During COVID, every developer was terrified that their costs were going to run way from them. According to this recent Globe and Mail article, residential building costs increased 55% since 2020. At the same time, city fees were being increased and some people, for whatever reason, believed this would not have an impact on home prices. Developers will always seek to profit maximize and charge whatever the market will bear, so why bother trying to reduce costs? This is/was one school of thought.
Despite this cost fear, the market managed to keep up for a period of time. Capital was cheap, as we all know. And that kept things going, until it was no longer the case. According to the same Globe article, there are 83 residential projects and 28,428 homes that have not launched (sales) over the last two years in the Greater Toronto Area because of market conditions. This year alone, the number is estimated at 14,000 homes. So supply has fallen off, and that's because demand and buying power have fallen off.
During COVID, every developer was terrified that their costs were going to run way from them. According to this recent Globe and Mail article, residential building costs increased 55% since 2020. At the same time, city fees were being increased and some people, for whatever reason, believed this would not have an impact on home prices. Developers will always seek to profit maximize and charge whatever the market will bear, so why bother trying to reduce costs? This is/was one school of thought.
Despite this cost fear, the market managed to keep up for a period of time. Capital was cheap, as we all know. And that kept things going, until it was no longer the case. According to the same Globe article, there are 83 residential projects and 28,428 homes that have not launched (sales) over the last two years in the Greater Toronto Area because of market conditions. This year alone, the number is estimated at 14,000 homes. So supply has fallen off, and that's because demand and buying power have fallen off.
There are many ways to describe one of the prevailing urban forms emerging across the Greater Toronto Area. You could call it spiky urbanism. You could call it a collection of peaks and plains. Or -- as it is referred to in this recent article by Alex Bozikovic about "turning the suburb into the city" -- you could call it cruise ship urbanity:
These megaprojects are where Toronto has chosen to cram much of its new growth – “cruise ships of urbanity,” as Mr. Giannone told me, in a sea of houses. As such they provide an opportunity to create citylike density and activity.
What we are talking about is a dichotomous form of urbanism: high-density mixed-use nodes surrounded by low-rise car-oriented communities. And on many levels, this makes a lot of sense, especially if the cruise ship happens to be docked on top of a transit station. This is where density needs to go. If you have a transit station without much density, that should be addressed immediately.
But it also presents a great challenge. If transportation planning is necessarily land use planning, then we are dealing with two very different kinds of land use patterns and, therefore, two very different kinds of mobility demands. You can address this by making the cruise ship as self-sufficient and pleasant as possible, but eventually someone will want or need to get off the ship.
Does that mean they will then need a car?
You don't have this same problem with more consistent forms of urbanism. Consider, for example, cities like Paris and Barcelona. These are dense cities, but more importantly they are, for the most part, uniformly dense. Or at least, uniformly dense enough. Meaning that you can probably apply a more uniform transportation strategy. What works in one part of the city is likely to work in other parts too.
Of course, we could also apply a uniform transportation strategy to our urban cruise ships. Given that they exist in a sea of low-rise houses, we could simply say that each urban cruise ship resident should also have their own parking space (1:1 ratio). The solution: everyone drives! But this, to me, seems like an insane long-term solution.
In my view, the most impactful solution lies not in the ships themselves, but in the seas surrounding them. We need to look holistically at our entire city region and determine what it will take to turn suburb into city. And that likely means a whole host of things, ranging from leveraging the infrastructure we already have (i.e. upzoning around transit stations) to embracing autonomous vehicles.
In the end, I don't think we want cruise ships of urbanity. We need more density, everywhere.
But let's think of this in economics terms. Price and quantity demanded are usually inversely correlated. Meaning, if the price of something goes up, demand will go down. And if the price of something goes down, demand will go up. So in theory, there are still prices that will get 28,428 people excited to buy a new home. I mean, if I were to list a condo in downtown Toronto for $500 psf right now, I'm pretty sure that most with the means would jump at the opportunity.
The problem is that whatever these prices are, they are largely beneath the floor price of where most developers can build to today. Developers weren't bluffing, costs really are too high now. And when this happens, the answer is simple: you can't build. A new equilibrium will eventually be found. But in the short-term, we should all expect new housing supply to remain limited. And because there's always a lag with real estate, the effects of this shortage will be felt in the years to come.
By land mass it is the second-largest country in the world, with the longest coastline. Bookended by the vast Pacific and Atlantic oceans it has enormous trading advantages, alongside access to the largely untapped Arctic to its north. It is a net energy exporter; it has the third-largest proven oil reserves and is the fifth-largest producer of natural gas — but it also boasts large deposits of critical minerals vital to the green energy transition. And, of course, it borders the world’s largest economy.
By purchasing power parity, its economy is ranked 15th globally by size, behind the likes of Turkey, Italy and Mexico. The OECD has forecast Canadian per capita gross domestic product growth up to 2060 to be the lowest among advanced nations.
Poor productivity is at the heart of the country’s growth challenges. In an hour a Canadian worker produces just over 70 per cent of what an American can — that’s below the euro area and even the UK based on 2022 data. Many would have expected the resource-rich economy to benefit as globalisation powered forward, but its relative labour productivity has actually slipped since 2000.
The solution is probably a simple one: We need to innovate, invest more in R&D, and create stronger links between research and Canadian businesses. But executing on this has proven difficult:
Enormous efforts have been made to understand why businesses in Canada invest so much less in R&D than their counterparts in the U.S., much of Western Europe, South Korea and Japan. Is it our reliance on the export of natural resources and agricultural products? Is it reduced incentives to innovate for our heavily regulated and profitable oligopolies in sectors such as banking and telecommunications? Is it our decades-old reliance on incentivizing industrial R&D through federal and provincial tax credits?
