Building Boom? I Think Not!

2019 building levels in the GTA are comparable to 1990s levels – it’s astonishing. Let’s hope that the current/upcoming recession/depression/immigration decrease/foreign investment decrease aren’t how we solve this longstanding supply problem.

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Building boom? I think not!

One of the benefits of aging is having a longer history of experiences. I remember the housing recession in the early 1990s – it’s when I lost my job and my house. This was a period of housing stagflation (persistent high inflation combined with high unemployment and stagnant demand) in the GTA. 1995 was the worst year for housing completions in the 1990s.

A comparison of early 1990s with 2019 is truly astounding. Thank you, Ben Myers from Bullpen Consulting, for the outstanding data!

  • The total amount of square footage built in 2019 is comparable to what was being built annually in the early 1990s.
  • The number of bedrooms built in 2019 is the lowest in the past 22 years, and is comparable to 1990s levels.

The main cause of the GTA housing problem has not changed in decades! We are simply not building enough homes. Supply is sorely lacking. All levels of government are contributing to this problem, and none have been able to make any meaningful improvements.

We can expect this situation to deteriorate before it improves, if past performance is any indication.

The most likely thing to ease the problem is a total collapse in demand as a result of (take your pick(s)) recession/depression/immigration decrease/foreign investment decrease. All of these reductions in demand have significant adverse impacts on the economy. Let’s hope this isn’t how we solve the supply problem. I would love to see policy changes from all levels of government. That is the solution.

I’d love to hear your take on this issue. Comment below or find me on Facebook or LinkedIn to join the conversation.

Pushing for Progress: Tackling the Housing Crisis in Bracebridge

My latest project in the works in Bracebridge, ON – developing and building rental apartments – is attempting to address Muskoka’s housing crisis.

Bracebridge apartments site plan

The housing crisis in Ontario is well-documented. From Toronto and the GTA to other southeastern areas of the province like Guelph, Hamilton, Kingston, Kitchener, Peterborough, Barrie, Muskoka and beyond, there’s a serious shortage of housing – and especially low-priced, attainable and affordable housing. A growing population, increasing costs of home ownership, a lack of well-paid and secure jobs, and increasing numbers of single-person households are all contributing to the crisis.

There’s especially a shortage of rental apartments, because the incentives for builders and developers to create rental housing have been very low since the 90s, and the government hasn’t been able to do it on their own. In Toronto, we’ve seen a proliferation of condos, which have higher profit margins for builders. In regions like Muskoka, rentals haven’t been built because of zoning restrictions, prohibitive development costs and government limitations.

Tackling the Housing Crisis

I’ve written about this problem before. (Check out my blog post “Getting to the Bottom of Ontario’s Rental Problem”.) To increase rental supply, I think the best solution is for the private sector (people like me!) to work with government.

This is being done sporadically, but many are skeptical about private/public partnerships, especially with developers.

However, we can all see that neither government nor the private sector alone has been able and/or willing to build sufficient rental housing. Working together is the only way to improve our housing crisis.

My Latest Initiative: Proposed Rental Apartments in Bracebridge

I’ve recently encountered this problem directly in Bracebridge, ON (Muskoka), where I’ve been trying to stir things up by pushing forward an exciting new project.

I have a vision for a rental housing project on Woodward Street in Bracebridge. It seeks to address Bracebridge’s housing shortage by bringing 49 new attainable, accessible, net zero-ready, energy efficient, environmental, low impact rental units to the community. This offers a high level of social benefit and increases the rental housing options available, which is beneficial to all.

In the past 5 years (2015-2019), according to data from the Town of Bracebridge, only 22 multi-residential apartment units have been approved for construction in Bracebridge. I’m proposing to add 49, which is double the total for the past 5 years.

I’ve been asking for the Town of Bracebridge and the District of Muskoka to work with me by rezoning the 2.2 acre parcel of land to allow for the higher density I need for this new apartment rental project. I’m also going to ask for relief from development charges (levies) and building permit and other development fees.

This project has great community social benefits, and yet opposition from NIMBY neighbouring homeowners has been an issue. The development process typically addresses objections from opponents more than it addresses supporters. That may be because most development projects – especially rental construction – have more objectors (typically NIMBYs and immediate neighbours) than supporters.

I’m therefore now working to engage the people of Bracebridge and to gather public support for this project. I want to give a voice to the many unheard champions and supporters of much-needed rental housing in Bracebridge. 

I think that if local Bracebridge politicians know there’s support from the larger community, it will help them to fend off the NIMBY neighbours. I want to help the decision makers hear from supporters, and not just the neighbours who are in opposition – who are typically the only ones to show up to public meetings about new developments such as this one.

We need to do what is right for the entire community. Given the housing needs in Bracebridge, I believe that my rental concept may have more supporters than objectors.

