sellers again and even though the market isn’t so much regional but is more hyper local ( meaning there are mini markets within a larger market) the lack of inventory is fairly consistent in most parts of the city.
So why aren’t people selling? I think it’s because homeowners became accustomed to the record home prices of early spring 2022 and are reluctant to list unless they can get those numbers on the sale of their home. This is their prerogative but consider the following example as to why this thinking may not serve you best especially if you’re considering a move up. If your current home sells for 10% less than it would have in early 2022 (i.e. 1,000,000 – 100,000 = $900k) and the home you look to purchase also sells for 10% less than it would have back in early 2022 (i.e. 2,000,000 – 200,000 = $1,800,000). Can you see how you’re saving $100k by upsizing now?
Our inventory problem is more than about people not selling. We have a systemic inventory problem which has been a mainstay for years. Torontonians like me are called to vote this month for a new mayor and housing affordability and supply are at the top of the list in terms of hot topics. Everyone will promise to increase housing and solve affordability and I’m not here to tell you who to vote for. Honestly, I don’t even know who I’m voting for but here’s what needs to change in my opinion.
1) Cut the Red Tape and Speed Up Building Approvals.
To contribute towards the provincial goal of building 1.5m new homes over the next decade, the City of Toronto needs to build 285,000 new homes of all types by 2031 which is a 160% increase in housing starts from the previous decade. Did you know that Toronto ranked last in obtaining approvals of all major Canadian municipalities studied in 2022? The average time to obtain an approval to build in Toronto was 32 months. That’s 4.5 times longer than what’s allowed under the Planning Act. It’s pretty hard to build housing when it takes this long to receive approval from the city. Don’t you agree?
2) Support Smarter More Efficient Land Use
Building all of these homes depends on the availability of land and we need to use our land more efficiently since we have fixed municipal boundaries and only so much land to go around. This means that antiquated zoning rules need to change so that there is greater residential density within neighbourhoods and along major streets. The city has just passed the allowance of building up to 4 housing units per lot in neighbourhoods. This means more duplexes, triplexes and fourplexes can be built and in some cases these same lots allow for a laneway house or garden suite to be constructed.
3) Focus on the Development of Infrastructure, Community & Social Services.
Housing demand will remain robust. Stats Canada recently announced that Canada’s population grew by one million people in 2022 and we’ll be welcoming 500 new immigrants annually over the coming years. Most of these people come to Toronto. Here’s why! So, the next time you look up in the sky and wonder about all of those cranes (not the avian type!) you will know why Toronto has the most cranes in North America!