Four real estate heavyweights on making housing in Toronto more affordable

16th Annual Real Estate Roundtable: the spring market update

We asked former chief city planner and Markee Developments partner Jennifer Keesmaat, condo king Brad Lamb, design expert Brian Gluckstein and placemaker Jay Pitter on how to solve the city’s affordability crisis as part of our spring market update with the Rotman School of Management. Here’s how that conversation went.

STREETS: Brad and Jennifer, the average detached price in Toronto for a house is over $1.3 million, and the average rent for a one bedroom is around $2,300. The city is trying to solve affordability by increasing supply, speeding up permitting processes and allowing for greater density. Is this strategy working?

JENNIFER KEESMAAT: Well, the first thing I’ll say is the strategy hasn’t really come to fruition yet. So, as a strategy, adding more supply, we have an incredible mismatch still today with respect to the amount of housing that we’re building, and the amount of housing that we need. And it’s not just the city that’s trying to expedite planning approvals, it’s also the province that’s trying to do that as well.

We’re having conversations right now about things like opening up some of the sacred cows in the city, like single-family zoning, in order to enable more density, more missing middle housing, six-, eight-, 10-storey buildings in those neighbourhoods. In the fullness of time, that will absolutely have an impact on supply. Our transit-oriented communities around our key rapid transit stations, in the fullness of time, will have an impact as well, but we’re not really feeling any of that yet.

And the risk right now is that — given what’s happening with interest rates and given what happened over the past two years with construction costs during the pandemic — is that there’s a lot of developers that are actually sitting and waiting right now at a moment when we need more supply than we’ve ever needed before.

So we have this convergence of two really significant risk factors, which is that we have a lot of talk about a new approach to delivering housing supply, but it’s not happening yet.

And now that I’m a developer, I’m deep in the thick of it and experiencing that at a very personal level. On the flip side of that, in the real estate market there’s a lot of confusion. We are meeting with capital partners, construction partners. Some of them are going full steam ahead, and some of them are sitting back and waiting.

There’s a lot of different approaches being taken, but the real risk right now is that some of the policy changes that you’re hearing about that are in the pipeline, they’re going to take years to come to fruition to lead to a new home being built in the city. And we’re so far behind that that presents continued risk. So affordability, is it going to get better in the city in the near future? Absolutely not.

BRAD LAMB: I don’t think the city is making any effort on that strategy. I think the province has more or less put a gun to the city’s head to do something about it. I think because that gun has been put to their head, by changing a lot of the legislation and forcing the city to do some things, they are begrudgingly doing some things. But the average time for me, from buying a property to getting it rezoned for highrise or mid-rise, is four years, which is way too long. Which means that it takes us eight to nine years all in to finish a building, from buying the land and moving very, very quickly to get started. That’s almost a decade from when you buy a property to complete it and give people their keys. It’s a disaster, and it’s not going to get any better. Developers are — Jennifer is right about this — developers are sitting on sites. They’re not buying sites. They’re not spending money.

And so, we’ll have this year and a half, according to Benjamin, of this disaster where the rates are. Plus you can add another two years of supply just because of the delays of getting to the market. So what we’re going to have in a year and a half is a monstrous housing crisis where prices are going to be significantly higher.

We’re not stopping bringing people into the country. We’re bringing, not just 500,000 new permanent residents a year. It’s more like 900,000 people a year [which includes temporary workers, refugees, students], and we can’t even come close to building a third of the housing they need.

JAY PITTER: I’d just like to add to the idea of risk. Along with the risk, we should be considering the fact that some of our greatest risk is the lack of political will and political imagination. We don’t actually have a strategy on the table right now. We’re not getting into the specificities pertaining to what kind of supply we are talking about here. What kind of housing mix are we looking at? And the fact that the province, which is corrupt, had to step in to force the hand of the municipality to move and advance housing units forward, that’s a major risk right there, because you can have policy in place, but without political will and political imagination — and dare I say political intelligence — we’re not going to move forward in a good way.

BRIAN GLUCKSTEIN: When we talk about building more condominiums, that is not affordable housing. So when a 600-square-foot unit is $900,000, that’s not affordable housing. If you want a family to live in the city, they’re not living in 600 square feet. Maybe they have to live in 900 or 1,200 square feet. That’s $1.7 million. That’s not affordable housing, nor are condominiums secure housing for renters. We can build all the condos we want, but that’s not secure.

First of all, it’s not affordable and it’s not secure for people who are going to rent for the rest of their lives, because there is no security that the person owning the condominium isn’t going to sell it at some point and can increase it to whatever level they want, whatever is allowable. Between interest rates, maintenance costs, taxes, what an investor has to pay and get from the tenant, we’re not talking about affordable housing.

The only way we can build affordable housing is if we build purpose-built rental housing. And the only way we can build that is if the government partners with developers to donate the land and make concessions to the taxes on these buildings, so they can secure low interest rates for the long term. That’s the only way we’re going to do it. You cannot pay for the land we have in Toronto. And no developer will build affordable housing for a $1,200-a-month apartment or $1,800. It’s not possible.

This is an excerpt from Post City’s 16th annual Real Estate Roundtable in partnership with the Rotman School of Management. Click here for more excerpts from the panel. Special thanks to our incredible sponsor The RE/MAX Collection.

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