They don’t build them like they used to.
In the Greater Toronto Area, developers shifted to building more dense, multi-family projects — and fewer detached homes — following provincial policies geared towards curbing urban sprawl that took hold in 2006.
The number of unsold new detached dwellings in GTA builders’ inventories last month neatly demonstrates this trend. There were just 534 of those homes available then, according to Altus Group data.
Now an eminent economist has charted how development has turned away from single-family homes since the 1990s when, in the aftermath of a Toronto bubble, low-rise housing construction overtook high-rise starts.
“Supply composition has shifted since higher intensification policies were put in place back in 2006,” writes BMO Senior Economist Robert Kavcic in a note sent to clients this morning.
The accompanying chart illustrates the path towards a situation in which a region of millions has only several hundred new detached homes to offer house hunters.
It plots monthly seasonally adjusted housing starts for Ontario, only tracking centres with populations of at least 10,000.
Kavcic does note one recent bright spot: the number of single-family homes Ontario builders broke ground for last month represented a 10-year high. In February, builders were on pace to construct nearly 30,000 of them this year.
“That’s encouraging given the supply-side constraints in the detached market, but it won’t eradicate the issue — new vintage ‘detached’ homes generally come much more densely packed, on narrower lots, with less favourable transit access,” he explains.
But he also clarifies that while the shortage has led to price increases, dwindling detached supply alone can’t be blamed for soaring prices in the GTA’s housing market. The average price of all GTA homes, including condos, sold last month was $875,983, up 27.7 per cent from a year ago, according to the Toronto Real Estate Board.
“We’ve long argued that shrinking detached-home supply within the overall housing stock has helped drive GTA price growth, but does not justify the explosion in prices, including condos, within the past year.”