This week, RBC Economics published a study on Canada's rental market where they argued that the pace of new supply needs to at least double in markets like Toronto in order to meet future housing demand and balance the market. Similar things, I'm sure, could be said about many other housing markets around the world.
The report pegs the current rental housing deficit in Toronto at about 9,100 units:
And because they believe that the cost of ownership is pushing more people into rentals, the number of renter households is expected to grow at an average rate of 22,200 units per year in Toronto.
If you take 22,200 units per year over the next two years, and add in the current deficit of 9,100 rental units, you get to a total count of 53,500 rental units. This is what RBC Economics believes must be delivered to the market in order to restore equilibrium, and decrease the upward pressure on rents.
Rental units are, of course, delivered to the market in two main ways. There's purpose-built rentals and there are for-sale units that end up as rental housing. But even if you amalgamate both of these tenures, we are not building enough housing.
Against this backdrop, I find it curious that developers are so often vilified. Earlier this week, I saw Jennifer Keesmaat tweet out that -- as we ready for this fall's federal election -- any sensible housing plan must move away from our current for profit housing delivery model.
Who, then, will build these 53,500 rental units? That part wasn't clear to me.
During the recent election here in Toronto, mayoral candidate Jennifer Keesmaat raised the idea of this city region, maybe, becoming its own province. It wasn’t the first time this idea has been floated, but it once again didn’t stick.
Earlier this week, Richard Florida spoke at the Urban Land Institute’s Toronto symposium and he brought up a similar issue: Toronto is a ‘city state’ and needs to start acting like it. Here is an excerpt from a recent Star article about his talk:
He also noted that in terms of total economic output, the GTA [Greater Toronto Area] — he included the Golden Horseshoe — is responsible for about “$700 billion” (U.S) in economic output.
“Which means our … region is equivalent to that of Sweden. So we are a city state, a mega region.”
He later added: “we are a powerful global city with lots of assets to build on,” he said.
But he went on to say that despite all of these successes there’s a “sense that something is amiss, something is wrong.”
I have long supported the notion that city regions need to see and think of themselves as one united and contiguous economic landscape. In our case, it is not about, for instance, Hamilton vs. Toronto. This is about our entire region vs. New York or Singapore (a city-state) or the Pearl River Delta megalopolis.
The headlines coming out of Amazon’s recent announcement are clear: In Superstar Cities, the Rich Get Richer, and They Get Amazon. This is winner-take-all urbanism where you need to be a “superstar” in order to compete.
Jennifer Keesmaat – the former chief planner of Toronto – recently published an article in Maclean’s called: Toronto’s unaffordable. Why can’t Halifax or Saskatoon take advantage? Her argument:
“The hard truth is that many mid-sized cities won’t win the future because they are stuck on a suburban growth model. If the future is green and walkable, they will be left behind.”
The model city that is held up is Portland – a terrific mid-sized city of only 640,000 people that has used progressive land use policies to build a livable and dense urban center. (In all fairness, the Portland MSA has over 2.4 million people.)
Now, if you’re a regular reader of this blog you’ll know that I have a penchant for dense urban centers. I live and I work downtown. And I would happily trade square footage for a more sensible commute and lower transportation costs.
But after I read the article, I couldn’t help but think that progressive land use policies, alone, aren’t enough. Cities, like social networks, experience network effects. That’s why there’s so much talk these days of winner-take-all urbanism.
All of this is not to say that progressive urban policies are a bad thing. Quite the opposite. I just think there are many other factors at play if we’re talking about taming the hegemony of our global cities.