Tag: housing supply

• How cities change their minds

  Toronto, like all great cities, is in constant change and transition. I did a search through my blog archive this morning (okay, AI did) and I found it telling to see the things I was writing about and advocating for in the early days, some 10 years ago.

  We used to talk about eradicating parking minimums, and it was a novelty whenever a new project was built with zero spaces. But now we don’t talk about that. Parking requirements? What are those? We let the market determine how much might be needed, if any at all.

  We also used to talk a lot about laneway housing — a lot. For decades, daring architects and urbanists were navigating labyrinthian land-use approvals to build the odd one for themselves. Oftentimes they were only permitted if a pre-existing coach house was already on the site. But as a rule, laneway houses were bad and not permitted.

  Critics were concerned that they would erode the fabric of our low-rise communities and overrun them with renters. I remember people telling me this to my face at committee meetings, and reading comments from folks who believed that laneways were unsavoury places, and so surely only questionable people would want to live in one.

  Fast forward to today, and laneway and garden suites are standard practice across Toronto. They are no longer novel. They’re just part of the housing supply that Toronto now builds. In fact, in many new housing projects, they are the most desirable suite on the property.

  Shifting scales, I also remember the challenges that the team initially faced in getting One Delisle approved at the intersection of Yonge & St. Clair. At 155m, it was the tallest development approval at the time, and it’s currently the tallest constructed building in the submarket.

  One of the criticisms was that it was not in keeping with the scale of the office buildings constructed at and around the intersection between the 1960s and the early 1980s. But is that where the line should be drawn? Let’s not forget that before its post-war development boom, Yonge & St. Clair was a predominantly low-rise area. Surely this jump in scale provoked similar concerns.

  The planning deal that was struck over the last development cycle was that low-rise neighbourhoods would go largely untouched and that density would be concentrated around transit stations and in specific nodes. These nodes were the housing supply outlets. The inverse would have been to redevelop our low-rise neighbourhoods.

  Today, the only comments I hear about One Delisle’s height are that it’s not tall enough given its beautiful architecture. Opinions clearly evolve, and sometimes the things we’re unsure about aren’t so bad after all. In fact, sometimes they can become a defining characteristic of a place.

  2026.10.10

• The viral housing photo that triggered provincial overreach in Alberta

  

  Here’s a polarizing photo of the backyard of a house in Edmonton flanked by two multiplexes under construction. For additional drama, it was also taken with an ultra-wide lens, which is evident from the stretched-out walkway in the foreground. But even still, it is indeed a photo of a single-family house between two larger multi-unit buildings.

  When I first saw the photo, via this tweet, I actually read it all wrong. What I thought was the concern — underutilized residential land — was not the concern. The concern was too much housing. More specifically, too much infill rental housing.

  So much so that one of the next tweets I saw was the premier of Alberta, Danielle Smith, using this exact photo to say that the province would be coming over top of Edmonton to overturn its multiplex permissions and return the city to the “density and height rules that were in place before 2024” along with “common-sense minimum parking requirements.”

  This, in my opinion, is provincial overreach (which sadly happens here in Toronto too) and a shortsighted approach to city-building. Now, I don’t know the address of this house (I tried to find it), nor would I be familiar with the area, but I do know that cities all across North America are taking an important and critical look at their low-rise neighbourhoods.

  We know that many of them are unaffordable, car-oriented, and actively losing population. To turn back the clock and return to parking minimums is to restrict housing supply and signal that Edmonton is not yet prepared to be an urban leader in the 21st century. Alberta likes to tout its “free-market” brand, but of course this move is anything but.

  2026.10.09

• Why you can’t price-control your way out of a housing shortage

  Spain has one of the lowest homebuilding rates in Europe. Over the last decade, it has barely expanded its housing supply, according to this recent FT article by John Burn-Murdoch.

  When you layer on increased immigration, rising tourism, and growing housing demand from digital nomads and others, you naturally get an environment where rents outstrip income growth. According to the same article, more than 50% of young Spanish adults (aged 18-34) now live with their parents!

