I’ve said this before, time and time again: the reason real estate prices are so high in Toronto is because demand massively outpaces supply.
And when we talk about the overall “supply,” we mean those houses that area available for sale.
But what about simply the overall number of houses in existence?
That number isn’t increasing. The “housing completions” are about 99.9% condos.
So when we do see a true “new” house built, it’s usually something like this…
If you tear down an existing house, and build a “new” house in its place, then technically the house is new, but there are no “new” homes to add to the overall stock of homes in Toronto.
We don’t live in a city where you can simply build 2,000 new homes on a vacant plot of land.
Part of the reason why so many real estate bubbles have crashed around the world is because of the available supply of raw land on which developers can continue to add to the stock of homes.
In Toronto, we almost never add true, new homes.
Drive along Queen Street East in Leslieville, and you’ll see a few old auto body shops in between the upscale meat, cheese, and coffee establishments. Those auto body shops will undoubtedly be turned into small rows of infill townhouses one day. There’s already one being advertised at Queen & Logan.
But how do we create “new” freehold, detached homes?
It’s next to impossible.
And when we do create a new home, it’s often the method shown above.
ONE house at a time.
That’s how slowly we’re increasing our housing stock in Toronto.
But we don’t want to build on parts of The Greenbelt right? Yeah, thought not. Just checking back to see if anybody changed their mind over the weekend…
But for every “new” person who comes to live in Toronto, is there a “new” house built?
No. Not even close.
I would guess that net migration is at least double housing completions, each and ever year, and thus we have far more demand than supply, and that means prices increase.
And when it comes to houses – actual freehold properties, the number of “new” ones will continue to dwindle each and every year. And who knows, maybe in 50 years, only the city’s true elite will live in them…