This is a follow-up to yesterday's post about too many people allegedly speculating on underutilized urban land. Over the weekend, I saw Patrick Condon, a professor at UBC and author of the book "Broken City: Land Speculation, Inequality, and Urban Crisis," argue that "urban land is the impossible-to-ignore driver of the housing crisis." Is it really? Let me offer the developer's perspective and explain what has happened in Toronto.
It is certainly true that the price of development land appreciated rapidly toward the end of the last cycle and that, at the time, there was enough margin for developers to bifurcate the work of zoning land and actually building out projects. But since 2022, that has gone away, and we have seen a dramatic correction in pricing.
According to Bullpen and Batory's Q4-2025 High-Rise Land Insights Report, the average sold price for a high-density site in the GTA has gone from $119 per buildable square foot in 2019 to $78 per buildable square foot at the end of last year (a ~34% decline).
But this is a blended average. In my experience, the falloff in pricing has been even more dramatic and, in many cases, land now feels illiquid. With rents declining and new condominiums not selling, what's the value? Land prices are a function of what you can do with the land. If what you can do disappears, so too does the value. Land is not the problem right now.
But even if we were to ignore current market factors, it's debatable whether land prices were really the primary driver of unaffordable housing. About six years ago, Toronto developer Urban Capital published a pro forma comparison between a project they did in 2005 and a project they were doing in 2020.
What they found over this 15-year period was that construction costs increased by 91%, land costs increased by 160%, and government fees and taxes increased by some 413% (development charges alone increased by 3,244%!). The price of development land certainly increased, surpassing the rate of inflation, but we can't ignore that roughly a third of the price of a new home became government fees and taxes.
Today, there are countless development models that don't pencil even if you plug the land value in at $0. That tells me that we've got bigger problems.
Cover photo by Patrick Tomasso on Unsplash
High Art Capital recently announced the launch of a new fund called the Greater Toronto Area (GTA) Rental and Affordable Housing Initiative. It has been anchored by a $300 million mezzanine debt commitment (and a "nominal equity investment") from the Building Ontario Fund (BOF) and is expected to be capitalized in total with a minimum of $1.3 billion.
The objective is to acquire approximately 2,200 rental homes in blocks within newly completed, unsold condominiums across the GTA and convert them into long-term rental housing. Included within this will be approximately 550 affordable rental homes that are expected to be title-protected at rents set at the lower of 25% below local market rent or 30% of median gross household income.
This is interesting, but it's certainly not the first example of investors buying, or wanting to buy, excess condominium inventory. However, it may become the largest in Toronto and, as far as I know, it's the only one to partner with the public sector (BOF is a provincial Crown agency).
The way it is intended to work is as follows:
Condominium developers are sitting on unsold inventory and maybe on inventory they took back after purchasers defaulted (and which may be subject to legal action). What High Art will do is say to developers, "Hey, if you give me a really awesome deal, I'll take 50 of those condominium units off your hands." And if the developer is desperate enough, they will say, "Sure, that sounds good. Let's do a deal and then go for a nice closing dinner."
But at what price?
As we've talked about many times before on the blog, developer pricing is typically based on a cost-plus model. We take our costs, add a margin, and there's the final sticker price. The reason prices haven't fallen as much as one might expect on unsold units is because they're hitting the "cost floor"; developers don't want to lose money, unless they are given no other option.
But for this rental fund model to work at reasonable costs of debt, I suspect that, in many/most cases, deals will need to be struck below a developer's cost basis. So, it'll be very interesting to watch how this fund deploys capital and who the winners and losers are in this market.
Regardless, I think it is good that we are seeing this sort of activity. The faster we deal with the pain, the faster we'll get to the other side.
Cover photo by Patrick Boucher on Unsplash
It is well known that the majority of Singaporeans live in public housing (that is, housing provided by the Housing and Development Board, or HDB). However, what you may not know is that the majority of residents obtain their housing through a model that shares some high-level similarities with the way we deliver new condominiums in Toronto.
In 2001, the HDB introduced a program known as Build-to-Order (BTO). The way it works is fairly straightforward: the HDB announces a new project, prospective buyers apply and are assigned a queue number, and then, if they're selected, they get to buy. Once a sufficient number of "pre-sales" have been obtained, the project begins construction, and buyers get a brand-new, subsidized apartment in 3 to 5 years.
Singapore also mandates that the apartments must be owner-occupied and so, in this carefully controlled delivery model, supply very closely mirrors demand. This is different from traditional condominium pre-sales where some buyers might be end users, some might be planning to rent out the home, and some might want to sell immediately upon completion. In those markets, the risk of overbuilding and speculative volatility is greater.
HDB classifies the apartments themselves into three groups: Standard, Plus, and Prime. This classification is meant to reflect the locational value of certain projects; but importantly, the intent is that they're all equally attainable to citizens. The difference is that "choicer" locations (their vocabulary — now you have a new Scrabble word) require greater subsidies to make them affordable, and so they come with additional obligations.
For example, in the case of Prime flats, there is a subsidy recovery upon any future sale (I'm told it's between 6-9% of the first resale price), the minimum occupation period (MOP) is 10 years (versus 5 for the Standard class), and you can never ever rent out the whole home, even once the MOP has lapsed. Once again, this is about strictly matching new supply to end-user demand.
It's a lot of rules. But in Singapore, the majority of people accept them in exchange for affordability.
Cover photo: Tengah, Singapore via Monocle