City BuildingHousing

Not just any supply–the right supply

By June 28, 2018 No Comments

By Cherise Bruda

Housing affordability is a complex problem and the simple answer of building more and more supply won’t solve it.  We must build the right supply.

Close to 100,000 condo units are set to roll out in the Toronto region over the next five years. This is a record high – more than we’ve ever seen before. However, the majority are one-bedroom condos and more than 80 per cent are in buildings 20 storeys or higher. These units might be attractive to investors, but they are unsuitable for “upsizing” millennials.

Over the next decade, upsizing millennials and downsizing seniors represent the fastest growing demographic – both looking for the same housing typology. Source: Bedrooms in the Sky by Ryerson CBI and Urbanation, 2017

Young families face a depressing choice: Try to make due in one of those small high-rise units or “drive to qualify” to the far fringes of the region where family-sized homes are being built in farmers fields. We are not running out of land for homes or bumping against the Greenbelt; 12,300 new single detached houses were completed in 2017, the highest since 2008.  But as we continue to sprawl, these homes become ever distant, requiring long commutes and time away from family stuck in traffic. As research has shown, often transportation costs negate sticker-price savings on cheaper far-away houses.

What is lacking is affordable “missing middle” housing: multi-unit homes such as townhouses, stacked flats, duplexes, triplexes, and laneway housing, as well as lower-scale 5 to 8-storey midrise buildings in our urban and suburban neighbourhoods that are suitable along neighbourhood main streets. Additionally, more 2 to 3-bedroom units in higher-scale condos are required to house families.

While not a detached house with a yard, these options are suitable for families, and can be built closer to jobs, and are more walkable to schools, services and great amenities. Because they are medium density, they also support frequent public transit, meaning families can save more money by ditching one car.

This kind of housing makes sense on so many levels, and one might expect that developers would eagerly build it. But there are a variety of barriers, such as zoning restrictions, a lengthy approvals process, access to financing, land costs, expensive infrastructure upgrades and community opposition to greater density.  Some costs are comparable whether you build a 7 or 27 storey building; it’s more cost-effective for developers to keep building tall or sprawl.

Removing red tape for all developments at all costs will just deliver more of the wrong type of supply. Any streamlining of the approvals process, policy solutions, as-of-right zoning or incentives should target the housing we need, such as the missing middle.

While condo development in the GTA is at record levels, the majority of units currently under development are not family-friendly. Source: Source: Bedrooms in the Sky by Ryerson CBI and Urbanation, 2017

Already, 94% of the condominiums under construction in the GTA are sold before construction begins and more than half of them are snapped up by investors. We need to nurture housing supply for families, rather than stimulating more speculation.

Single-family houses will continue to be built on increasingly distant farmland, but this will not solve the problem of affordability. We need to start building homes in the locations where they are needed. Fortunately, we have plenty of land within our already urbanized neighbourhoods in the GTA for multi-unit, family-friendly housing, including lots of the missing middle.

A case study by the Ryerson City Building Institute recently analyzed the capacity for housing in Mississauga and found that there is sufficient space available to accommodate its population growth—as well as 80% of Peel Region’s—until the year 2041, building mainly missing middle and midrise housing around GO stations and along light rail and rapid busway routes.

New townhomes, stacked flats and midrise buildings can fit along our urban and suburban main streets, replace big box stores and fill empty parking lots. Deeper in our established residential neighbourhoods, the dominant single family homes are declining in population as empty-nesters hang onto oversized housing.  The Canadian Centre for Economic Analysis found that there are five million unused or spare bedrooms in Ontario, with at least half in the GTA.

Creative actions are needed to stratify existing large empty-nest houses in into a number of family-friendly units for sale or rental, unlocking more affordable homes for young families and un-tying wealth for seniors who are resistant to moving, without having to take out home equity loans.

Building the right supply of housing for our shifting demographics is a challenge, and will require some out-of-box thinking from both provincial and municipal decision-makers to help make neighbourhood family-friendly multi-unit housing cost competitive with the tall or sprawl development that dominates. If it were simple, we wouldn’t have this problem.