Not enough family-friendly condos to match demand: Report
A new report shows that only 38 per cent of condos in development have at least two bedrooms.
|Report an Error|
Share via Email
Up-sizing young families and downsizing seniors are about to converge on a Toronto-region housing market that isn’t sufficiently prepared to accommodate their needs in terms of space and affordability.
In the next decade there will be 484,000 more seniors and 207,000 more residents aged 35 to 44, who need family-friendly housing.
But the majority of condos coming up for occupancy in the next five years have fewer than two bedrooms, says a joint report from the Ryerson City Building Insitute (CBI) and development market research firm Urbanation.
It’s the first report to marry demographics with pending condo construction data, said CBI executive director Cherise Burda.
Seniors who want to age in their own neighbourhoods often want more than a one-bedroom-plus-den condo and families need more space.
“They’re going to be looking for the same housing and (families) are not going to want to drive to the greenfields where we’re building a detached house that’s affordable,” she said.
The report called, “Bedrooms in the Sky: Is Toronto Building the Right Condo Supply?”, shows the price gap between detached houses and condos has tripled since 2007 — from $200,000 to $600,000.
In the City of Toronto, 38 per cent of condos in the pipeline have at least two bedrooms, compared to about 60 per cent in the 1990s. Across the entire region, only 41 per cent of condos being built have at least two bedrooms, down from 67 per cent.
The decline in the number of two-bedrooms may be a result of investor demand for smaller units. Sixty per cent of new construction condos are bought by investors, said Urbanation’s Shaun Hildebrand.
At the same time, buildings are getting taller — averaging 21 storeys compared to 15 in the 1990s. That’s not always appealing to families and seniors, said Burda. Only 7 per cent of coming units are in buildings five to eight storeys and only 3 per cent are low-rise walk-ups — the kind of housing planners call the “missing middle.”
In downtown Toronto, low-rise buildings account for only 9 per cent of development, compared to 29 per cent in the 1990s.
About 70 per cent of condo development is in the City of Toronto with 47 per cent (45,000 units) in the core. Toronto’s old suburbs, which contain about five times the amount of land, have about half the number in development.
“(Mid-rise apartments and low-rise attached homes) represent the type of housing that people might feel more attracted to largely because of where it can be located,” said Burda. “It’s usually along avenues and established neighbourhoods. It’s the scale that is closer to the ground, it can contain the neighbourhood character.”
For developers it’s more expensive to build mid-rise housing, said Hildebrand.
“With a high rise there are a lot of efficiencies to building towers that you don’t get with mid-rise. You just don’t have as much sellable area per foot as you would with a tower. Parking is also a big cost barrier (with mid-rise). You’re not building up as high, but you’re having to dig down low to incorporate parking,” he said.
But the growing demand is prompting developers to reconsider, said Hildebrand.
“In a market full of high-rises, mid-rises have become such limited supply that premium pricing is actually achievable,” he said.
Mid-rises used to take longer to sell because they appealed to buyers who were hesitant about buying off a plan. But the limited number of re-sale mid-rise units, is pushing them to reconsider.
That could present another issue, said Burda.
“The more we’re building one-bedrooms and studios; the more we’re building those in high rises, the less we’re building the other stuff,” she said. “The family-friendly housing becomes more rare and more expensive. So you’ll end up with two classifications of housing affordability. We can build more supply but we can’t build our way out of the affordability conundrum.”
One bright spot shows that there’s a slight increase in the share of three-bedroom apartments coming with 4.6 per cent of pre-construction units in that category compared to 3.4 per cent that are already being built.
But the re-sale cost of those three-bedroom condos may be too high to be affordable to many of the families who want them, averaging $918,000, according to the study, compared to $700,000 to $800,000 for a row-house or semi-detached home or $679,000 for a two-bedroom apartment.