Still convinced that the city of Toronto needs to build more housing to bring down prices? It’s a growing city, and housing all these people is applying pressure to prices. Makes sense, but unfortunately there’s no data to support that. Actually, the data shows the opposite. Basic analysis shows the city might be overbuilding by over 40% for the current rate of growth.

Toronto’s Population, and Households

Toronto’s population grew, but not as much as you might think. Population growth slowed from 9% in the 2011 Census, to just 6.2% in the 2016 Census. The 2016 Census counts 5,928,040 people in Toronto, which is 344,976 more people than 2011. It’s solid growth, but it is slowing.

The number of people living in each household didn’t change much either. In 2016, there were 2,135,909 households in Toronto Census Metropolitan Area (CMA). This works out to an average of 2.77 people per occupied home. The number in 2011 was 2.8 people per home, making it only slightly less in 2016. So there’s little reason to think everyone is buying single person pods.

Completions of Homes

Despite slower population growth in the last Census, building completions accelerated. From 2012 to 2016, Toronto CMA saw 175,825 homes completed. This represents a 9.75% increase from the period prior. That’s a home for every 1.96 people that moved to the area, and 41% more than the average household size. That would have to be a pretty wide margin of error from all levels of government for there to be a “shortage” of homes.

Toronto Home Completions Vs Estimated Use

Source: CMHC, Better Dwelling.

Overbuilding By 41%, Or Accommodating Speculators?

So what’s happening with those extra units? Well let’s see. A few months ago our robo-researcher identified 1 in 3 homes listed for resale in Toronto were being sold as never having been occupied. Then there’s the 99,236 vacant homes in the city. The latter is a number so large that Paris, a city with just a few thousand more vacant units, is calling it an emergency. That considered, this sounds a lot like plain ole speculation. The fact that China’s capital outflows are reversing this year, also means it’s most likely domestic speculation.

This doesn’t mean that prices should necessarily come down. Commodities are worth what people are willing to pay for them. It does mean that no amount of building will bring down prices without a change to buyer mentality. Great time to make money as a seller, bad time to be a young person trying to start out in this city.

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