Why is Ontario Housing Inventory So Low?
Low supply and high demand—that’s been a consistent story for the Greater Toronto housing market over the past year. There was a record 121,712 home sales reported in 2021, this was up 28% from last year. At the same time, the number of new listings on the market failed to keep pace with sales.
These supply issues have led to skyrocketing prices for homes in the area, with the average price last year jumping by more than 17% to well over a million at $1,095,475.
What’s caused housing inventory to be so low?
There are a number of different factors that have caused housing inventory to remain low in the Greater Toronto Area. We’ll break down some of them for you here in our latest blog.
COVID has caused its fair share of issues with the Greater Toronto Area housing market. From material shortages to lack of available labourers and lockdowns, the construction industry has experienced many delays causing houses that would have been completed earlier to now be months behind schedule.
Immigration creating new buyers
With a large number of new people entering the province, the market has become even more competitive.
International immigration added 84,887 people to Ontario’s population in the third quarter of 2021, according to the Toronto Regional Real Estate Board. That number represents a record for any quarter to date. There was also more than 20,000 people who moved to Ontario from other provinces in the third quarter of 2021. Although some people did end up moving out of the province, there was still a total net increase of 77,995 people causing pressure on an already strained housing market.
Record low interest rates
Low interest rates also have contributed to tight market conditions. Many people have jumped to take advantage of the low rates and move into their first home while it’s still affordable, causing even more of an inventory shortage.
Delays in approvals for new developments
There have been delays in approvals by municipalities for new developments as well, which have also contributed to the lack of housing availability on the market. A study released by the Building Industry and Land Development Association found that the average municipal approval times for single applications across the Greater Toronto Area was significantly longer than the maximum allowable times under provincial legislation. These long approval delays mean that builders and developers are left waiting until they can begin to build. For inventory to make up some ground on demand, municipalities must begin to approve developments at a much more efficient pace.
How can the housing supply issue be solved?
It starts with all three levels of government focusing on supply, said Toronto Regional Real Estate Board president Kevin Crigger.
“This collaboration could be spearheaded, at least in part, with housing related incentives tied to federal infrastructure investment,” Crigger said.
Looking to purchase a home this year?
Despite the lack of inventory, there are still opportunities out there. We can help you find them.
Check in on our website, for our latest listings and a number of pre-construction opportunities upcoming around the GTA.
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Contact us today to find out more about our available real estate opportunities! You can reach us at 416-613-1010 or by email at email@example.com.