New Report Shows Shortage of Condos Units for New Home Buyers in Toronto
The Residential Construction Council of Ontario (RESCON), the non-profit association that represents 200 of Ontario’s residential builders, and the University of Toronto’s Tall Research Group, have just released a new report which details condo development trends in Toronto over the last decade. According to the report, there has been a slowing in the building approval process for condo developments in the city over the last 10 years and this has had a dire impact on municipalities, as well as potential condo buyers. With zoning and by law demands increasing, condo units are not getting made and this is leaving millions in property tax dollars on the table, as well as many potential condo home owners in Toronto scrambling to find units to purchase.
The detailed report titled, “Evaluation of Tall Building Construction Permitting Process in Toronto,” completed by academics, engineers and business professionals, took a detailed look at the Official Plan and/or zoning bylaw amendment approval process of 174 new condo developments in Toronto between 2006 and 2016. The researchers concluded that the time to complete the approvals process has more than doubled in the past decade. For instance, what is supposed to be a 9 month approval process for planning and zoning bylaws for new condo developments in Toronto is, on average, taking nearly 3.5 years.
Such delays in the building of condo developments in Toronto, means many things to the citizens of our city. First, as projects are slowed, the City misses out on the collection of potential property tax revenues, which could greatly benefit the development of our municipalities. To illustrate the weight of such a delay on municipal well-being and growth, the study notes that a hypothetical 50-storey condo with 500 units (with an average unit cost of $470,000 per unit) would mean $3,200 of property tax per unit. This means that each 50-storey condo unit in Toronto could create property tax revenue of $1.6 million per year. That is a lot of money for a young, yet burgeoning world-class city to miss out on annually. Now figure in the fact that the report notes that most Toronto condo developments are delayed by three years and a half years and you are looking at about $5 million in lost property tax revenue per Toronto condo development.
The municipal delays in condo project development in Toronto are not only hurting the revenue of the city but they are hurting the citizens hoping to call Toronto home. With real estate prices in Toronto steadily climbing and the value of home ownership in the city increasing every day, many first time homebuyers in Toronto are looking to condo ownership. With a condo you can get a good amount of square footage, similar to a small two-bedroom house in Toronto, but for half the price and in a better location. The planning, zoning and bylaw delays in Toronto condo projects means that new home buyers are facing less condo inventory on the market and therefore, are less likely to find their first home in the city.
Paul De Berardis, M.Eng., P.Eng., RESCON's director of building science and innovation notes that, "The drawn-out approvals process and lack of a predictable timeline foster uncertainty and risk for a condo development project. The current process throttles the supply of new units and ultimately costs homebuyers.” In Toronto’s hot real estate market, condo units are already in high demand but these delays in the development approvals of condo projects in the city, are making the situation even more dire. It is no wonder that as Ontario roles out plans to try and increase housing supply in the city of Toronto, experts agree that making sure the development approvals process is streamlined is of the utmost importance.
While new condo projects in Toronto have been slowed by city planning, zoning and by law requirements and demands, and this has hurt both the municipal coffers and new homebuyers in Toronto, there are still great condo units available in the city. The key is that you have to know where to look and when. More than ever, home buyers who are looking to purchase a condo in Toronto need to turn to experienced real estate professionals who can seek out great units that are still available and which meet their home ownership needs. Finding your condo dream home in a city like Toronto might be a difficult undertaking, but it is worth it and with the right real estate agent it is possible.
Lara Brighton is a journalist and real estate aficionado living in Toronto