Toronto Is Running Out Of……What?


What’s the word I’m looking for here, folks?

We’re running out of…..real estate agents?

Ha!  Not on your life.

But we are running out of something, and that one thing is probably the number-one reason why I think our market, despite all hopes and prayers, will continue to rise.  And debate all you want (we probably will…), but it has to be one of the biggest considerations when assessing the future of the Toronto real estate market.


Here’s a story you’ve probably heard before.

In fact, I think I’ve told it on TRB in the last little while, or maybe that was in an email to a client.  Either way – it’s nostalgic, and it ties into today’s topic.

I’ve alluded to my very difficult and disadvantaged upbringing in the past, and one of the travesties we had to endure as children was going to ski in Park City, Utah once or twice per year.

Park City, Utah is a historic town, with its roots deep in the mining industry.

Of course, it also happens to have some of the most spectacular mountains anywhere in North America, so somewhere between mining for coal and mining for silver, one or two people had the bright idea to open a ski resort, and the rest is history.

My father went to ski there in the late 1970’s, and it was, back then, a very quaint little town.

Along with a few friends, my father purchased a small house in “Park Meadows,” which was a residential area of Park City, so that their families could ski in the winters.

We first went to Park City in 1988.  It truly was a very quaint little town, with an historic little “Main Street” that even had a trolley!  My mother made us run up and down Main Street (it’s a massive hill) on that trolley one night in the dead of winter, and while my father thought it was punishment, I think she just really enjoyed the damn ride!  I digress…

As more and more people began to flock to Park City, since “word got out” about the skiing, obviously things began to change.

In 1995, the Olympic Winter Games were awarded to Salt Lake City, which basically meant that Park City was getting the games, since all the skiing would be held there.

By the time 2002 rolled around, Park City had completely transformed.

The t-shirt shops and pizza pubs on Main Street were replaced with jewelry stores and places flogging time-shares.

The base of Park City Ski Resort was completely unrecognizable, as there was a gargantuan six or eight story condominium built in place of where a one-storey shack once stood.

The real estate prices absolutely skyrocketed, and development ran rampant.

I last skied in Park City in 2004.

My father then bought a house in Victor, Idaho (as many of you know from reading this blog), which is……..wait for it……”a quaint little town.”

In the summer of 2011, I went with my now-wife on a road trip from Idaho, and I wanted to show her Park City where I spent a lot of time in my childhood.

I hardly recognized the place.

Driving into the city, the highways were lined with massive houses, where nothing once stood.

Picture hay-bales, and tumbleweeds.  Rock-faces, and sagebrush.

That’s all that was there when I was a kid.

And now there were multi-million-dollar houses.

This was, of course, 2011 – after the real estate crash in the United States.

Despite the presence of all of these gorgeous homes, I also noticed the presence of a heck of a lot of “FOR SALE” signs.

The market in Park City was depressed.  I can’t recall, or seem to find online, any dependable statistics on how much house prices decreased, but I would assume the decline was substantial.

And as my wife and I drove through this sub-division of four or five-year-old houses, we basically came to the “end” of the road.

But not the end of the road, like here in a Toronto neigbhourhood, where maybe you run into a court or a crescent.

I mean the end of the road, and the end of the neighbourhood.

The neighbourhood was a perfect square; laid out in a grid.

And do you know what was located on the other side of the “end” of the road; on the other side of this perfect square?

Thousands and thousands of acres of vacant land.


That’s the “word” I wanted you to come up with at the onset, and you might have.

You might have also figured out where I was going with that story.

And while I mention, “Toronto has run out of land” in a blog post every so often, I’m not sure if we’ve given the notion it’s full due, with a full post.

There are a lot of factors affecting the long term pricing of real estate.

Obviously interest rates will top many of your lists, as will the health of the local economy and the job market, and population growth.

But save for Detroit, whose population has dropped from 1,850,000 in 1950 to 701,000 in 2013, most large cities in North America only see their populations go up.

I may have just written a full blog post last week about how people are moving out of Toronto and into Mississauga, Oakville, Brampton, and the like.  But the net migration into Toronto is still increasing.

And whereas in some markets, when demand increases, you simply see a corresponding increase in supply, we simply can’t build more freehold houses in Toronto, and condo developers are lamenting out in the open about how hard it is to find building sites.

I mentioned that my father bought a house in Victor, Idaho after Park City turned into yet another Aspen.

