Have you ever wondered why the price of a single family detached home in Leaside and elsewhere in Toronto is going through the roof? I often wonder whether my children and grandchildren will ever be able to afford to buy a house. I know, however, that I could never have afforded to buy the house we live in today if I had to buy at the present prices.
The real estate agents will tell us that the reason for the high prices is location, location, location. But that doesn’t explain why the price of houses in the outer suburbs are also going sky high. The bankers tell us it is all the fault of the low, low, low mortgage interest rates. That is what is driving prices up they say.
Those things may play a part but the real answer is just supply and demand. In 2005 the provincial government of Dalton McGuinty passed “The Places to Grow Act” aimed at restricting detached home building in order to preserve farm land and contain urban sprawl by requiring the city to increase its housing density. Since then the vast majority of new home construction within Toronto has been townhouses and high rise apartment condominiums. Since then additional single family houses are constructed only, when a builder buys an existing detached home, tears it down and builds two houses on the same property. Thus with new young families coming into the market wanting to buy a house and with the total population of the city increasing demand for detached houses has gone up by leaps and bounds, while the supply of detached homes is virtually the same as it was in 2005. According to Canada Mortgage and Housing Corporation in the second quarter of this year in the entire GTA there were 46,152 condominium apartments under construction but only 39 detached homes. The result according to Economics 101 has been the enormous rise in the price of a house in Leaside and elsewhere in Toronto.
So what about affordable housing? Canada Mortgage and Housing Corporation tells us in a recent report that a condominium apartment is the affordable home for both the present and the future. The ever increasing high rise density will keep the purchase price of a condo apartment unit affordable, they say. But what if you and your family want to live in a detached house? It wasn’t very long ago that the “Garden City” concept of large lots and reasonably sized detached houses was considered “the Canadian family dream.” Apparently it still is. According to a recent Ipsos poll more than half of those intending to buy a home in the near future want to buy a detached home while only one quarter want to buy an apartment condominium. Good luck, unless both you and your spouse have very high paying jobs to meet the mortgage payments, even with these low, low, low interest rates your future lies in a condo unit whether or not that’s what you want.
Years ago we thought of Montrealers as apartment dwellers and East Yorkers and other Torontonians as detached home owners. Not so any more, the times they are a changing!