Get Used To Renting, CIBC Tells Torontonians

Huffingtonpost.ca
Aug. 16, 2016
By Daniel Tencer

An overwhelming majority of Toronto’s residents - including millennials - want to own a single-family home, according to a new study from Ryerson University.

For many those dreams will be dashed on the rocky shores of rising house prices, which the Ryerson study and a new CIBC report blame partly on provincial densification policies that have reduced single-family home construction to a fraction of its former self.

And not only should Torontonians stop dreaming of single-family home ownership (that is, other than those who already own a home), some should even stop dreaming of owning anything at all, the CIBC report says.

As Toronto becomes a larger, denser and more expensive city, a larger share of the population will have to rent their housing. The CIBC report suggests that increasingly unrealistic expectations of homeownership are part of what’s driving up house prices in Toronto.

“The GTA is in a twilight zone of home prices characterized by a homeownership mentality that is slow to change to the required higher propensity to rent,” economists Benjamin Tal and Katherine Judge wrote.

It’s not just Toronto. Many “globalized” cities around the world have seen substantial jumps in housing prices in recent years, and there, too, experts say more people will have to get used to renting.

A recent study looking at London predicted the U.K. capital’s home ownership rate will drop to 40 per cent by 2025, from 60 per cent in 2000. (Toronto’s home ownership rate came in at 68 per cent in the 2011 National Household Survey.)

But the Ryerson study, which collected data from a number of earlier surveys, found that Greater Toronto Area residents continue to be as ambitious as ever in their homeownership goals. Only 18 per cent in the GTA prefer apartment housing to ground-level housing.

Millennials - who are doing most of the first-home buying - are more likely to prefer apartments, but only slightly, with three-quarters saying they want ground-level housing.

Meanwhile, two-thirds of the housing starts in Greater Toronto these days are apartments or condos.

“The view that many households in the GTA would willingly give up single-detached houses to move into higher density housing in location-efficient communities is wrong,” the Ryerson study concluded.

A 'huge windfall' for those who already own land

The report warns that Ontario's densification policies will reduce the quality of life and, in effect, cause a transfer of wealth to existing landowners, from non-landowners.

“Urban policies which try to force [densification] by constraining the supply of new ground-related housing will lead to even higher house prices, sub-optimal location choices, and huge capital gain windfalls for the lucky owners of existing houses and vacant lands....”

Like the Ryerson study, the CIBC analysis also points the finger at restrictive land use policies as being part of what’s driving up house prices.

“Policies such as the ‘Places to Grow Act’ have limited the availability of serviced land for ground-oriented houses through setting aggressive intensification and density targets,” the CIBC report wrote.

The study says Ontario should “reassess” its plan, unveiled earlier this year, to set even higher densification requirements for the southern Ontario area.

Fighting urban sprawl

But environmental advocates are defending densification targets, as well as the Greenbelt the province put around the GTA to limit urban sprawl.

“Some in the development industry want to keep building sprawling low-density housing. It’s this cookie cutter approach to land use that has caused Ontario's mess of traffic congestion, hefty residential taxes, and degraded natural environment,” Erin Shapero, the Greenbelt and smart growth program manager for Environmental Defence, told HuffPost Canada in an email.

“It’s time the sprawl developers stop trying to turn back the clock to a 1950s model of growth, where low-density sprawl destroys farms, makes residents car-dependent and creates debts for municipalities struggling to provide services like water and transit to these far-flung subdivisions.”

Shapero pointed to a recent study from the Neptis Foundation, which found that enough developable land exists in the GTA “to last to 2031 and likely beyond.”