Right housing types will curb unsustainable price growth, says TREB
The Greater Toronto and Hamilton Area suffers from scarcity of “missing middle” housing, and the Toronto Real Estate Board fears unsustainable price growth will ensue if the problem isn’t rectified.
“One of the things we’re pushing is, even though we’ve seen a dip in home sales compared to what we saw in the same period last year, market conditions remain tight and we’re still seeing three months’ worth of inventory,” said Jason Mercer, TREB’s director of market analysis. “That’s far from a scenario of protracted price decline, and the issue is that even though demand edged back a little bit, we’re still not seeing much supply in the marketplace. Our concern is that as demand picks up again, we’re going to be back into the same issue we saw in 2015 and 2016 where there isn’t enough inventory to keep up with demand, and that leads to an unsustainable pace of price growth.”
Missing middle housing is defined as anything between single-family detached dwellings and condos, like townhomes, semis, and even smallplexes.
But last year, a Canadian Centre for Economic Analysis [CANCEA] report revealed there are over five million unused bedrooms in the region largely because would-be empty nesters have no place to go.
“CANCEA found millions of unused bedrooms in the Greater Golden Horseshoe just because people are living in homes that don’t meet their needs anymore,” said Mercer. “They can’t find type of housing that’s better suited for them because, quite frankly, we haven’t built much of that."
“You’re not seeing as many listings for detached homes, and as a result people are remaining in place rather than moving into a home type that’s more efficient for them.”
That doesn’t surprise Daniel Johanis. He regularly sees people stuck where they are, and in addition to a shortage of middle homes, he attributes it to prohibitive pricing.
“I was just dealing with a couple who has a second child on the way and they needed to move from their one-plus-den condo,” said the DLC Mortgage Centre broker. “It’s not feasible to raise a family there, but the problem with the B-20 guidelines, and other factors that are playing into our mortgage qualification rates, is they making it a little bit more difficult to get into homeownership that’s affordable and suitable for a growing family.”
So where do they go?
“My clients are looking outside of traditional places,” continued Johanis. “They’re looking in Georgetown and Guelph—places outside the city.”