  The knee-jerk reaction to all of this by most governments is stronger rent controls. Rents are growing too quickly, so let’s just block them from doing that, right? While this certainly does help the already housed, study after study shows that it has negative consequences for the broader housing market.

  

  Non-controlled rents go up, overall housing quality drops, and, perhaps most importantly, new housing supply goes down, further exacerbating the initial problem it’s trying to solve.

  You can’t intervene in the market and not expect there to be second- and third-order consequences. In this case, it’s akin to telling a group of kids there’s an ice cream shortage, fixing the price below the cost of production for the few who do have access, and then wondering why other ice cream trucks don’t show up to service the unmet demand.

  Spain doesn’t seem to get this, but other markets appear to. According to Burn-Murdoch, Ireland recently “watered down rent controls over concerns they were contributing to weak rates of new construction in the rental sector.”

  It needs to be understood that there are no shortcuts to solving housing crises. You need to start from first principles and do the hard work of building housing.

  ---

  Diagram by John Burn-Murdoch via the FT

  2026.10.03

• Inside the post-pandemic AI investment boom reshaping San Francisco

  San Francisco’s Q2 2026 economic report is perhaps an idealized summary of how the post-pandemic, AI investment boom is transforming our cities.

  Housing Supply Crisis: Residential apartment rents grew 14% from March to July, and single-family house prices are now growing at double-digit annual rates. And yet, the city continues to see a structural decline in housing permits, below pre-pandemic levels.

  

  

  

  Segmented Commercial Market: The city’s office vacancy rate declined 3.7% over the past year, but the overall vacancy rate is still greater than 30%. Weekly office attendance also remains below 50% of pre-pandemic levels.

  

  

  Urban Rebound: Average highway speeds are dropping, suggesting more user demand. MUNI Metro (local) ridership is also increasing rapidly, reaching over 70% of pre-pandemic levels. But downtown BART station exits (regional rail) are below 50% of 2019 levels, reinforcing the fact that though the city is active, but people simply aren’t commuting in nearly the same way.

  

  

  

  Ultimately, the surge in housing prices proves that the “urban doom loop” narrative was fundamentally wrong (remember that?). San Francisco remains an intensely desirable place to live and work. But they’ve got to get moving on building more housing.

  2026.09.23

• Let’s get serious about building more homes in Canada

  I live in a condominium. I find it extremely desirable. I don’t yearn to live anywhere else. And I think of it as my home. But there is of course truth to this Globe and Mail article:

  Canadians, by and large, continue to think of condos and apartments as housing, not homes. That’s hardly surprising given the way Canada builds them: small units in tall towers clustered in downtown cores or near busy transit hubs. They’re the one- and two-bedrooms young people rent in their 20s (and, increasingly, their 30s). The starter homes. The initial landing spot for newcomers. But they are not desirable homes for two large swaths of the population. Young families need multiple bedrooms and proximity to parks and schools. Retirees looking to downsize often say they want to remain in the same neighbourhood. A dearth of higher-density homes for these two groups has dire consequences for cities.

  The problem is twofold.

  Our land use policies are too restrictive, though that is slowing starting to change for the better. And it is simply not economically feasible to build larger, family-sized apartments at any sort of meaningful scale. This is not a developer unwillingness problem, it is a math problem.

  Toronto, for instance, would be far better off if we had European-scaled apartment buildings all across the city and a lot more family-friendly housing. I believe this to be true at least. But in order to achieve this, we need to get serious. This is not serious.

  We need to dramatically reduce development charges and other government fees. We need to get rid of the site plan control process for smaller buildings. We need to remove required amenity areas (the city is the amenity for small-scale neighborhood apartments). And the list goes on.

  So if anyone in government is reading this and is truly serious about building more affordable housing in this country, please give me a call. I will gladly come into your office and run you through a development pro forma so that you can see what it’s going to take. We can fix housing.

