Toronto’s Housing Affordability Problem Expected To Grow In 2020
After a brief slowdown, Toronto’s affordable housing problem may be getting worse, predicts a new report from the Toronto Regional Real Estate Board.
“The issue is constrained supply,” said Jason Mercer, TRREB’s chief market analyst and director of service channels. “The city needs to add a greater diversity of housing. But we’re probably talking years. There’s no relief on the way.”
TRREB’s fifth annual Market Year in Review and Outlook Report follows Toronto’s increased demand for ownership and rental housing, and the persistent lack of listings that has led to ballooning home prices.
In many ways, Toronto has become a victim of its own success.
“Robust regional economic conditions, strong population growth and low borrowing costs will support increased home sales in 2020,” TRREB President Michael Collins said in the report.
“Transactions will continue to outpace the growth in available listings. The resulting increase in competition between buyers will likely result in an acceleration in price growth across all major market segments.”
The report predicts GTA home sales will reach 97,000 in 2020 – up by almost 10.5% compared to 87,825 sales reported in 2019. However, new listings will witness a sharp decline, from 9,456 in 2019 to 7,836.
Increased demand and less supply means the overall average selling price in 2020 is expected to top $900K, close to a 10% increase from $819,319 in 2019. Compare that to a mere five years ago, when the average sat at $622,116.
“The price growth gets to the point where people simply look elsewhere,” Mercer said.
He characterized government efforts to combat the problem in recent years, like an increase in the Municipal Land Transfer Tax, as an “unsustainable and risky fiscal strategy for the city.”
“Various policy measures haven’t solved the problem,” he said. “Short term, bandages solutions work for awhile but then the problem rears its head again.”
Frank Clayton, senior research fellow at Ryerson University’s centre for urban research & land development, said a massive overhaul of the land-use planning system is needed to speed up the process and increase supply.
“Land supply is political. The province dictates what goes on, and the planning process remains very complicated and very long. It’s full of uncertainties; full of costs. Even with a high-rise, it can take years. It needs to be streamlined."
Both Mercer and Clayton said they are starting to see positive signs that the government is beginning to realize the problem.
“[Provincial] Conservatives are moving in the right direction now, but everyone underestimated the magnitude of the problem,” Clayton said. “If we think housing is a crisis, we should make it priority one. When demand for cars pick up, GM puts on another shift."