Is it a coincidence that the markets with the highest home prices also have the highest development fees?
Urbanation just released its Q3-2025 condominium market survey results for the Greater Toronto and Hamilton Area. Last quarter, a total of 319 new condominium apartments were sold across the entire region. This is the lowest quarterly total since Q3-1990 and is 92% below the latest 10-year average for Q3 periods. It also places us on track for the worst sales year in about three and a half decades. But this isn't news to anyone in the industry. And I'll remind you all that, in my view, now is the time for contrarianism, not conformity.
Here's something I found interesting in the data, though, and it ties into the above quote tweet. The average prices for unsold condominiums in Q3 were as follows:
$1,315 psf for unsold pre-construction suites (i.e. projects in the pre-sale period)
$1,199 psf for unsold developer-owned suites (i.e. remaining inventory in built projects)
$867 psf for resales in recently completed buildings
Why do you think there's this gradient? The answer is that these are condominiums of different vintages and, therefore, of different cost structures. Developers generally price projects on a cost-plus basis — meaning if development charges go up (see above tweet), then developers have no choice but to raise home prices to cover their costs. And if the market isn't there at these new higher prices, well then too bad for developers. We don't get to build. The floor is the floor.
In economic terms, what is happening right now is that the marginal cost of producing new condominium homes exceeds the marginal benefit to home buyers (i.e. costs are greater than what the market is willing to pay for new condominium homes). And for this to change, one or both of the following adjustments will need to occur. The cost of building will need to come down and/or the price buyers are willing to pay for new homes will need to go up. Until then, Urbanation will continue to publish gnarly market updates.
But while the market works to find a new equilibrium, I do think it's disingenuous to try and detach the cost of building new homes from end-user prices (which is what the above quote tweet seems to do). Increasing the marginal cost of a good forces prices to rise. In turn, the quantity demanded falls because fewer people can afford it. And if the demand curve also shifts to the left, which is what happened starting in 2022, then the quantity demanded can even approach zero (see second chart).
Pretending we can heavily tax housing and not pay the price doesn’t help anyone looking for more affordable options.
This past Monday, approximately 44,770 attendees descended on the SkyDome, I mean Rogers Centre, in downtown Toronto to watch Game 7 of the ALCS between the Blue Jays and the Mariners. I was lucky enough to be one of them. And with one swing of George Springer's bat, we did it.
The Blue Jays became only the fourth team in the history of Major League Baseball to come back and win a best-of-seven series after losing the first two games at home. (Baseball is full of fun little stats.)
This is what makes October baseball so exciting. It's slow and suspenseful, but then all of a sudden — boom — you completely lose your voice because you're screaming so hard. I still don't have mine back at the time of writing this post.
What a game. What a moment for Toronto.
Now let's switch gears and think about all of this from an urban mobility standpoint. Forty-five thousand is a lot of people. How do you efficiently move this many people to and from a stadium? One option is you could build a ton of parking.
Here, for example, is Dodger Stadium in Los Angeles:
Last week, Uber announced something called "digital tasks." These are simple, quick tasks that drivers can do when they are not driving — things like recording a voice note in a person's mother tongue, submitting a document in a different language, or uploading images of everyday items (such as a menu or storefront).
This is Uber expanding its data-labeling and AI-training business, and they are positioning it as a "new way to earn" for drivers. But another way to think about this move is that it's a way for Uber to start to repurpose its workforce in preparation for a world where human drivers are far less essential to the business. That feels like the case to me.
On a related note, Waymo also announced last week that it will start operating its autonomous ride-hailing service in London, beginning in 2026. This is another first for the company: the first commercial operation outside of the US. Though they are also driving vehicles around Tokyo in preparation for eventually launching there.
Things continue to happen. As a casual observer of this market, Waymo feels like it is out front, which often makes me wonder about Tesla's sky-high valuation. Does the market really believe their Robotaxis have more potential?
Is it a coincidence that the markets with the highest home prices also have the highest development fees?