Victor, Idaho, as well as neighbouring Driggs, experienced their own speculation-driven real estate boom.

The house that my father bought, was listed for $799,000.

It didn’t sell, and was dropped in price to $699,000.

Then $599,000.

Then $499,000.

Then after 18 months on the market, my father bought it for $375,000.

The problem with the market out there in Victor, Idaho, is that just as with Park City, Utah, there is land everywhere!

Say what you want about speculation from both foreign and domestic investors here in Toronto, but we don’t have anymore land on which to build.

In real estate booms in Florida, or Phoenix, or any other North American city that’s seen spectacular hills and valleys, you can always find available supply as one of the root causes of a decline.

One of the golf courses I play in Victor, Idaho always has plots of land up for sale.

In 2009, when I first went to Victor, I noticed that two identical plots of land – both 1/8th of an acre, were for sale, but at very different prices.

Property A: $400,000
Property B: $28,000

These two plots were identical. 

I asked a real estate agent down there why the two plots were so drastically different in price, and he said, “One is owned by an investor who paid $400,000, and is going down with the ship.  He refuses to take less than he paid.  The other is owned by the bank, who are looking to sell it at current fair market value.”

That’s one-eighth of an acre.

Do you know how many millions of acres of vacant land are in the Teton Valley?

Granted, this one happens to be on a golf course.  But then how many thousands of 1/8-acre parcels are out there?

Both of these towns – Park City and Victor, saw prices massively increase when times were good, and saw prices plummet when times were bad.

You can argue that the Toronto real estate market, under various circumstances, could see a price drop.  I don’t want to seem like that much of a real estate cheerleader, as if to say, “Our market is shooting for the moon, and never coming down.”

But one thing you can’t argue with is that there will be approximately a 0.00% increase in the existence of freehold dwellings in the central core of Toronto.

We don’t have one million acres of vacant land sitting next to Leaside, or Leslieville, or Lawrence Park, unlike the “Red Stone Estates” in Park City, Utah.

For the life of me, I can’t find the article online.  But I recall seeing an interview with a prominent condo developer (was it Barry Fenton of Lanterra?) where he said that they can’t get their hands on any more land on which to build new condos.

Developers these days are no longer targeting those empty parking lots about which people say, “That will be a condo one day.”  Those days are gone.

Developers these days are targeting 15-20 storey office buildings at major intersections, looking to turn around and build 50-60 storey condos.

Supply and demand, folks.

The true “supply” might be what is available for sale on the open market.  But the number of freehold houses in Toronto isn’t changing…


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  1. Perkie says:

    As I drive around the city I see hundreds of sites that could be used for residential development and all of it serviced. The inner suburbs have 100’s of abandoned warehousing or factories because most of that has moved to places like Vaughan and Brampton where land is cheap with good access to freeways. There are 100’s of 1 story or 2 story strip plazas with a few stores fronted by parking on all major streets. Around many of the city’s malls are vast parking lots that would only be full before Christmas. In all cases rezoning would facilitate redevelopment for housing.

    1. Kyle says:

      The problem with the sites you mention is that they are not economically feasible to develop…yet The factories, warehouses and strip malls, tend to be zoned “employment areas” by our city’s archaic Official Plan, which insists employment areas need to be kept separate from residential areas (and we wonder why there is so much traffic in this city…has no one in the City ever heard of mixed-use?). So it would be very risky, costly and time-consuming for a developer to attempt to re-zone. As well, many of those sites require remediation and infra and coordination to create a ‘district’ that people will want to live in, before they can be developed. An example would be the entire Eastern waterfront between Cherry and Leslie. This area “should” be ripe for development, but it still remains a wasteland. In time the economics of these sites will become more compelling, but it will be very slow.

  2. Cool Koshur says:

    It all nails down to two key factors one is where jobs are, Second the transit. There is lot of brown fields in the suburbs for new housing but then there are no jobs there and there is no transit. Currently most jobs are concentrated in and around downtown. There are nothing much left there except Port lands.

