Altus Group recently completed a study for BILD (Building Industry and Land Development Association) that looked at the various factors that might be contributing to housing affordability and supply issues here in the Greater Toronto Area. One area that they looked at was development approval timelines, and I thought these were two interesting charts:
What this is suggesting is that approval timelines don't seem to really vary based on project size. Whether you're rezoning for 3-50 homes or 400-500 homes, it's probably going to take you a similar amount of time. This in turn creates a strong incentivize to want to develop bigger projects. Among other things, it brings down the "number of days per unit" metric shown in this second chart.
I have spoken anecdotally before about minimum project size inflation, and here's some data to support why that is happening. But it really is too bad. We should be doing more to incentivize smaller infill projects. Our cities need development at all scales.
Marlon Bray over at Altus recently shared the above chart on LinkedIn. Normally I only go on LinkedIn about once every quarter, if that. But thankfully our team likes to follow nerdy charts and so it got circulated around.
The chart is from Statistics Canada (table 18-10-0135-01 to be exact) and what it shows is the % change per annum of their construction price index, going all the way back to 1989. It is good context for the massive cost increases that we are all currently working through.
Increasingly, I think that most people in the industry feel as if we're now reaching a tipping point. Costs -- both hards and softs -- cannot continue to go up like this. At some point supply will start to taper off or even shut off. The former has likely already started.
Altus Group just released its January (2018) sales figures for the new home market in the Greater Toronto Area.
- 1,251 new homes sold last month. 886 of these (or 70.8%) were condominium apartments (everything from stacked townhouses to high-rises).
- This is down from 2,429 homes in 2017 and 2,118 homes in 2016.
- Almost half of the new home sales (609 homes) came from Toronto alone. And almost all of these (607 homes) were condominium apartments. Only 2 new single-family homes sold in the city last month.
- Benchmark price for single-family homes was $1,229,454, which is a 19.6% increase from January 2017.
- Benchmark price for condominium apartments was $714,430, which is a 40.8% increase from January 2017.
That last increase really stands out. I did a double take.
But as we’ve talked about before, low supply and high prices seem to be pushing more buyers toward condos – and larger ones at that.
Recently we’ve been seeing an increase in both average unit sizes and prices per square foot.
According to Altus, sales of new single-family homes in the GTA last month were the lowest for a January since before 2000.