Urban Sprawl Rules Choking Toronto Development: Building Industry

Commentary, Urbanization, Frontier Centre

Provincial guidelines intended to contain urban sprawl in the Greater Toronto Area are choking development, according to the building industry, pushing the value of single-family homes above $500,000 in 2010 as developers struggled to find land they are allowed to build upon.

Data from RealNet Canada released on Thursday show that 36,803 new housing units were sold in the GTA in 2010. And although the condo and resale markets were strong, it was the second worst year in a decade for the sale of new houses.

“You can’t sell what you don’t have,” said RealNet president George Carras. “Sales have been flattened by a lack of supply.”

The government brought in legislation in 2005 that restricts development in a so-called greenbelt around the city and tightened the way developers could plan their projects. Forty per cent of all development is supposed to be infill by 2015, and the supply of new land is limited until 2031.

It isn’t that the developers want to flatten playgrounds and farmland – the executive vice-president of Empire Communities said the approvals needed to build on land that is intended for housing are slow to come. This has pushed prices higher and made it more difficult for new projects to break ground.

“The growth policies are working a little too well,” said Paul Golini, executive vice-president of Empire Communities. “We don’t have enough inventory of lots.”

The sale of low-density housing, such as single-family dwelling and townhouses, fell by 10 per cent in 2010 as the average price hit $503,190. Meanwhile, units in condo towers averaged $441,663. Condo sales accounted for 55 per cent of all activity last year, and the second best year of the decade for the sector.

The industry has met with the province to attempt to speed up the approval process, said Stephen Dupuis, the president of president of the Building Industry & Land Development Association of Toronto.

“We need to reduce the red tape,” he said. “Governments are really afraid to open land for development. They may just have to say yes more than they have been.”

Developers are busier in the 905 area codes that surround the city, Mr. Carras said, with 55 per cent of sales last year.

However, the condo boom has new home growth in the 416-region almost double what it was 10 years ago. And while many market watcher have expressed concern about the amount of inventory in the city, at the end of 2010 the supply was 35 per cent lower than it was at the peak of the market in 2008.

“Since 2000, the residential development industry in the GTA has seen apartment condominium product increase it total market share by 30 per cent, while over the same period the industry has seen a 16 per cent drop in market share of detached homes.”

There were 233 residential land sales in 2010 totalling $1.4-billion in the various residential land types, including long term land, low density land, medium density land and high density land. The high-density land sector saw the largest investments accounting for 46 per cent of the transactions by dollar volume, as investments in residential land investments in 2010 increased by 77 per cent over 2009.