    It is paramount transit infrastructure is build simultaneously along with any new housing communities. Take an example of new townships like Milton, New Market, Georgetown etc which popped up in last decade but they lack viable transit.Provide incentives to businesses to move these localities and voila we have viable ecosystem

  3. Kyle says:

    I agree and disagree. I agree that all the “low-hanging fruit” lands have been developed, which has driven up the price of land and with it the price of real estate. However where i disagree, is that when you look at Toronto from the sky and compare it to other major cities, it is very low density. In fact other than the downtown core, it looks more like a forest than a city from several stories up. The problem isn’t so much that there isn’t anymore land, it’s that zoning of the land doesn’t allow the land to be economically used in a more efficient manner. The term the yellowbelt, has been used to describe the huge area of Toronto where zoning does not allow for higher density then currently exists.

    Here’s a good blog about it:

  4. James mather says:

    The big unknown for cities is automated transportation. Fleets of connected self driving cars may make the burbs and the countryside very attractive. Will this happen in 5 years? No. But in 10 or 20? Yes, quite possibly. Also, history suggests that city dwelling simply goes in and out of fashion in long cycles.

  5. BillyO says:

    David, you are correct that it was indeed Barry Fenton and it was in reference to being out bit for the Cumberland Terrace site at Yonge and Bloor for $265M (so Kingsett bought the land for $200 PSF!). So yes, not only is land downtown becoming scarce for condo development, it’s also selling at never before seen prices.

  6. O says:

    Agree 100%. As I tell my “smart friends” who mocked me for buying a house in the mid 90s… “You want a house 20 minutes from downtown, near the subway, in a good school district near a hospital? So do about 1000 other people.” I used to be a bit more downbeat about the Toronto market..the whole late 80’s crash and all, but now, I am not so sure. We will have the jobs…finance, healthcare, media, high tech, manufacturing, construction..we are not a one industry town. And even if the private sector crashes, lets not forget all that government money….a cop married to a nurse brings in close to 200 grand a year. For Toronto prices to come down, Toronto itself has to crash. Don’t see that happening soon.

    1. WarnerBro says:

      You’ve basically described what my wife and I did in 1998: moved from a Malvern “starter” semi (we got $155,000) to a similarly sized detached at Broadview and Danforth (we paid $299,000). Friends thought we were nuts for doubling our mortgage debt. Hmmm.

  7. Potato says:

    Weird, I took the opposite conclusion from the example. It’s a tale of animal spirits: look at Park City, where it should have been obvious that there was land aplenty, but prices climbed anyway. Now how much easier would it be for Toronto residents to mis-price housing where it’s harder to determine the underlying value?

    1. Appraiser says:

      Please define “underlying value.”

  8. Joel says:

    There are a few 10-15 story building on the Danforth now. I think it would be great if developers continued that trend and built up along the subway. The profit won’t be as much as a 70 story in the financial district, but they can still find a way to make money they may have to work a little harder for a little less.

  9. Kramer says:

    I continue to try to look at Supply and Demand as independent economic functions with many variables.

    Supply will only go up if a) you can build more, or b) if more people in general want to sell (and flee far FAR away vs sell one Toronto property and buy a different Toronto property, which I consider a wash).

    While demand COULD drop a bit because of tighter lending rules, etc… that doesn’t impact the supply function… it doesn’t mean that more people are going to list and leave the market. A few extra units of inventory sitting for a few more weeks because of a small drop in demand doesn’t mean the supply function has changed AT ALL. That’s the difference between moving along a supply or demand curve, and having a shift in a supply or demand curve.

    So, what is actually going to increase Supply, i.e. shift the Supply curve?
    – increase in unemployment forcing more people to sell and move far away or rent.
    – increase in interest rates to a point where more people are forced to sell and move far away or rent.
    – a sudden decrease in desire to live in or own in Toronto/surrounding area resulting in more people selling and moving far away or renting.
    – a sudden massive availability of land to build new houses/units on.
    – a sudden massive selling off of investment properties (foreign and domestically owned).

    I guess I don’t see any of those shifting the Supply curve in the near term.

  10. Ralph Cramdown says:

    Those parking lots that developers have been developing over the last 20 years weren’t always parking lots. They had useful, income generating properties on them. Then at some point it became cheaper to tear them down, run them as surface lots so as to pay lower property taxes, and wait. Hmm…

    1. Appraiser says:

      The only parking lots that are going to be built in T.O. will start well underground. No more wild fantasies Ralph.

      1. Ralph Cramdown says:

        Oh we’ve had one of those, too. The Bay Adelaide “stump,” a failed office tower that reminded everyone that real estate is cyclical from 1991 to 2006. $500 million for a six level underground parking garage.

