CBC aired a documentary on Toronto’s condo market on November 21st that can be viewed here. It is notable for two reasons. First, it provides a prognosis for Toronto that is much darker than the most negative mainstream sources would suggest. Second, while it hints at some of the policies that have fuelled the condo boom, the producers seem to lay the blame for the problem they perceive entirely at the feet of “corporate greed” and foreign ownership, as though to absolve the particular policies behind the boom that they happen to like.
Some observers have expressed concerns over the last few years of a potential housing bubble in Canada. Of course, the more astute observers realise that the Canadian housing market is, in fact, dozens of loosely linked markets. The real concerns lie in Toronto and Vancouver, where prices have escalated dramatically since the 1990s. But there are good reasons why housing prices have increased in those markets.
Strong demand driven by in-migration, paired with natural and artificial barriers to growth lead inexorably towards higher prices. For there to be a genuine bubble, there would have to be a good degree of speculative investment that eclipses expected demand. That doesn’t seem to be the case. As the documentary points out, 2.5 million people are expected to move to Toronto in the next 20 years. People need places to live. At worst, supply could get ahead of demand. Except it hasn’t. Otherwise prices would be falling.
As the documentary points out, the construction industry cannot actually keep up with the demand. There are many people who purchase condos as an investment, and never actually live in them (many rent them out), and people who only live in the city part time, but it isn’t clear why these are supposed to represent problems.
At one point they talk to a retail business owner who tried to set up shop in a Vancouver condo neighbourhood, only to go out of business. That person claimed that the fault lie with the fact that not enough people actually occupy those condo units. No thought was given to the fact that it might not have been a sound business idea to begin with. It’s as though the documentarians set out to find as many victims as possible, even if they were cut by their own hands.
In addition to concerns over a possible bubble, the documentarians express concern over the quality of condos. They visit a few people who have had problems with their condos such as leaking windows, but provide no evidence that these aren’t exceptional circumstances. Some percentage of construction is flawed, whether high rise or not. Simply pointing out a few cases doesn’t tell us whether or not defects are uncommonly prevalent in the Toronto condo market.
The most bizarre part of the documentary is when Toronto city councillor Adam Vaughan, beloved by downtown “progressives”, argues that condos are breeding grounds for crime. The documentarians then implied that the downtown condo developments would turn into St. Jamestown, a poor high rise community. Yet, they fail to explain how condos only accessible to high income earners, could be breading grounds for poverty among low-income Torontonians.
The documentary mentions that the creation of the Greenbelt, which put much of the unused land around GTA cities off limits for development, helped spur the condo boom in Toronto. There is obviously some truth to that, as there is less land available for single dwelling houses, though shifting preferences towards urban living (while often exaggerated) certainly played a role as well. But this is the last we hear of the Greenbelt throughout the entire program. While pundits in documentary raise alarm bells about condo price increases in the GTA, they don’t mention the very simple fact that reducing the supply of land available to development pushes up prices not only outside of the city, but also within. Those increasing land prices get passed on to condo buyers. There is good reason to believe that this will keep prices up unless migration to the GTA tails off dramatically, which isn’t likely in the foreseeable future. While foreign buyers and speculators are convenient targets, it seems odd to ignore simple arithmetic.
The troubling part of this documentary is not that it took a dim view of the Toronto condo market, but that they never bothered to interview anyone who didn’t share that view. Given that the documentarians expressed a perspective that runs contrary to most independent assessments, the least they could have done was engage with people holding the majority opinion. It’s fine to take a dissenting view, but when doing so, one should explain what the majority opinion is, and why they believe that position to be erroneous. A strong documentary should weigh various perspectives according to their merits. Instead, The Condo Game makers mustered selective evidence to defend their preconceptions. Our publicly funded broadcaster should aspire to a much higher standard.