Recently I’ve heard a few people say that condos are not for families. Some of this was on Twitter and some of it was to me directly in person.

If you’re a regular reader of the blog, you’ll know that I disagree with the title of this post. My neighbors two doors down from me in my condo building have a young child and a big part of our focus with Junction House (hence the “House”) is to make better and higher density family housing.

So I would like to unpack this topic today on the blog.

One argument is that developers simply aren’t building the right kind of family housing (supply). Profit maximization is leading us to smaller units.

Sales velocity

One area that arguably does create a bias toward smaller units is HST. I’ve written about this before on the blog and I continue to believe that this needs to be revisited as our condo market matures and it’s no longer just about serving first-time buyers on their way to a low-rise house.

In many cities around the world, 

 and I’m going to structure it from two perspectives: the supply side and the demand side. 

Because on the one hand, I think there’s a belief that developers aren’t building the right kind of family housing (supply). At the same time, there are folks who simply believe that no child should be raised in a condo, irrespective of suite size and how they’re designed (demand).

Most recently, at least in Toronto, it’s true that the demand hasn’t really been there for larger suites, such as 3 bedrooms. They didn’t sell well and so developers didn’t design around this use case. To get the right kind of sales velocity you wanted smaller suites.

But I believe this is starting to changing for certain project types and you see evidence of that with average unit sizes starting to creep upward across the Greater Toronto Area. More on this when we talk about demand.

With respect to profit maximization, there are a number of things to consider: sales velocity, per square foot pricing, HST implications, construction costs, and so on. 

But one thing that I’m starting to notice is a “U” shaped price curve, where it’s both the smaller and larger units that are seeing a premium on a per square foot basis. My sense is that this is being driven by both empty nesters exiting large homes and families who need more space.

From the developer’s perspective, fewer larger units in a project also means fewer kitchens, fewer entry doors, less suites to coordinate, etc. 

Moving onto demand, I think 

Developers and designers will adapt.