  11. Sabrina says:

    I hate to play the “old woman” card, but way back before I was a teenager (when I was living in one of those awful split-levels in the ‘burbs)—almost 50 years ago—we were told that only the wealthy would be able to afford a house in Toronto and that there would be no land on which to build single-family dwellings. Housing in Toronto could become affordable again if the country spread the economy from sea to sea. Right now, in this vast, largely uninhabitable space we call Canada, Toronto is the only viable city, financially, culturally, sports-wise, etc. But there is no good reason for that. The country as a whole lacks vision. If we encouraged business, culture and sports to develop other places (and in other places), Toronto real estate would become more reasonably-priced. Yes, that’s bad for sellers and agents, but it’s good for a population that wants a life and a place to live.

    1. Ralph Cramdown says:

      If only there was another big city in Canada with culture, cuisine, winning (hah!) sports teams, a big international airport and seaport, and well developed financial, technology and industrial sectors.

      1. Sammy says:

        Ummmm… Vancouver?!?!

      2. Appraiser says:

        Montreal, Quebec City, Halifax, Charlottetown, Victoria, Calgary, Edmonton,Winnipeg, Banff, Whistler, Lake Louise, Jasper, Niagara Falls are all personally recommended.

    2. Real estate millennial says:

      commercial transportation prior to planes was by sea so all major cities that thrived boardered large bodies of water. A surprise to most people is how much we still rely on ship for transportation of commercial goods. The other provinces are inland making it tougher logistically and not cost effective. Vancouver, Montreal, Toronto are all in direct proximity to water thus they thrive as cities in Canada. It’s not much different around the world, when you look at a map you’ll see how many major cities reside next to large bodies of water. The only way for Toronto house prices to slow down is to make transit more efficient to and from the surrounding areas (Guelph, Waterloo, Milton, Whitby etc).

      1. Kramer says:

        I agree with you about transit, but the decrease in demand in Toronto will come at the expense of increased demand in those smaller communities… so you’re really just spreading the demand around – which is a good thing… the clincher would be if there is more land out there to build on and meet the increased demand, as you could then see the overall Supply side impacted, and a more balanced market.

        So is there more land to build there? Or is it just gonna increase prices out there?

  12. Appraiser says:

    Little known fact. Chicago also had a million more souls in the 1950’s than it has today.

    I can’t see the population in Toronto declining – ever.

    So yeah, land.

    1. Mike says:

      That’s interesting.

      I’m sure Montreal in the 60’s thought that they could do no wrong, but look what happened.

      We kind of seen a bit of it here or at least rumblings about a decade ago.

      Those new condo’s at Avenue and St. Clair were built in what was the head office of Imperial Oil when they moved west to Calgary. The banks considered it a few years back since manufacturing is all but dead in Ontario and at one point oil looked to be our savior.

      Some Vancouver head offices have closed down and the buildings converted to housing but Vancouver is locked in by a river, ocean and mountains so no real impact there.

      There are certain tax advantages to head quartering in Alberta or Quebec, if the jobs move out of Toronto, would it be hard to see a hollowing out of Toronto? Bankers can work anywhere, with them they bring lawyers, accountants and all the ancillary staff, there’s nothing really tying them to Toronto.

      1. Julia says:

        I’m not sure if I can see that happening of a large scale… Companies (large and small) want to be where the talent is. This is why Telus has just opened a brand new head office in downtown Toronto, and why companies such as Rogers and Unilever are staying put where they are. I know for a fact that those who do make a move further afield (such as Loblaws who has their head office in Brampton) have a very difficult time attracting top talent especially in the more creative areas such as marketing. I think for some professions, telecommuting will become more common (how I wish I was in one of those!) but for many, especially for those who are in more collaborative roles, going into the office will be a reality for many years to come and they in turn will continue to place high value on proximity to where they work.

        1. DavidP says:

          Totally agreed. Most people I know would only accept suburban corporate campus jobs only if the pay is insanely higher than their downtown salaries…and even then they’ll still reverse commute from a place within the city instead of moving further afield, since it’s not like it’s any more job security working for a place in the boonies. Transit really impacts lifestyle so directly that it affects the recruitment of talent in significant ways.

      2. WarnerBro says:

        Check out the writings of people like Richard Florida, Lewis Mumford, Witold Rybczynski, James Howard Kunstler, Charles Landry, etc. for insights into why “there’s nothing really tying them to Toronto” isn’t true, and likely won’t be for quite some time.