Urbanation just released its Q3-2025 condominium market survey results for the Greater Toronto and Hamilton Area. Last quarter, a total of 319 new condominium apartments were sold across the entire region. This is the lowest quarterly total since Q3-1990 and is 92% below the latest 10-year average for Q3 periods. It also places us on track for the worst sales year in about three and a half decades. But this isn't news to anyone in the industry. And I'll remind you all that, in my view, now is the time for contrarianism, not conformity.
Here's something I found interesting in the data, though, and it ties into the above quote tweet. The average prices for unsold condominiums in Q3 were as follows:
$1,315 psf for unsold pre-construction suites (i.e. projects in the pre-sale period)
$1,199 psf for unsold developer-owned suites (i.e. remaining inventory in built projects)
$867 psf for resales in recently completed buildings
Why do you think there's this gradient? The answer is that these are condominiums of different vintages and, therefore, of different cost structures. Developers generally price projects on a cost-plus basis — meaning if development charges go up (see above tweet), then developers have no choice but to raise home prices to cover their costs. And if the market isn't there at these new higher prices, well then too bad for developers. We don't get to build. The floor is the floor.
In economic terms, what is happening right now is that the marginal cost of producing new condominium homes exceeds the marginal benefit to home buyers (i.e. costs are greater than what the market is willing to pay for new condominium homes). And for this to change, one or both of the following adjustments will need to occur. The cost of building will need to come down and/or the price buyers are willing to pay for new homes will need to go up. Until then, Urbanation will continue to publish gnarly market updates.
But while the market works to find a new equilibrium, I do think it's disingenuous to try and detach the cost of building new homes from end-user prices (which is what the above quote tweet seems to do). Increasing the marginal cost of a good forces prices to rise. In turn, the quantity demanded falls because fewer people can afford it. And if the demand curve also shifts to the left, which is what happened starting in 2022, then the quantity demanded can even approach zero (see second chart).
Pretending we can heavily tax housing and not pay the price doesn’t help anyone looking for more affordable options.
This past Monday, approximately 44,770 attendees descended on the SkyDome, I mean Rogers Centre, in downtown Toronto to watch Game 7 of the ALCS between the Blue Jays and the Mariners. I was lucky enough to be one of them. And with one swing of George Springer's bat, we did it.
The Blue Jays became only the fourth team in the history of Major League Baseball to come back and win a best-of-seven series after losing the first two games at home. (Baseball is full of fun little stats.)
This is what makes October baseball so exciting. It's slow and suspenseful, but then all of a sudden — boom — you completely lose your voice because you're screaming so hard. I still don't have mine back at the time of writing this post.
What a game. What a moment for Toronto.
Now let's switch gears and think about all of this from an urban mobility standpoint. Forty-five thousand is a lot of people. How do you efficiently move this many people to and from a stadium? One option is you could build a ton of parking.
Here, for example, is Dodger Stadium in Los Angeles:
Last week, Uber announced something called "digital tasks." These are simple, quick tasks that drivers can do when they are not driving — things like recording a voice note in a person's mother tongue, submitting a document in a different language, or uploading images of everyday items (such as a menu or storefront).
This is Uber expanding its data-labeling and AI-training business, and they are positioning it as a "new way to earn" for drivers. But another way to think about this move is that it's a way for Uber to start to repurpose its workforce in preparation for a world where human drivers are far less essential to the business. That feels like the case to me.
On a related note, Waymo also announced last week that it will start operating its autonomous ride-hailing service in London, beginning in 2026. This is another first for the company: the first commercial operation outside of the US. Though they are also driving vehicles around Tokyo in preparation for eventually launching there.
Things continue to happen. As a casual observer of this market, Waymo feels like it is out front, which often makes me wonder about Tesla's sky-high valuation. Does the market really believe their Robotaxis have more potential?
Brandon Donnelly
Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly.
