Bullpen Consulting just released its latest land insights reports for the Greater Toronto Area. For the period of Q2-2022, Ben Myers and the team identified 46 high-density residential land transactions with an average price of $95 per buildable square foot. This is down from $112 pbsf in Q1.

In the core of the city (former City of Toronto), the average price for Q2-2022 was $135 pbsf. In North York it was $103 pbsf. And in Scarborough it was $50 pbsf. Overall land prices are down about 15% from last quarter (though it’s important to note that quarterly transactions can represent a relatively small sample size).

We have spoken before about how land prices tend to be fairly sticky in the face of changing cost structures. But what we are seeing right now is a bit of a perfect storm:

• Development charges (here in Toronto) are set to increase by 49%
• Hard costs have seen double digit increases (with some inputs increasing by 30-40%)
• Inclusionary zoning is on the horizon and will add another additional cost to new housing
• And rising interest rates are both increasing project costs (higher interest charges) and slowing the macro economy

All of this is naturally causing developers to be more cautious when it comes buying new land. And we are seeing that in the above pricing. But at the same time, this dip in pricing is not going to be enough to absorb all of the additional costs that new housing projects now face in today’s market.

If you’d like to download a full copy of Bullpen’s report, click here.