It's hard to imagine a more important topic affecting all Canadians. So I would encourage you to read this recent opinion piece by David Naylor (president emeritus of the University of Toronto) and Stephen J. Troops (president of the Canadian Institute for Advanced Research).
It's a balanced piece. Neither of them are arguing for "empty credentialism" or for research that remains in academia. What matters is what we do with the work that our smartest minds are doing. And the overarching point is that innovative research needs to find demand within Canadian businesses.
Right now, we're very bad at this. That needs to change.
There are many ways to describe one of the prevailing urban forms emerging across the Greater Toronto Area. You could call it spiky urbanism. You could call it a collection of peaks and plains. Or -- as it is referred to in this recent article by Alex Bozikovic about "turning the suburb into the city" -- you could call it cruise ship urbanity:
These megaprojects are where Toronto has chosen to cram much of its new growth – “cruise ships of urbanity,” as Mr. Giannone told me, in a sea of houses. As such they provide an opportunity to create citylike density and activity.
What we are talking about is a dichotomous form of urbanism: high-density mixed-use nodes surrounded by low-rise car-oriented communities. And on many levels, this makes a lot of sense, especially if the cruise ship happens to be docked on top of a transit station. This is where density needs to go. If you have a transit station without much density, that should be addressed immediately.
But it also presents a great challenge. If transportation planning is necessarily land use planning, then we are dealing with two very different kinds of land use patterns and, therefore, two very different kinds of mobility demands. You can address this by making the cruise ship as self-sufficient and pleasant as possible, but eventually someone will want or need to get off the ship.
Does that mean they will then need a car?
You don't have this same problem with more consistent forms of urbanism. Consider, for example, cities like Paris and Barcelona. These are dense cities, but more importantly they are, for the most part, uniformly dense. Or at least, uniformly dense enough. Meaning that you can probably apply a more uniform transportation strategy. What works in one part of the city is likely to work in other parts too.
Of course, we could also apply a uniform transportation strategy to our urban cruise ships. Given that they exist in a sea of low-rise houses, we could simply say that each urban cruise ship resident should also have their own parking space (1:1 ratio). The solution: everyone drives! But this, to me, seems like an insane long-term solution.
In my view, the most impactful solution lies not in the ships themselves, but in the seas surrounding them. We need to look holistically at our entire city region and determine what it will take to turn suburb into city. And that likely means a whole host of things, ranging from leveraging the infrastructure we already have (i.e. upzoning around transit stations) to embracing autonomous vehicles.
In the end, I don't think we want cruise ships of urbanity. We need more density, everywhere.
But let's think of this in economics terms. Price and quantity demanded are usually inversely correlated. Meaning, if the price of something goes up, demand will go down. And if the price of something goes down, demand will go up. So in theory, there are still prices that will get 28,428 people excited to buy a new home. I mean, if I were to list a condo in downtown Toronto for $500 psf right now, I'm pretty sure that most with the means would jump at the opportunity.
The problem is that whatever these prices are, they are largely beneath the floor price of where most developers can build to today. Developers weren't bluffing, costs really are too high now. And when this happens, the answer is simple: you can't build. A new equilibrium will eventually be found. But in the short-term, we should all expect new housing supply to remain limited. And because there's always a lag with real estate, the effects of this shortage will be felt in the years to come.
By land mass it is the second-largest country in the world, with the longest coastline. Bookended by the vast Pacific and Atlantic oceans it has enormous trading advantages, alongside access to the largely untapped Arctic to its north. It is a net energy exporter; it has the third-largest proven oil reserves and is the fifth-largest producer of natural gas — but it also boasts large deposits of critical minerals vital to the green energy transition. And, of course, it borders the world’s largest economy.
By purchasing power parity, its economy is ranked 15th globally by size, behind the likes of Turkey, Italy and Mexico. The OECD has forecast Canadian per capita gross domestic product growth up to 2060 to be the lowest among advanced nations.
Poor productivity is at the heart of the country’s growth challenges. In an hour a Canadian worker produces just over 70 per cent of what an American can — that’s below the euro area and even the UK based on 2022 data. Many would have expected the resource-rich economy to benefit as globalisation powered forward, but its relative labour productivity has actually slipped since 2000.
The solution is probably a simple one: We need to innovate, invest more in R&D, and create stronger links between research and Canadian businesses. But executing on this has proven difficult:
Enormous efforts have been made to understand why businesses in Canada invest so much less in R&D than their counterparts in the U.S., much of Western Europe, South Korea and Japan. Is it our reliance on the export of natural resources and agricultural products? Is it reduced incentives to innovate for our heavily regulated and profitable oligopolies in sectors such as banking and telecommunications? Is it our decades-old reliance on incentivizing industrial R&D through federal and provincial tax credits?
It's hard to imagine a more important topic affecting all Canadians. So I would encourage you to read this recent opinion piece by David Naylor (president emeritus of the University of Toronto) and Stephen J. Troops (president of the Canadian Institute for Advanced Research).
It's a balanced piece. Neither of them are arguing for "empty credentialism" or for research that remains in academia. What matters is what we do with the work that our smartest minds are doing. And the overarching point is that innovative research needs to find demand within Canadian businesses.
Right now, we're very bad at this. That needs to change.
