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Tag Archives: urban sprawl

Toronto makes list of least affordable housing markets: study

Jessica Smith Cross – Metro

A study placing Toronto yet again among the least affordable housing markets in the world has raised a debate about whether or not Ontario’s Greenbelt is to blame for sky high house prices.

Comment: Partly, but only as one of 20 different reasons.

On one side there’s the head of an American think tank who describes himself as “pro-choice” on the issue of urban sprawl and on the other is a pro-densification and transit building philosophy shared by Toronto’s chief planner and the Pembina Institute.

The 11th Annual Demographia International Housing Affordability Survey ranks Toronto 74th out of 86 major global cities in its “affordability index” which compares median house prices to median income.

Comment: That is barely making the list, don’t you think?

Toronto real estate market
The conclusion the author draws is that land use policies, like Ontario’s Greenbelt plan, make cities unaffordable and their residents poorer.

Comment: And that conclusion is wrong. Prices are rising because houses are scarce and bidding wars are common. Mortgage rates are low, allowing people to spend more. Land is rare downtown, pushing up the price of land on which to build condos. Consumer preferences are changing, making downtown living more desirable than the suburbs. Greenbelt legislation is WAY down the list.

Wendell Cox, an American urban planner and the author of the report, argues it’s an issue of supply and demand: the Greenbelt policy makes less land available for development, which makes the price of the available land, and the houses on it, more expensive.

Comment: But it doesn’t make much land unavailable. There is a ton left to build on, mostly way out in the 905. It doesn’t affect the price of land in downtown Toronto.

“The fact is, all economic teaches is if that supply of a wanted good or services is limited, the costs will tend to go up, all other things being equal,” he said.

Comment: Which is why the lack of supply of houses in the 416 is the main reason prices are rising as much and as fast as they are.

Cox said all of the cities that are not affordable have land use plans that restrict growth, or sprawl, and those that are affordable don’t. Detroit is most affordable, followed by, Rochester, Buffalo, Cleveland and Cincinnati. Hong Kong, followed by Vancouver, Sydney, San Jose and San Francisco are the most expensive, by the same ranking.

Comment: Detroit is a hollowed out shell of a city with no jobs and horrible violence. Land use plans are moot. Rochester, Buffalo, Cleveland and Cincinnati are also dying cities. Their industries are gone, unemployment is up and they are urban wastelands. That is why they are cheap. Vancouver, Sydney, San Hose and San Francisco are all nice and desirable cities with vibrant cores full of life and work opportunities. Land use has NOTHING to do with either end of the scale – it is a matter of which cities are thriving and which are not. Toronto is thriving, thus becoming more expensive. Someone is comparing cities and missing the point entirely. Would you rather live in Cincinnati?

Cincinnati
The ranking is often reported widely in cities around the world.

Cox said he’s been devoted to this issue for years, out of concern on the impact rising home prices have on making people poor. His biography includes a life of work for conservative American causes arguing for building roads and suburbs against most forms of public transit and dense urban planning.

Comment: Rising home prices don’t always make people poor. My house is worth $130,000 more today than I paid for it almost 6 years ago. On paper, I am now worth $130,000 more than I was. Include the mortgage I have paid down and I am probably $170,000 up from when I bought the house.

The ranking, and a news story based on it, caught the ire of Toronto’s chief planner, Jennifer Keesmaat, who argued, in a series of tweets, that the study was flawed: it misses how houses are unaffordable in dense walkable areas that are considered highly desirable, but affordable and less desired, on the car-dependent edges where the high cost of transportation must also be taken into account.

Comment: That is also true. Which is why the 905 is cheaper than the 416. Partly. But she is right in that the study is missing the point. The cities are not ranked the way they are because of land use policies.

The Pembina Institute studied the impact of the Greenbelt on housing prices and found Cox’s argument is too simple.

“We don’t believe it’s a lack of land issue,” said Cherise Burda, Ontario Director of the Pembina Institute. Instead, it’s a policy issue.”

The Pembina Institute authored a report that found there is no shortage of the developable land in the Toronto area, like Cox suggests, but it’s far from Toronto and other employment centres.

Comment: Right. Which is why houses get built in the 905, because that is where the land is. Downtown it is condos, because the land is in short supply. They could build houses on those lots, but each home would cost $15 million.

Homes are expensive near Toronto, because there are few single family homes here and they’re highly sought after, she said. Much of the new development are small condos downtown and large houses in the suburbs, but there’s a lack of middle ground: mid-rises and townhouses in sought-after central, walkable neighborhoods, that suit a broader range of families.

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Contact Laurin Jeffrey for more information – 416-388-1960

Laurin Jeffrey is a Toronto real estate agent with Century 21 Regal Realty.
He did not write these articles, he just reproduces them here for people who
are interested in Toronto real estate. He does not work for any builders.

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