But this is a suboptimal approach, which is why a year ago the LA Times had to write: "Going to Dodger Stadium for the World Series? Five ways to avoid parking and traffic headaches." In it, they suggest the following: Take the bus, take the Dodger Stadium Express Bus, take an Uber, ride your bike, or walk 30 minutes to the nearest metro station (Chinatown).
On Monday, we took the Union Pearson Express from Bloor to Union. The train was absolutely packed, but we got on the first one and we were door-to-door in a little over 30 minutes. After the game, it was pandemonium. People were swinging from light poles, lighting off smoke bombs, and the lineup to get back on the UP Express looked like this:
But here's where I need to give a lot of credit to whoever was responsible for keeping things together on Monday night. They had stanchions lined up to accommodate the crowds flooding out of the Rogers Centre, they had staff walking up and down the lines so people could tap on ahead of time, and they had more trains operating. The result was that we waited maybe 10 or so minutes before getting on one.
Nobody got out of downtown this quickly unless you were on a train or you biked. My friends who had to take Ubers home were stuck for hours. In fact, one driver said, "We're not moving for a while. You're better off going into that bar right now and I'll come back for you later."
Sometimes when I write about trains and public transport, people comment that I'm living in the past and that it's an outdated technology. Look, I'm all for new tech. Bring on the autonomous vehicles and let's get the global financial system onto the Ethereum blockchain already. But when it comes to urban mobility, trains work. They're highly efficient at moving the greatest number of people.
And you really see that in action when there are sudden demand shocks, like what happened on Monday night when the Blue Jays punched their card to the World Series for the first time since 1993. Go Jays!
In theory, this could be true. Their decentralized model — where individuals own the vehicles and plug them into their ride-hailing network — could allow them to scale quickly. But this is less proven — they're still in the pilot/validation phase. They also seem to chronically overpromise.
Regardless, I would really like to see Waymo launch in Toronto in the near future. As I understand it, regulatory barriers are the problem. I hope whoever is in charge is working on fixing this.
But this is a suboptimal approach, which is why a year ago the LA Times had to write: "Going to Dodger Stadium for the World Series? Five ways to avoid parking and traffic headaches." In it, they suggest the following: Take the bus, take the Dodger Stadium Express Bus, take an Uber, ride your bike, or walk 30 minutes to the nearest metro station (Chinatown).
On Monday, we took the Union Pearson Express from Bloor to Union. The train was absolutely packed, but we got on the first one and we were door-to-door in a little over 30 minutes. After the game, it was pandemonium. People were swinging from light poles, lighting off smoke bombs, and the lineup to get back on the UP Express looked like this:
But here's where I need to give a lot of credit to whoever was responsible for keeping things together on Monday night. They had stanchions lined up to accommodate the crowds flooding out of the Rogers Centre, they had staff walking up and down the lines so people could tap on ahead of time, and they had more trains operating. The result was that we waited maybe 10 or so minutes before getting on one.
Nobody got out of downtown this quickly unless you were on a train or you biked. My friends who had to take Ubers home were stuck for hours. In fact, one driver said, "We're not moving for a while. You're better off going into that bar right now and I'll come back for you later."
Sometimes when I write about trains and public transport, people comment that I'm living in the past and that it's an outdated technology. Look, I'm all for new tech. Bring on the autonomous vehicles and let's get the global financial system onto the Ethereum blockchain already. But when it comes to urban mobility, trains work. They're highly efficient at moving the greatest number of people.
And you really see that in action when there are sudden demand shocks, like what happened on Monday night when the Blue Jays punched their card to the World Series for the first time since 1993. Go Jays!
In theory, this could be true. Their decentralized model — where individuals own the vehicles and plug them into their ride-hailing network — could allow them to scale quickly. But this is less proven — they're still in the pilot/validation phase. They also seem to chronically overpromise.
Regardless, I would really like to see Waymo launch in Toronto in the near future. As I understand it, regulatory barriers are the problem. I hope whoever is in charge is working on fixing this.
