The Greater Toronto Area (GTA) has enjoyed over a decade long financial boom in the housing market, but according to a new TD Economics report, Torontonians are still facing some hurdles as they look for places to live.
Specifically, the report shows a rapid decline in housing affordability, a lack of adequate housing choices with enough room for a quality standard of living and reveals problems with mobility when it comes to public transportation.
According to the report, “average rents amount to almost half of household income for earners in the bottom 40% and the share of those in core housing need remains unacceptably high.”
It also points out a rise in consumer debt-loads, leaving many households with “little wiggle room in the event of an unanticipated economic event.”
Chris Horlarcher, a director of the Ludwig Von Mises Institute in Toronto is pleased to see some attempt in addressing structural challenges, but says the report does not go far enough.
“The problem is, when they start talking about solutions, they’re not talking about really solving the problem,” says Horlarcher, adding, “the solution is not to make it easier for people to build more condos. The solution is for interest rates and the economy to return to normal, stable levels.”
Derek Burleton, Vice President and Deputy Chief Economist at TD and author of the TD Economics report says interest rates are low for a reason.
“Right now there’s a lot of debate about what rates should be. Rising interest rates will likely weaken the housing market and condos especially, but it will help alleviate some of the pressures with affordability,” he says.
The report gives readers a glimpse into the future of housing, with an ever-increasing price gap between large and small spaces, leaving homeowners and renters alike with limited options in choosing appropriately sized units.
Julie Ross, a real estate agent for Re/Max says she thinks builders are taking advantage of the market, buying up property and cutting it into smaller condos to sell at a premium. “They’re building them like hotel rooms sizes, 500 square feet,” she says, “you’re buying now for something that’ll be built in three years and who knows what will happen in three years with the interest rates.”
The report also recommends that the Ontario government focus on building more transportation corridors. Many corridors are underdeveloped, forcing some residents to rely on other means of transportation, but according to the report, lower income families cannot afford a car and an inadequate transit system has hampered their mobility and access to their jobs.
