According to a study conducted by Ryerson University’s Centre for Urban Research and Land Development, Toronto is the fastest-growing city in Canada and the US by a huge margin. The city is on the number two spot with 125,000 new additions to population. The reason being, this metropolitan city is a magnet for young, mobile talent which is why more and more millennials are coming to live in Toronto compared to those who are leaving, irrespective of the high cost of living. Toronto is growing at such a rapid pace that the housing supply in the Toronto real estate market will no longer be able to keep up with the rising population. This will soon lead to a serious housing crisis if not addressed. Now the question is what can be done to avoid this? Read this blog post by our expert real estate agents in Ontario to learn what the problem is and how it can be solved.
Toronto Housing Crisis: How Can It Be Solved?
To understand how this housing crisis can be tackled, we should first look at some of the stats to understand the contributing factors that led to this situation.
The Fact Sheet
- According to a report published on the University of Toronto’s website, Toronto added more than 82,000 new tech jobs between 2012 and 2017, and attracting people looking for high-paying knowledge jobs.
- According to data from Canada Mortgage and Housing Corporation posted in Huffington Post Canada, new house builds in Toronto are down by 24 per cent in 2019.
- Organisation for Economic Co-operation and Development (OECD) data shows Canada topped the house price to income index. The index reached 122.9 in Q4 2018, thus making Canadian housing the least affordable in the world for local incomes.
Many real estate agents in Oakville, Hamilton and Toronto are of the opinion that new construction in Toronto would be significantly low in 2019 as a result of affordability issues. Lack of available units for possession and steady demand of housing will create a situation that only very high-income buyers will be able to afford a home in the city. A study conducted by Zoocasa found that just 10 per cent of Toronto’s top earners will be able to buy a home in the city. The alarming data shows that there are 245,605 renter households in Toronto who are facing affordability issues, and more than 90,000 households on the affordable housing wait list.
How to Overcome This Housing Crisis?
Toronto’s housing affordability crisis acts as a major hindrance to the city’s future progress. The very success of this global city will force many income groups to move out as the talent needed to fuel the economy will no longer be able to afford to live comfortably in the city. This situation will get worse if not addressed in time. Here are a few ways how the situation can be handled.
1. Dezoning the Suburbs
Unlike the major parts of the city, the suburbs are being overlooked by both urban planners and developers. These areas are generally populated by baby boomers that are slowly ageing. Dezoning these suburban localities and allowing some densification in single family home areas would allow construction of low-rise apartment buildings and townhomes. It will help get more people to live near Toronto, instead of being squeezed into tiny condos.
2. Change in Rental Financing Policies
Up until the 1980s, the Government of Canada heavily subsidized the construction of affordable rental apartments on a mass scale when the population was booming. But lately, it hasn’t done so. it The 2019 budget proposal has stated that it will “expand the Rental Construction Financing initiative to increase the construction of rental units in communities across Canada”
3. Take Control of Excessive Lending
There are many reasons why the housing prices in Toronto are increasing which include the amount of money lenders are willing to out into the real estate market. Excessive lending of money to home buyers gives them more purchasing power, thus leading to a higher bid for properties or bully offers. It not only increases the price of a property but also makes it unaffordable to several buyers. Limiting the amount of money banks can lend (for example, by setting a strict loan-to-income ratio) will be an indirect step to tackling the housing crisis.
Toronto’s housing crisis can’t be ignored. If it continues to proceed in the same direction, housing affordability will be soon out of reach of tens of thousands of people living in the city. It is necessary to take concrete actions to deal with the housing crisis. Realistic plans to increase affordable housing, logical lending of money and a change in rental financial policies are some of steps that can make a difference. However, new ideas and bold steps are needed to ensure everyone gets to live their Canadian dream without putting this fabulous city’s growth and prosperity at stake.