  2024.11.08

• Attainable housing is in short supply

  Approximately 41% of the YTD population growth in Canada this year has been in Ontario. Here’s a slide from a recent presentation by Zonda Urban:

  

  So there’s an argument to be made that demand is still outpacing new housing supply in most of our major markets:

  

  Why then are new home sales continuing to slide? A reasonable answer would be that — by design — this new housing isn’t attainable to most:

  

  The result seems to be a long-term structural shift toward more rental housing:

  

  2024.10.18

• Density is good

  Here is an interesting chart (source) showing housing starts in Canada, by type, between 2000 and 2023:

  

  As recent as 2000, single-family houses accounted for 61% of total starts and multi-family housing accounted for 39%. This flipped somewhere around the financial crisis and, last year in 2023, the percentages were 23% and 77%, respectively. This is a meaningful inversion which has helped our cities become more vibrant and more conducive to non-car modes of transport.

  But in this recent article about Canadian housing, Donald Wright more or less argues: so what? We’ve been densifying our cities for all these years, but it hasn’t helped our affordability problem. Supply must not be the answer to our housing crisis.

  I’m not exactly sure what he believes to be the solution, but I don’t think this problem is as simple as “we’ve built some housing, we made our cities denser, and yet housing is still expensive — more supply must not be the answer. Let’s move on.”

  Among many other things, it’s important to understand what kind of density we’ve been building. Because up until very recently, we’ve basically taken the position that single-family neighborhoods should never be touched, and that density should only go in very specific areas — and only after a lengthy and expensive rezoning process has been completed.

  We’ve designed new housing to be expensive.

  But attitudes are changing all across North America. We are now starting to do two very important things: (1) we are opening up more of our cities to intensification and (2) we are now allowing more multi-family housing on an as-of-right basis. Meaning, no lengthy rezoning exercises and no risk of community opposition.

  These are two fundamental changes that should alter the kind of density that gets built. And in my view, it’s going to be a positive thing for Canadian cities.

  2024.10.04

• Remember unfunded inclusionary zoning?

  Over the weekend, we spoke about how the “GTA condo market is in a state of economic lockdown.” What this generally means is that the math isn’t making sense to build new condominiums. And so the market is necessarily pausing.

  We spoke about what this will likely mean for supply in the coming years, but I think it’s also interesting to talk about this in the context of something else: unfunded inclusionary zoning.

  As a reminder, inclusionary zoning is, in its most basic form, a requirement to build a certain amount of affordable housing as part of new housing developments. And what I mean by “unfunded” is that there are no subsidies or other incentives being provided to the project.

  This means that the cost of providing this housing — and there is an additional cost — needs to be shouldered by the project, which ultimately means the market-rate units need to pay for it.

  Which is why if you look at most policy studies, you’ll often find recognition that, because of this economic reality, IZ tends to work better in areas where home prices/rents are higher. And again, that’s because the market-rate homes need to shoulder the cost.

  We have questioned, many times, on this blog, whether this is the right approach to delivering affordable housing, but I think this question becomes even more critical in our current market environment.

  If the entire market is, for the most part, in a state of economic lockdown, should we really be layering on additional costs and making it broadly more difficult to build any sort of new housing? It seems counterintuitive.

  For more on this topic, check out this recent Sightline article by Dan Bertolet.

  2024.07.29

• Over-building and then under-building: Is Toronto headed for a severe shortage of new rental housing?

  As we know — because here’s the data — this is the current state of affairs:

  The GTA condo market is in a state of economic lockdown. The math doesn’t make economic sense from both the demand side (investors) and the supply side (developers), leaving the market at a standstill.

  The above excerpt is from a recent CIBC Capital Markets article by Benjamin Tal (CIBC) and Shawn Hildebrant (Urbanation). And what it ultimately means is that the supply of new condominiums in the GTA is falling and will continue to fall for the foreseeable future. Below are two charts, from the same article, that show that.

