A new report from Ryerson City Building Institute and Urbanation has brought renewed urgency to calls for more family-friendly housing in the GTA, including ‘missing middle’ options such as stacked townhouses. Bedrooms in the Sky: Is Toronto Building the Right Condo Supply? predicts that baby boomers and their millennial kids will soon be competing for the same type of real estate: two- and three-bedroom units in low- and mid-rise buildings.
Greying boomers will cause the 65-plus set to swell by more than 484,000 in the coming decade, while maturing millennials will add 207,000 to the ranks of 35 to 44-year-olds. As boomers reach retirement age and millennials begin families, write report authors Cherise Burda, Graham Haines and Shaun Hildebrand, the elder demographic cohort will be looking to downsize from detached homes without giving up too much space and the younger demographic cohort will be looking to move up from bachelor and one-bedroom units to make room to raise kids of their own.
Detached homes are an increasingly unattainable move-up option for millennials, the report finds, as the gulf between the average cost of condo apartments and detached homes has widened by three-fold to $600,000 in the last 10 years, and this trend is expected to continue.
“Within the GTA, the best opportunity to provide affordable family-friendly units will come via built forms that fall between one-bedroom condo apartments and detached houses on the price spectrum — such as two- and three-bedroom units in mid-rise and low-rise multi-unit buildings,” states the report.
The supply of three-bedroom units has seen modest growth in recent years, thanks to prompting by the City of Toronto, but at an average price in the high six-figures, many buyers are unable to afford them. The supply of units with two or more bedrooms as a percentage of completed units has remained static in recent years and dropped from past levels, the report points out, having represented around two-thirds of condo apartments completed in the 1990s versus the two-fifths of condo apartments in the current development pipeline.
As the supply of two-bedroom units has declined as a percentage of completed units since the 1990s, the average height of condo buildings has shot up from 15 storeys to 21 storeys today in the GTA.
“Many downsizers and young families do not necessarily want to live in a 30- or 40-storey tower downtown, which is why it is important to examine where we are developing family-friendly condo units,” adds the report.
The City of Toronto is where the vast majority of condo projects are concentrated, as compared to the 905 region, which is home to slightly more than a third of condo projects. The 905 region represents an even lower share of the units coming down the development pipeline because its projects are more likely to take the form of mid- or low-rise buildings.
The record-high 105,000 condo apartments due to come online in the next five years are largely spoken for, with 94 per cent pre-sold. Investors have claimed half of those units at a minimum, according to Urbanation statistics tracking the supply of new condo apartments to the rental market.
As investors typically snag smaller units to lease to tenants, says the report, the larger units take time to reach the resale market. The alternative, for families to buy larger units pre-construction, is challenged by lags as long as five years.
“If these construction trends continue, the proportion of family-appropriate housing available in location-efficient neighbourhoods (close to transit, employment, schools and services) will decrease and affordability will erode further,” the report concludes.