Experts say the Toronto real estate market is facing a major crisis
Real estate in Toronto — and the rest of Canada — could be on the way toward a crisis point, according to the 2022 Housing Inventory Report released by RE/MAX Canada on Monday.
The report underscores what experts have been shouting from the rooftops for years: a critically short supply of housing inventory requires immediate action from politicians. An added threat of a resurgence in demand for new homes now has industry analysts using the word 'crisis' to describe the housing situation in Canada.
Housing development is slow, but the only thing slower might be government processes. Removing barriers and cutting red tape is necessary. There's a short runway to reverse course before the impacts become very real for Canadian homebuyers and renters: https://t.co/HaumMs6CW0— RE/MAX Canada (@REMAXca) September 12, 2022
According to the inventory report, supply levels in major Canadian housing markets have dwindled for years, citing active listings in July running below the 10-year average across almost all markets surveyed.
Active listings fell in July for eight major Canadian population centres from 2013 to 2022, and while the Greater Toronto Area is far from the most worrying on the list, the continued undersupply of homes in what is now the country's hottest housing market has experts warning that there could be trouble on the horizon.
Double-digit dips below the 10-year average were recorded in centres like Halifax-Dartmouth (65.5 per cent below the average) and Ottawa (42 per cent below), while the GTA supply was only seven per cent below the ten-year July average.
The only major population centre to actually register above the average was Hamilton-Burlington, increasing 3.2 per cent.
It's a reversal of the trend seen in the decade before, with Toronto registering a July 10-year average of 21,243 active listings in the years from 2003 to 2012, versus the 16,458 July average for the decade of 2013-2022.
"Supply was far more robust in the early 2000s in centres such as Greater Vancouver, the Greater Toronto Area and Hamilton-Burlington," according to Christopher Alexander, President, RE/MAX Canada.
"Population growth and household formation have played a significant role in depleting inventory levels from coast to coast over the most recent decade, triggering chronic housing shortages in large urban centres that resulted in mini 'boom' and 'bust' cycles."
Alexander warns that "If we don't move now to build more housing in the current lull, it's expected that this same scenario will continue to resurface over and over again."
Several factors are expected to stress this supply shortage out further. Statistics Canada expects Canada to welcome 1.2 million immigrants between 2021 and 2023, with a large share anticipated to settle in the GTA.
Between population growth and changing work patterns bringing buyers back to the city, the RE/MAX Canada report states a concern that "there is inadequate supply to accommodate future growth."
Increased demand and a lack of supply almost universally translate to rising prices, and the average price of a home in the region sat at $1,074,754 in July, already 33 per cent higher than the $806,755 average in July 2019.
RE/MAX Canada suggests that development charges levied by (cash-strapped) municipalities have developers passing on costs to consumers and sitting on land, resulting in high-profile cancellations and shelving of condo and purpose-built rental developments.
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