There’s been a high level of local interest in this project, and it has been covered in several local media sources:

If you support this project, please submit a written statement of support today to planning@bracebridge.ca. Please include your name, hometown, and reason for interest/support in the project.

What are your thoughts on this topic? Comment below or find me on Facebook or LinkedIn to join the conversation!

Mattamy Limits Over-Eager New Home Buyers

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Wow! We’ve never seen this before in the new home industry. A marketing email from Mattamy Homes that recently landed in my inbox caught my attention. The email was about a new release of homes for sale at Mattamy’s Hawthorne South Village community at Sixteen Mile Creek in Milton. In the list of rules and information about the new release and registration for it, this item was included:

“Previous Buyers With Pending Agreements Of Purchase & Sale With Mattamy Homes Are Not Eligible To Purchase. We Thank You For Your Interest.”

Mattamy Homes is not allowing existing buyers of unclosed Mattamy homes to buy any more new homes.

Mattamy has historically been a price leader. They have attracted more than their share of investors. Their main concern now is that buyers of multiple homes may not be able to close – the buyers may be able to come up with a deposit, but they need/want price to be up at closing. Mattamy sees that prices are not going up these days, so the likelihood of the homes they sold appreciating before closing is small. Therefore, buyers of multiple homes may be biting off more than they can chew, which will ultimately affect Mattamy.

This is a statement by Mattamy that they see market staying flat and/or their buyers not being financially able to close on multiple homes.

(Read my recent blog post, 2019 Toronto Housing Market: A Year of Opportunity?, for more info on the current state of the market.)

What are your thoughts? Comment below or find me on Facebook or LinkedIn to join the conversation!

2019 Toronto Housing Market: A Year of Opportunity?

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GTA real estate has entered a new era. Gone is easy money. Gone are many investors, including foreign ones, with the new 15% non-resident speculation tax imposed by Ontario’s Fair Housing Plan. Tighter lending conditions and new mortgage rules including a new mortgage stress test are producing fewer prospective buyers, while rising interest rates are scaring prospective buyers and reducing affordability.

The resulting benefits to prospective buyers haven’t been seen in over a decade!

  • Better choice
  • Better value
  • More time to evaluate and analyze
  • Better terms

Even last spring, most of the residential and investment properties I looked at were not interested in conditional offers. But that’s already changing.

On the other hand, supply of new low-rise housing remains constrained. Immigration levels are high and Canada plans to increase them even further in the next few years, with up to 350,000 new foreign nationals expected to arrive each year in 2019, 2020 and 2021. Rental demand far exceeds supply. Fewer people can afford to buy, which means there’s an increased demand for rentals. Furthermore, Ontario’s Fair Housing Plan expanded rent controls to all private rental units across the province, which will likely result in fewer rental properties on the market as developers move away from purpose-built rental projects for more profitable returns (despite the plan also including a five-year, $125-million program that’s aimed at encouraging the construction of new rental apartment buildings by rebating a portion of development charges).

With the number of units available for rent expected to decrease and immigration rates set to increase, we can expect that in the long-term, the fundamentals underlying the real estate market’s strength and growth will still be very good. Demand will increase and prices will rise again, especially since we’re not significantly increasing the supply of low-rise homes and are not building enough high-rise units to keep up.

To me, this means opportunity! 2019 will be a good time to buy property in the GTA, as the market goes through this micro-adjustment. The long years of the GTA real estate boom are over and there are way more opportunities available for buyers now. But as we saw above, this opportunity may not be around forever – long-term, I expect the market to stabilize and grow again.

Personally, I’m looking around for opportunities, but taking my time. I’ll post my findings in the future.

Supporting BILD

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Here at BAM, we’re big on helping builders to be the best they can be; from green design within their communities and homes, encouraging better building practices, and – overall – just providing better products and service to their customers. In the end, helping them to put their best foot forward is a great thing for everyone, right down to the family who is purchasing their first brand-new home. It’s this same desire that drives BILD, which is an essential lifeblood of our industry. A product of the merger between the Greater Toronto Home Builders’ Association and the Urban Development Institute of Ontario, BILD is the voice of the land development, home building, and professional renovation industry in the GTA. Currently, it represents more than 1,400 member companies.

They provide a necessary link between the industry and governments, helping to promote both fair and effective policies. They also encourage innovations and excellence in the planning and building of sustainable communities – all while simultaneously protecting the best interests of homebuyers. Through home shows, their print publication, members-only workshops, courses, and seminars, they keep us abreast of everything that affects us. As well, through the sponsorship of university courses in planning, and their work with community colleges and unions to promote building trades as a career choice, they are strengthening our industry for years to come.

They are the backbone of the building industry here in the GTA, and we strongly support them as an active member. It was an honour for us to design their most recent advertisement, at no-cost to BILD, which celebrates the 64 BILD Award winners this year, and the amazing things they’re doing; from innovation in sustainability to affordable home design. It was our way of showing gratitude for everything they’ve done for our homebuilding community.

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