Toronto’s housing affordability issue
You know Toronto must be in the midst of a housing crisis when a large group of young professionals shows up for a panel discussion on housing over after-work drinks on a weekday evening.
The salon event of sorts, organized by BetterTO.ca, a group of urban professionals “striving to shine a light on Toronto’s most critical issues,” was indeed timely, and necessary.
In the last year alone, home prices have shot up almost 30 percent in the Greater Toronto Area. A recent publication from analytics firm CoreLogic claimed that Toronto’s home price growth was the fastest in the world in 2016, outpacing some of the world’s most expensive cities like New York, London, and Singapore. In fact, according to an RBC report published this week, housing affordability in Toronto is currently at its lowest level since 1990.
“How many of you earn upwards of $100,000 a year?” social worker and housing activist Dr. Emily Paradis asked the audience. A grand total of zero hands shot up. Similar queries were directed at salon participants, and a picture emerged of a group of concerned renters, perhaps in their late 20s to mid 30s, financially stretched and far removed from the prospect of ever owning a home.
“We did a lot of data digging before coming up here to talk to all of you,” said Paradis. “Here are the numbers: A studio apartment rents for $1500, a one-bedroom condo rents for at least $1800, and it’s $2,400 for a two-bedroom condo.”
Those numbers are indeed frightening — only 10 years ago, it was not uncommon to pay roughly $1,400 in rent to share a sizable two-bedroom apartment. Bachelor apartments went for about $900, and people who lived in newer condominium buildings were considered “wealthier” because they could afford roughly $1,500 per month per person.
That rent price is now considered normal, despite the fact that wages in Toronto have stagnated over the past two decades or so. So, we aren’t getting any richer, and we’re having to spend more of our income on housing, which leaves us with barely any money left to save to actually BUY a house.
This is probably why buying is such a foreign concept to many people, despite being middle-class Torontonians with good jobs. “I pay $1600 in rent for a condo, and that’s definitely more than half of my take-home salary per month,” Catherine Tucker, a salon attendee told VICE Money. “I came [to the event] because I find it so problematic that we’ve somehow normalized the problem of high rents. It’s kind of assumed that that’s what you’re supposed to be accustomed to it if you live in a big city.”
One of the fundamental reasons it’s so unaffordable to own or rent in Toronto, says urban planner Sean Galbraith, also a panelist at the salon event, is a low supply of housing units.
This is not a new story, and it’s undeniably a contentious one to those who believe that population growth and foreign buyer activity are bigger drivers of home-price increases. The Greater Toronto Area’s zoning bylaws dictate that developers are not allowed to build multi-unit dwellings in certain neighbourhoods. For instance, the rows of old, Victorian-style duplexes in Toronto’s Annex neighbourhood cannot be replicated in the vast, spacious, leafy (and very expensive) suburb of North York.
“Because of these outdated zoning laws, the pressure release valve for housing units is in the downtown core. We’ve essentially lost out on adding units to the market, that would help bring supply up, and prices down,” Galbraith told the audience.
You’d think this pressure release valve — aka the mass construction of condominiums in the downtown core over the last five years — would have resulted in excess supply and lower rent prices. Not the case, unfortunately.
“Condominiums have become financial instruments for the wealthy — not a home, but merely a place to park their wealth,” argued Paradis. “Many people leave their homes vacant if they can afford to, because what landlord wants to deal with a tenant, right?” According to Paradis, it’s not uncommon to hear of landlords forcing their tenants to move out to make way for the landlord’s own family to occupy the unit. “In most of those cases, the landlords’ claims of ‘own use’ are not verifiable.”
After tip-toeing around Toronto’s housing problem for years, TD Bank issued a report last week citing “buyer speculative activity” as a key driver of home price growth. “It’s getting harder to ignore warning signs that market demand pressures are increasingly reflecting speculative forces,” said the report.
Last November, Vancouver’s city council voted to impose a tax on empty homes, the first tax of its kind in Canada. Vacancy rates, or the number of available dwellings for rent in Vancouver have consistently averaged below one percent. Toronto isn’t too far behind — 2017 data from Statistics Canada showed that Toronto has over 99,000 unoccupied homes, meaning that they are owned, but not rented out. Downtown Toronto condominiums lead that pack.
“What if we start looking at housing as a human right? Like healthcare and education?” Paradis asked the audience. “By letting the private sector take the reigns on city development, the public sector has abandoned its responsibility to our city, to our communities.”
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