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I've been reading about the Toronto & GTA housing market and all the articles keep pointing to low inventory which technically is true, but come on, this is Canada.  Toronto and GTA have large areas.

Can't we build out a little more?

I understand the concept about urban sprawl, but building out properly will allow people to buy houses, not exacerbate the housing problem. 

Done right, the infrastructure, light sewer and electricity will be able to handle the load.  Otherwise look what happened at the CityPlace condo electricity outage.

Link to the Global News story here: CityPlace condo

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Costs in Toronto have risen 20.3% since last November - that is 11.6x more than the normal wage increment, 11.3x more than Inflation, and 16.2x the populace increment. Home costs have decoupled from each sensible monetary metric.
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The other answers here (finite land, etc.) are technically correct but most ignore the real elephant in the room.
Van and TO are pricy because they have become a great place for non-residents, mostly non Canadians, to buy real estate for speculation. For the Asian buyer it is also a way to launder money and to have a nest egg in western currency in the event that the regime collapses. That began with the Hong Kong crowd before the 1995 takeover by China and really took of with the Olympics in 2010. The city of Vancouver in the category of condos alone has 10,000 vacant dwellings and perhaps 20,000 in all, this in a city of 600,000 so perhaps 200,000 dwellings max. Some corner stores have gone bankrupt because there are so few people living in the houses in the area.
An estimated >80% of these alien buyers are from Communist China followed by the US and the UK. As the bubble grew, everyone else began to speculate. The last provincial government loved it partly because they were real estate oriented but also for the transfer tax that became a significant source of revenue. Oddly, some banks have given mortgages to non-citizens who had no Canadian financial history while continuing a policy of denying mortgages to citizens without the right bells and whistles. Banks are pigs at the trough? The average house in the region of Greater Vancouver would require a $300K down payment and who can raise that? The payments would requite a $160K a year salary. The average family income in the area is closer to $50K. Companies can no longer transfer or hire employees to come to the area because of the cost of housing yet we are told about major job growth. Construction is everywhere you look but who can buy?
Vancouver and Toronto are not alone. My relatives on the south coast of England have the same problem with the rich from London wanting a house on the seaside. Today they cannot attract nurses and teachers because none can afford to live and work there. 

Thank You


James Jasper - British Coursework Help UK