  

  

  Because of this, I actually think that, if you need or want a place to live, right now is a near ideal time to buy a condominium, especially if it’s from developer inventory (in an already completed project) or it’s a resale. Of course, most people won’t want to do this because they’d rather buy when most other people in the market want to buy. This is how markets tend to go.

  It has been a while since the GTA has gone through one of these real estate cycles, but it is typical: developers are prone to both over-building and under-building. It simply takes too long to build a building, and so it is natural for there to be moments when supply and demand don’t exactly line up.

  Pre-selling condominiums is — in theory only — supposed to protect against too much overbuilding. But as we have spoken about many times before, it can be challenging for end users to buy a new home so far in advance. And so the new condominium market has come to rely on investors who want to buy early and then either sell later or rent later.

  According to the above article (and MLS data), the share of newly completed condominiums used as rentals reached a peak of 34% in 2023. So a third of new condos. My gut tells me that the actual number is much higher. Many rentals never reach MLS. Overall, I think it’s very safe to assume that the majority of new condominiums are owned by investors.

  But right now, fewer investors want to own condominiums, which is why the number of resale listings has spiked this year:

  

  

  This is, again, why I think right now is an excellent time to buy a condo. You know, be greedy when others… Regardless, this inventory will need to get absorbed and that will ultimately happen. Some of it will go to end users and some of it will go to investors who can make sense of the rental math and/or want to take a long view on Toronto. But if more goes to the former, we will be losing a lot of new rental housing.

  At the same time, while all of this is going on, construction starts are likely going to remain depressed (chart 3 above). It’s impossible to know how long this lasts, but at some point we will reach a moment in the cycle where we are under-building new housing. Maybe we’re already there. Development simply can’t turn on fast enough when demand spikes. There will almost always be a lag.

  So, since the majority of new condominiums have been serving as new rental housing, there’s a strong case to be made that at some point we will run into a potentially severe shortage of rentals. Condo investors are sometimes vilified in the media, but we will soon find out what happens when you take a big chunk of them out of the housing market.

  2024.07.27

• Where 3+ bedroom homes are getting built in Ontario (Hint: It’s not Toronto)

  

  Here’s an interesting, though not shocking, chart from a recent Globe and Mail article talking about “Canada’s dysfunctional housing market.” What is noteworthy is that Toronto is dead last when it comes to the number of new 3+ bedroom homes built between 2016 and 2011.

  Peterborough, for example, is a census metropolitan area with somewhere around 130,000 people. And yet, based on this data, it is building more family-sized homes than Toronto.

  Why this is not surprising is that the vast majority of new homes now built in Toronto are high-density and built out of reinforced concrete. This means that they are relatively expensive on a per square foot basis.

  In fact, you could argue that mid-rise housing — the exact high-density type that is supposed to be most attractive to families — is the most expensive to build. What this means is that if you’re building a 3+ bedroom home in this way, it’s not going to be affordable to most.

  It also means that people are going to go shopping elsewhere: Ottawa, York, Simcoe, Durham, and so on. The expected market outcome is decentralization. But in my mind, this raises an important question: Is this what people really want?

  This is a great debate. And many will argue that grade-related suburban housing is exactly what people want. What we are seeing is a result of raw consumer preference.

  However, the costs are so skewed in favor of low-rise housing, that I think it’s hard to say with absolute certainty the degree in which this is true. What if higher-density 3+ bedroom homes were the cheaper option? My bet is that we would see a lot more centralization.

  The development charge rate for a 2+ bedroom apartment in the City of Toronto is currently $80,690 per unit (effective June 6, 2024). As development charges work, this is supposed to pay for the growth-related impacts of adding a 2+ bedroom apartment in the city.

  However, the above chart suggests that there are also impacts to not building that 2 or 3 bedroom apartment in an already developed area next to existing infrastructure. It means the home goes somewhere else (further away) or doesn’t get built at all.

  Both of these outcomes also have costs.

  2024.06.30